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) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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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:
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5) Total fee paid:
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[ ] Fee paid previously with preliminary materials:
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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:
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4) Date Filed:
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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 27, 2005
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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 27, 2005, at the Company's showroom
located at 1370 Avenue of the Americas, 14th 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 nine (9) directors to the Board of Directors of the Company
to serve until the next annual meeting of the Company's stockholders
or until their successors are duly elected and qualified;
2. To ratify the appointment of Eisner LLP as the Company's independent
auditors for the fiscal year ending December 31, 2005;
3. To approve the issuance of an aggregate of 100,000 shares of our
common stock, $.0001 par value, to certain of our executive officers
pursuant to their employment agreements; 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 15, 2005 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 Annual Meeting and for ten days prior to the meeting
for any purpose germane to the meeting, between the hours of 9:00 a.m. and 4:30
p.m. at our principal executive offices at 52-16 Barnett Avenue, Long Island
City, NY 11104, by contacting the Secretary of the Company.
BY ORDER OF THE BOARD OF DIRECTORS
April 27, 2005 /s/ JAMIESON A. KARSON
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Jamieson A. Karson
Chairman of the Board and 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 and the accompanying Notice of Annual Meeting of
Stockholders and form of proxy are being furnished to the holders of common
stock of Steven Madden, Ltd., a Delaware corporation (the "Company"), in
connection with the solicitation of proxies by the Board of Directors of the
Company (the "Board of Directors") for use at the 2005 Annual Meeting of
Stockholders of the Company (the "Annual Meeting") to be held at the Company's
showroom located at 1370 Avenue of the Americas, 14th Floor, New York, New York
on Friday, May 27, 2005 at 10:00 a.m, Eastern Daylight Time, and at any
adjournments thereof. These proxy materials are being sent on or about April 27,
2005 to holders of record of common stock, $.0001 par value (the "Common
Stock"), of the Company at the close of business on April 15, 2005 (the "Record
Date"). The Company's Annual Report for the fiscal year ended December 31, 2004,
including audited financial statements, is being sent to stockholders together
with these proxy materials.
The Annual Meeting has been called to consider and take action on the
following proposals: (i) to elect nine (9) directors to the Board of Directors
of the Company to serve until the next annual meeting of the Company's
stockholders or until their successors are duly elected and qualified, (ii) to
ratify the appointment of Eisner LLP as the Company's independent auditors for
the fiscal year ending December 31, 2005, (iii) to approve the issuance of an
aggregate of 100,000 shares of our Common Stock to certain of our executive
officers pursuant to their employment agreements, 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 the Common
Stock of the Company at the close of business on 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.
INFORMATION CONCERNING SOLICITATION AND VOTING
As of the Record Date, there were outstanding 13,241,617 shares of Common
Stock (excluding treasury shares) held by approximately 72 holders of record and
2,502 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 ratification of the appointment of Eisner LLP as the Company's
independent auditors for the fiscal year ending December 31, 2005 described in
Proposal 2 and the approval of the issuance of an aggregate of 100,000 shares of
our Common Stock to certain of our executive officers pursuant to their
employment agreements 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 Proposal 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
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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 and 2. 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. The Company has entered into an
agreement with The Proxy Advisory Group of Strategic Stock Surveillance, LLC to
assist in the solicitation of proxies and provide related advice and
informational support. The total expense of this engagement, including customary
disbursements, is not expected to exceed $20,000 in the aggregate.
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 shall
be 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 NINE DIRECTORS TO SERVE UNTIL THE NEXT ANNUAL MEETING
OF THE COMPANY'S STOCKHOLDERS OR UNTIL THEIR SUCCESSORS
ARE 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. Walter Yetnikoff will stand for election for the first time at the
Annual Meeting.(1)
The Nominating/Corporate Governance Committee of the Board and the Board
have nominated and are recommending the election of each of the nine (9)
nominees set forth below to serve as a director of the Company until the next
annual meeting of the Company's stockholders or until his successor is duly
elected and qualified. The names and biographical summaries of the nine (9)
persons who have been nominated by the Nominating/Corporate Governance Committee
of the Board and the Board to stand for election at the Annual Meeting have been
provided below for your information. Proxies will be voted for the election of
the nine (9) 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
Jamieson A. Karson has been the Chief Executive Officer of the Company and
Chairman of the Board of Directors since July 22, 2004 and was 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.
Jeffrey Birnbaum has been a director of the Company since June 2003. Mr.
Birnbaum has been the Product Development Manager of Dolphin Shoe Company since
August 1982.
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.
Currently, Mr. Cooper serves as a director of Maxcor Financial Group Inc. and
North Atlantic Trading Company, Inc.
Harold Kahn has been a director of the Company since December 2004. Mr.
Kahn currently heads HDK Associates, a consulting company that advises financial
and investment groups. Mr. Kahn also serves as an independent consultant for
Judith Leiber LLC. Mr. Kahn served as the Chief Executive Officer of Macy's East
from January 1994 through March 2004. Currently, Mr. Kahn also serves as a
director of The Wet Seal, Inc. and House of Brussels Chocolate Inc.
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(1) Under the terms of the Settlement Agreement dated February 2, 2005 between
the Company and the Barington Group and related entities, the Company agreed to
seek, in its sole discretion, at least one additional independent candidate to
stand for election to the Board of Directors. Mr. Yetnikoff has been nominated
by the Company's Board of Directors upon the recommendation of the
Nominating/Corporate Governance Committee and has no association, and has never
had any association with, the Barington Group.
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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. John Madden and JLM Consultants, Inc.
are party to a consulting agreement with the Company, as further described under
"Certain Relationships and Related Transactions." 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.
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.
Thomas H. Schwartz has been a director of the Company since May 2004. Mr.
Schwartz has been a managing director of Helmsley-Spear, Inc. since 1984, where
he was also a salesman since 1973. As managing director, among other things, Mr.
Schwartz is responsible for the leasing and sales brokerage of real estate,
management of real estate leasing and supervising managers of properties.
Awadhesh Sinha has been a director of the Company since October 2002. Mr.
Sinha has served as Chief Operating Officer and Chief Financial Officer of WEAR
ME Apparel Inc., a company that designs, manufactures and markets branded and
non-branded children's clothing, since 2003. Prior to that, Mr. Sinha worked for
Salant Corporation, a company that designs, manufactures and markets men's
clothing, for 22 years, and held the position of Chief Operating Officer and
Chief Financial Officer of Salant Corporation from 1998 to 2003.
Walter Yetnikoff is a new nominee for director. Mr. Yetnikoff has served as
Chief Executive Officer of Commotion Records, a company he co-founded, since
2003. From 2001 through 2003 Mr. Yetnikoff was self employed as a researcher and
writer. Mr. Yetnikoff served as president of CBS Records from 1975 to 1990 and
served on the Board of Directors of CBS, Inc. from 1975 through 1988.
Recommendation of the Board of Directors
The Nominating/Corporate Governance Committee of the Board and the Board
unanimously recommend a vote FOR the election of Messrs. Jamieson A. Karson,
Jeffrey Birnbaum, Marc Cooper, Harold Kahn, John L. Madden, Peter Migliorini,
Thomas H. Schwartz, Awadhesh Sinha and Walter Yetnikoff. 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 Independence
The Board of Directors is currently comprised of eight (8) members. Walter
Yetnikoff has been nominated to stand for election for the first time at the
Annual Meeting. The Board has determined that the following director nominees
are "independent" for purposes of The Nasdaq National Market listing standards:
Messrs. Cooper, Kahn, Migliorini, Schwartz, Sinha and Yetnikoff. If the nine (9)
nominees set forth above are elected, the Board will be comprised of a majority
of independent directors. The Board has adopted a policy whereby the independent
directors have regularly-scheduled executive sessions at least twice a year. On
February 28, 2005, the Board appointed Peter Migliorini to serve as Presiding
Director of the executive sessions.
Directors' Attendance at Annual Meetings
The Company encourages all of its directors to attend annual meetings of
the Company's stockholders. Four directors attended the Company's 2004 annual
meeting of stockholders.
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Communications with Directors
The Company has adopted a procedure by which stockholders may send
communications as defined within Item 7(h) of Schedule 14A under the Exchange
Act to one or more members of the Board of Directors by writing to such
director(s) or to the whole Board of Directors in care of the Corporate
Secretary, Steven Madden, Ltd., 52-16 Barnett Avenue, Long Island City, NY
11104. Any such communications will be promptly distributed by the Corporate
Secretary to such individual director(s) or to all directors if addressed to the
whole Board of Directors.
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. In 2004,
each non-employee director received the following compensation: (i) a grant of
options to purchase 10,000 shares of Common Stock at an exercise price per share
equal to the fair market value of the Common Stock on the date of grant and (ii)
fifty thousand dollars ($50,000) in immediately available funds. Members of the
Audit Committee, Nominating/Corporate Governance Committee and Compensation
Committee each received an additional five thousand dollars ($5,000) for service
on such committees, except that Awadhesh Sinha received twenty-five thousand
dollars ($25,000) for serving as chairperson of the Audit Committee and Peter
Migliorini received seven thousand five hundred dollars ($7,500) for serving as
chairperson of the Compensation Committee. In addition, non-employee directors
are reimbursed by the Company for all expenses related to attending meetings.
Meetings and Committees of the Board of Directors
The Board of Directors met six times during the fiscal year ended December
31, 2004. The Board of Directors has the following standing committees: Audit
Committee, Compensation Committee, Nominating/Corporate Governance Committee,
Real Estate Committee and Cash Investment Committee. In addition, the Company
has an Ad Hoc Committee made up of certain board members and executive officers
which meets to discuss general issues regarding the business and strategic
growth of the Company.
Audit Committee
During the year ended December 31, 2004, the Audit Committee of the Board
of Directors consisted of directors Awadhesh Sinha (chairman), Thomas Schwartz
and Peter Migliorini. The Audit Committee is comprised of directors who are
"independent" for purposes of The Nasdaq National Market listing standards and
who meet the independence requirements contained in Exchange Act Rule
10A-3(b)(1). The Board has determined that Awadhesh Sinha meets the SEC criteria
of an "audit committee financial expert." 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
2004, the Audit Committee met ten times.
The Audit Committee is responsible for reviewing and helping to ensure the
integrity of the Company's financial statements. Among other matters, the Audit
Committee, with management and independent and internal auditors, reviews the
adequacy of the Company's internal accounting controls that could significantly
affect the Company's financial statements. The Audit Committee is also directly
and solely responsible for the appointment, retention, compensation, oversight
and termination of the Company's independent accountants. In addition, the Audit
Committee also functions as the Company's Qualified Legal Compliance Committee
(the "QLCC"). The purpose of the QLCC is to receive, retain and investigate
reports made directly, or otherwise made known, of evidence of material
violations of any United States federal or state law, including any breach of
fiduciary duty by the Company, its officers, directors, employees or agents, and
if the QLCC believes appropriate, to recommend courses of action to the Company.
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. 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
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perform. A copy of the Audit Committee Charter is attached as Annex A to the
Company's 2004 Proxy Statement and is available on the Company's website.
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 accounting
principles generally accepted in the United States of America 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.
AUDIT COMMITTEE REPORT
The Audit Committee reviewed the Company's audited financial statements for
the fiscal year ended December 31, 2004 and met with both management and Eisner
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 accounting principles generally
accepted in the United States of America. The Audit Committee has received from
and discussed with Eisner LLP the written disclosure and the letter regarding
the independence of Eisner LLP as required by Independence Standards Board
Standard No. 1. The Audit Committee also discussed with Eisner 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, 2004.
AUDIT COMMITTEE
Thomas Schwartz
Peter Migliorini
Awadhesh Sinha, Chairman
Nominating/Corporate Governance Committee
In April 2004 the Board of Directors created a Nominating/Corporate
Governance Committee and appointed Peter Migliorini and Awadhesh Sinha as the
initial members of such committee. The Nominating/Corporate Governance Committee
is comprised of directors who are "independent" for purposes of The Nasdaq
National Market listing standards. The Nominating/Corporate Governance Committee
considers and makes recommendations to the Board of Directors with respect to
the size and composition of the Board of Directors and identifies potential
candidates to serve as directors. The Nominating/Corporate Governance Committee
identifies candidates to the Board of Directors by introductions from
management, members of the Board of Directors, employees or other sources and
stockholders that satisfy the Company's policy regarding stockholder recommended
candidates. The Nominating/Corporate Governance Committee does not evaluate
director candidates recommended by stockholders differently than director
candidates recommended by other sources. A copy of the Nominating/Corporate
Governance Committee Charter is attached as Annex B to the Company's 2004 Proxy
Statement and is available on the Company's website.
Stockholders wishing to submit recommendations for the 2005 Annual Meeting
should write to the Corporate Secretary, Steven Madden, Ltd., 52-16 Barnett
Avenue, Long Island City, NY 11104. Any such stockholder must (x) comply with
the director nomination provisions of the Company's By-Laws, (y) meet and
evidence the minimum eligibility requirements specified in Exchange Act Rule
14a-8 and (z) submit, within the same timeframe for submitting a stockholder
proposal required by Rule 14a-8: (1) evidence in accordance with Rule 14a-8 of
compliance with the stockholder eligibility requirements, (2) the written
consent of the candidate(s) for nomination as a director, (3) a resume or other
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written statement of the qualifications of the candidate(s) for nomination as a
director, and (4) all information regarding the candidate(s) and the submitting
stockholder that would be required to be disclosed in a proxy statement filed
with the SEC if the candidate(s) were nominated for election to the Board of
Directors.
In considering Board of Directors candidates, the Nominating/Corporate
Governance Committee takes into consideration the Company's Board Candidate
Guidelines, attached as Annex C to the Company's 2004 Proxy Statement and
available on the Company's website, the Company's policy regarding stockholder
recommended director candidates, as set forth above, and all other factors that
they deem appropriate, including, but not limited to, the individual's
character, education, experience, knowledge and skills. In addition, the
Nominating/Corporate Governance Committee develops and recommends corporate
governance principles for the Company; makes recommendations to the Board of
Directors in support of such principles; takes a leadership role in the shaping
of the corporate governance of the Company; and oversees the evaluation of the
Board of Directors and management.
During 2004, the Nominating/Corporate Governance Committee met three times.
Compensation Committee
The Compensation Committee of the Board of Directors for the year ended
December 31, 2004 consisted of directors Peter Migliorini (chairman) and Thomas
Schwartz. The Compensation Committee is comprised of directors who are
"independent" for purposes of The Nasdaq National Market listing standards. 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 2004, the Compensation Committee met four times.
Real Estate Committee
The Real Estate Committee of the Company for the year ended December 31,
2004 consisted of Jamieson A. Karson and Arvind Dharia. 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.
Cash Investment Committee
In February 2004 the Board of Directors created a Cash Investment Committee
and appointed Jamieson A. Karson, John Madden and Marc Cooper as the initial
members of such committee. The Cash Investment Committee is primarily
responsible for setting the Company's policy with respect to cash investments.
During 2004, the Cash Investment Committee met three times.
Ad Hoc Committee
For the year ended December 31, 2004 the Ad Hoc Committee consisted of
Jamieson A. Karson, John Madden, Richard Olicker, Arvind Dharia and Robert
Schmertz. The Ad Hoc Committee meets to discuss general issues regarding the
business and strategic growth of the Company. The Ad Hoc Committee met five
times in 2004.
Code of Business Conduct and Ethics
All of the Company's employees, officers (including senior executive,
financial and accounting officers) and directors are held accountable for
adherence to the Company's Code of Business Conduct and Ethics (the "Code"). The
Code is intended to establish standards necessary to deter wrongdoing and to
promote compliance with applicable governmental laws, rules and regulations and
honest and ethical conduct. The Code covers all areas of professional conduct,
including conflicts of interest, fair dealing, financial reporting and
disclosure, protection of Company assets and confidentiality. Employees have an
obligation to promptly report any known or suspected violation of the Code
without fear of retaliation. Waiver of any provision of the Code for executive
officers and directors may only be granted by the Board of Directors or one of
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its committees and any such waiver or modification of the Code relating to such
individuals will be disclosed by the Company. A copy of the Code is attached as
Annex D to the Company's 2004 Proxy Statement, is available on the Company's
website and may also be obtained by any stockholder without charge upon request
by writing to the Corporate Secretary, Steven Madden, Ltd., 52-16 Barnett
Avenue, Long Island City, NY 11104.
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, 2004,
all Section 16(a) filing requirements applicable to its officers, directors and
greater than ten percent beneficial owners were complied with, except that Mr.
Steven Madden failed to timely file one Form 4 relating to the exercise of stock
options that were previously granted to him.
Equity Compensation Plan Information
The following table provides information as of December 31, 2004 with
respect to the Company's Common Stock that may be issued under its existing
equity compensation plans: The table shows the number of securities to be issued
under compensation plans that have been approved by stockholders and those that
have not been so approved. The footnotes and other information following the
table are intended to provide additional detail on the compensation plans.
Number of securities
Number of securities remaining available for
to be issued upon Weighted-average exercise future issuance under
exercise of price of outstanding equity compensation plans
outstanding options, options, warrants and (excluding securities
Plan category warrants and rights rights reflected in column (a))
----------------------------------- --------------------- ------------------------- --------------------------
Equity compensation plans
approved by security holders
Equity Stock Option Plans (1) 2,113,000 $14.78 255,100
Equity compensation plans not
approved by security holders
Non-Qualified Options (2) 400,000 $ 1.75 0
Other (3) 240,000 N/A 0
Total 2,753,000 $12.71 255,100
------------------
1) Consists of the 1993 Incentive Stock Option Plan, the 1995 Stock Plan,
the 1996 Stock Plan and the 1999 Stock Plan, as amended.
2) 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
Company's former Chief Executive Officer. The options were
subsequently transferred to Steven Madden. The options, which are
fully exercisable, had an exercise price of $1.75 and an exercise
period of 10 years. As of the Record Date, all of these options have
been exercised. 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.
-8-
3) (a) In 2002 and 2003 the Company entered into agreements with eight
employees and one independent contractor which agreements provide
that, if such individuals continue to be employed by, or in the case
of the independent contractor, provide services to, the Company
through specified future dates (ranging from January 1, 2004 through
March 31, 2007), they each will be entitled to receive shares of the
Company's Common Stock in amounts ranging from 20,000 shares to 50,000
shares. Such shares were registered by the Company on Form S-8 in
August 2004.
(b) In April 2002 the Company entered into an agreement with Robert
Schmertz which provides that, subject to shareholder approval, if Mr.
Schmertz is employed by the Company through June 30, 2005 he will be
entitled to receive 50,000 shares of the Company's Common Stock. See
Employment Agreements with Certain Executive Officers.
(c) In October 2002 the Company entered into an agreement with Harry
Chen which provides that, subject to shareholder approval, if Mr. Chen
is employed by the Company through June 30, 2005 he will be entitled
to receive 50,000 shares of the Company's Common Stock. See Employment
Agreements with Certain Executive Officers.
Certain Legal Proceedings
On September 12, 2001, the State of Florida, Department of Banking and
Finance, Division of Securities and Investor Protection (the "Department")
issued a Final Order adopting the Stipulation and Consent Agreement to Final
Order dated May 15, 2001 ("Stipulation and Consent Agreement") between John
Madden and the Department relating to the Department's investigation of alleged
sales of unregistered securities in 1997. Under the Stipulation and Consent
Agreement, Mr. Madden neither admitted nor denied the allegations against him;
however, Mr. Madden agreed to pay an administrative fine in the amount of $5,000
and agreed to abide by certain limitations related to his employment in the
securities or investment advisory industry for a period of five years, including
Mr. Madden's agreement to not act in any principal, supervisory, or managerial
capacity in the securities industry and to not exercise discretionary authority
in any account of any person.
On April 26, 2004, the SEC sent the Company a letter requesting information
and documents relating to, among other things, Steven Madden's employment with
the Company. The Company has responded to this request.
-9-
Directors, Director Nominees and Executive Officers
Certain information concerning the directors, director nominees and
executive officers of the Company is set forth below:
Name Age Position(s) with the Company
------------------------ ------- -----------------------------------------------
Jamieson A. Karson 47 Chief Executive Officer and Chairman of the
Board
Arvind Dharia 55 Chief Financial Officer
Richard Olicker 47 President and Chief Operating Officer
Gerald Mongeluzo 64 President of Adesso-Madden, Inc.
Robert Schmertz 41 President of Steve Madden Womens Wholesale
Division and Brand Manager
Joseph Masella 56 President of Licensed Footwear Division
Harry Chen 55 Chairman and Lead Designer of Madden Mens
Division
Andrew Shames 47 President of Madden Mens Division
Larry Paparo 37 President of Candie's Kids and Stevies, Inc.
Jay Litvack 54 President of Diva Acquisition Corporation
Amelia Newton Varela 33 Executive Vice President - Wholesale Sales
John L. Madden 58 Director and Independent Contractor
responsible for Foreign Sales
Peter Migliorini 56 Director
Marc Cooper 43 Director
Awadhesh Sinha 59 Director
Jeffrey Birnbaum 44 Director
Thomas H. Schwartz 57 Director
Harold Kahn 59 Director
Walter Yetnikoff 72 Director nominee
--------------------
See "Biographical Summaries of Nominees for the Board of Directors" for
biographical summaries of Messrs. Jamieson A. Karson, Jeffrey Birnbaum, Marc
Cooper, Harold Kahn, John L. Madden, Peter Migliorini, Thomas H. Schwartz,
Awadhesh Sinha and Walter Yetnikoff.
Arvind Dharia has been the Chief Financial Officer of the Company since
October 1992 and was a director of the Company from December 1993 through May
2004. From December 1988 to September 1992, Mr. Dharia was Assistant Controller
of Millennium III Real Estate Corp.
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., which markets 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 New Retail
Concepts, Inc., an apparel licensing firm.
Gerald Mongeluzo has been President of Adesso-Madden, Inc., a wholly owned
subsidiary of the Company, since September 1995. Mr. Mongeluzo served as a
director of the Company from July 2001 through May 2004. 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.
Robert Schmertz has been the President of Steve Madden Womens Wholesale
Division and Brand Manager 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
-10-
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 the President of the Licensed Footwear Division
since March 2004. Previously, he was the Executive Chairman of the l.e.i.
Footwear Division and Stevies, Inc. since June 2002. Prior to that, he was
President of Stevies, Inc. since April 2000 and President of l.e.i. Footwear
Division since July 1998. Prior to that, 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.
Harry Chen has been the Chairman and Lead Designer of the Madden Mens
Division since March 2004. Previously, he was the President of Union Bay Mens
Footwear, Inc. since January 2003 and the President of Madden Mens since
November 2001. Before joining the Company, Mr. Chen served as Chief Executive
Officer of XES Appeal, Inc. from 1997 to 2002.
Jay Litvack has been President of Diva Acquisition Corporation since May
2002. Before joining the Company, Mr. Litvack served as the President of Me Too
from 1996 to 2002.
Andrew Shames has been the President of Madden Mens since March 2004.
Before joining the Company, Mr. Shames was an executive at Harbor Footwear Group
Ltd. from 1997 to 2004. Mr. Shames began his career at J.P. Marks International,
one of the first importers of men's dress and casual products from Asia, and
occupied the role of Vice President of Sales.
Larry Paparo has been the President of Candie's Kids and Stevies, Inc.
since March 2004. Prior to that, Mr. Paparo served as the Vice President of
Sales for Candie's Division since November 2003. Before joining the Company, Mr.
Paparo held sales and management positions with both Nine West and Kenneth Cole.
Amelia Newton Varela has been the Executive Vice President of Steven
Madden, Ltd. Wholesale Sales since October 2004. In April 2000, she was named
Vice President of Sales for the Steve Madden Womens Division. Previously, she
was a Key Account Executive since 1997 and began her career with the Company as
a Customer Service Representative in 1996.
-11-
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, 2004, December 31, 2003 and December 31, 2002 the
remuneration paid by the Company to its Chief Executive Officer and the four
most highly compensated executive officers (other than the Chief Executive
Officer):
Summary Compensation Table
Annual compensation Long-term compensation
----------------------------------- --------------------------------------------
Restricted
Fiscal Awards Stock Awards All other
Name and principal position year Salary($) Bonus($) options(1) ($) compensation
--------------------------- ------ ---------- ---------- ----------- ---------- ------------
Jamieson A. Karson, 2004 $467,500 -0- -0- N/A $146,226(2)
Chief Executive Officer 2003 $467,500 $108,056(3) -0- N/A $287,963(4)
2002 $400,000(5) $286,319(6) 45,000(7) N/A $ 32,268(8)
Robert Schmertz, 2004 $432,649 $ 50,000 -0- N/A $205,769(9)
President, Steve Madden 2003 $393,750 -0- -0- N/A $256,000(10)
Womens Wholesale Division 2002 $363,750 $150,000 100,000 $850,000(11) $ 5,769(12)
and Brand Manager
Harry Chen, 2004 $250,000 $313,018 -0- N/A $ 8,400(13)
Chairman and Lead Designer 2003 $250,000 $448,808 100,000 N/A $ 8,400(13)
of Madden Mens Division 2002 $150,000 $216,020 -0- $917,000(14) -0-
Andrew Shames, 2004(15) $634,621(16) -0- -0- N/A -0-
President, Madden Mens
Division
Joseph Masella, 2004 $606,886(17) -0- 25,000 N/A
President, Licensed Footwear 2003 $892,861(17) -0- -0- N/A $ 62,500(19)
Division
2002 $571,191(18) $103,067 -0- N/A $ 3,323(20)
---------------
(1) Options to purchase shares of Common Stock.
(2) In 2004 the Company paid Mr. Karson $116,112 in lieu of granting him the
option to purchase 58,056 shares to purchase Common Stock that he was
entitled to under his employment agreement and paid $30,114 for expenses
paid on behalf of Mr. Karson pursuant to his employment agreement.
(3) Mr. Karson was paid cash bonuses totaling $108,056 for 2003.
(4) In 2003, the Company paid expenses in the amount of $37,963 on behalf of
Mr. Karson pursuant to his employment agreement. In addition, in 2003 the
Company paid Mr. Karson $250,000 in lieu of granting him the option to
purchase 100,000 shares to purchase Common Stock that he was entitled to
under his employment agreement.
(5) Mr. Karson's employment agreement was amended to provide for a base salary
of $425,000 as of July 1, 2002. See "Employment Agreements with Certain
Executives."
(6) In exchange for the increase in base salary described in note (5) above,
Mr. Karson agreed to waive his right to collect the portion of his cash
bonus for 2002 that is allocable to the payment by the Company of the loss
mitigation insurance premium that the Company purchased in the fourth
quarter of fiscal year 2001. The amount waived by Mr. Karson was
approximately $278,000. See "Employment Agreements with Certain
Executives."
(7) Although, under his employment agreement Mr. Karson was entitled to receive
an option to purchase 50,000 shares of Common Stock in 2002, on June 24,
2002, Mr. Karson agreed to accept an option to purchase only 45,000 shares
of Common Stock so that an option to purchase 5,000 shares of Common Stock
could be awarded to a key employee.
(8) Expenses paid on behalf of Mr. Karson pursuant to his employment agreement.
(9) In 2004, the Company paid expenses in the amount of $5,769 on behalf of Mr.
Schmertz pursuant to his employment agreement. In addition, in 2004 the
Company paid Mr. Schmertz $200,000 in lieu of granting him the option to
purchase 100,000 shares of Common Stock that he was entitled to under his
employment agreement.
-12-
(10) In 2003, the Company paid expenses in the amount of $6,000 on behalf of Mr.
Schmertz pursuant to his employment agreement. In addition, in 2003 the
Company paid Mr. Schmertz $250,000 in lieu of granting him the option to
purchase 100,000 shares to purchase Common Stock that he was entitled to
under his employment agreement.
(11) On April 2, 2002, the Company agreed to grant Mr. Schmertz 50,000 shares of
Common Stock on June 30, 2005 if Mr. Schmertz is employed by the Company on
such date. The grant of these shares is subject to approval of the
Company's shareholders. The closing price of the Company's Common Stock on
April 2, 2002 as reported by The Nasdaq National Market was $17.00. The
value of these restricted shares of Common Stock as of December 31, 2002
was $903,500 (based upon a closing price on December 31, 2002 of $18.07 per
share as reported by The Nasdaq National Market). These shares have not
been issued to Mr. Schmertz and Mr. Schmertz will not be entitled to any
rights with respect to the ownership of these shares (including voting
rights and dividends) until they are issued to Mr. Schmertz.
(12) Expenses paid on behalf of Mr. Schmertz pursuant to his employment
agreement.
(13) Expenses paid on behalf of Mr. Chen pursuant to his employment agreement.
(14) On October 7, 2002, the Company agreed to grant Mr. Chen 50,000 shares of
Common Stock on June 30, 2005 if Mr. Chen is employed by the Company on
such date. The grant of these shares is subject to approval of the
Company's shareholders. The closing price of the Company's Common Stock on
October 7, 2002 as reported by The Nasdaq National Market was $18.34. The
value of these restricted shares of Common Stock as of December 31, 2002
was $903,500 (based upon a closing price on December 31, 2002 of $18.07 per
share as reported by The Nasdaq National Market). These shares have not
been issued to Mr. Chen and Mr. Chen will not be entitled to any rights
with respect to the ownership of these shares (including voting rights and
dividends) until they are issued to Mr. Chen.
(15) Mr. Shames' employment with the Company commenced on March 8, 2004.
(16) In 2004, Mr. Shames directly received $121,153 in base salary pursuant to
his employment agreement. Pursuant to a commission agreement between the
Steven Madden Mens Wholesale Division of the Company and Hev Sales, Inc., a
corporation of which Mr. Shames serves as President, Hev Sales, Inc.
received payments in the amount of $513,468 in 2004.
(17) Under the terms of Mr. Masella's employment agreement, commissions on sales
by Mr. Masella are paid to T.J.M. Sales Corporation, a corporation of which
Mr. Masella serves as President.
(18) In 2002, Mr. Masella directly received $88,738 in salary and T.J.M. Sales
Corporation was paid $482,453.
(19) In 2003, the Company paid Mr. Masella $62,500 in lieu of granting him the
option to purchase 25,000 shares of Common Stock that he was entitled to
under his employment agreement.
(20) Expenses paid on behalf of Mr. Masella pursuant to his employment
agreement.
-13-
The following table sets forth certain information with respect to options
granted during the last fiscal year to the persons named in the Summary
Compensation Table above.
Option/SAR Grants In Last Fiscal Year
Number of Percent of Total Potential Realizable
Securities Options/SARS Exercise Value at Assumed Annual
Underlying Granted to or Base Rates of Stock Price
Options/SARS Employees in Price Appreciation for Option
Name Granted (#) Fiscal Year % ($/Sh) Expiration Date Term
--------------------- ------------- ------------- ---------- ---------------- ------------------------
5% 10%
---------- ----------
Jamieson A. Karson -0- N/A N/A N/A N/A N/A
Robert Schmertz -0- N/A N/A N/A N/A N/A
Harry Chen -0- N/A N/A N/A N/A N/A
Andrew Shames -0- N/A N/A N/A N/A N/A
Joseph Masella 25,000 6.6 19.97 6/30/2014 1,301,738 2,170,871
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- -0- 145,000 0 6,000 -0-
Robert Schmertz -0- -0- 100,000 -0- -0- -0-
Harry Chen -0- -0- 130,000 20,000 505,500 -0-
Andrew Shames -0- -0- -0- -0- -0- -0-
Joseph Masella -0- -0- 22,925 12,500 1,146 -0-
----------------------
(1) Based upon a closing price on December 31, 2004 of $18.86 per share as
reported by The Nasdaq National Market.
-14-
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. In May 2002, the Company's stockholders approved an
amendment to the 1999 Plan increasing the number of shares of Common Stock
subject to the plan from 1,600,000 to 2,280,000. In May 2003, the Company's
stockholders approved an amendment to the 1999 Plan (i) increasing the maximum
number of shares of the Company's common stock available for issuance under the
plan from 2,280,000 shares to 2,920,000 shares; (ii) providing that the exercise
price of an option granted under the plan shall be no less than the fair market
value of the Company's common stock on the date of grant (except to the extent
otherwise provided in agreements with the Company dated prior to the effective
date of the amendment) and (iii) prohibiting the Board from amending the terms
of any option granted pursuant to the plan to reduce the option price. In May
2004, the Company's stockholders approved an amendment to the 1999 Plan
increasing the maximum number of shares of the Company's common stock available
for issuance under the plan from 2,920,000 shares to 3,220,000 shares. As of the
Record Date, options to purchase 3,011,000 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.
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. On July 22, 2004 at a
regularly scheduled meeting of the Board of Directors of the Company, Mr. Karson
was appointed Chairman of the Board of Directors. This agreement was amended in
February 2004. The term of Mr. Karson's employment under his employment
agreement (as amended) is five (5) years commencing on July 1, 2001 and ending
on June 30, 2006. 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 agreement (as amended) provides that
the Company pay Mr. Karson an annual salary of $467,500 which base salary is
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 for each fiscal
year (beginning with 2002) 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 National
Market. These options vested quarterly over the one year period following the
date of grant and are exercisable for a period of five (5) years from the date
-15-
of grant. On or about July 10, 2001, the Company issued to Mr. Karson 10,000
shares of restricted common stock, 25% of which became 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 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 National 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 April 2002, the Company entered into an employment agreement with Robert
Schmertz pursuant to which Mr. Schmertz agreed to serve as President of Steve
Madden Wholesale Womens Division and Brand Manager for Steven Madden, Ltd. The
agreement was extended in March 2005. The term of Mr. Schmertz's employment
under his employment agreement (as extended) commenced on April 1, 2002 and ends
on June 30, 2007. Mr. Schmertz received an initial signing bonus of $150,000 and
a signing bonus of $50,000 upon the execution of the extension. The Company
agreed to pay Mr. Schmertz an annual salary of $375,000, to be increased to
$412,500 on July 1, 2003, to be increased to $453,750 on July 1, 2004, to be
increased to $476,438.00 on July 1, 2005 and to be increased to $500,260.00 on
July 1, 2006. Pursuant to the agreement, on May 17, 2002 Mr. Schmertz received
100,000 options to purchase the Company's Common Stock at an exercise price
equal to the closing market price on such date. These options vested quarterly
beginning with the first 25,000 vesting on September 30, 2002 and the last on
June 30, 2003. In addition, on the date of the Company's annual meeting in each
of 2003 and 2004, Mr. Schmertz became entitled to receive an option to purchase
100,000 shares of the Company's Common Stock. These options had an exercise
price equal to the closing market price on the date of the grant and vest
quarterly beginning with the first 25,000 vesting on the September 30th
immediately following the grant. In the event of a change in control, all
unvested options will vest on the date of the change of control, priced as of
the closing market price on the date of transfer as quoted on The Nasdaq
National Market. Under the terms of the agreement as extended, the Company shall
pay Mr. Schmertz a discretionary bonus in an amount determined solely by the
Company's Board of Directors. In the event of a "change of control" Mr. Schmertz
shall be entitled to terminate the agreement and upon such termination will be
entitled to receive three times the compensation received in the prior year
(capped at the maximum allowed under Section 4999 of the Internal Revenue Code
of 1986). Subject to the approval of the Company's shareholders, if Mr. Schmertz
is employed by the Company through June 30, 2005, he will be entitled to receive
50,000 shares of Common Stock.
In October 2002, the Company entered into an employment agreement with
Harry Chen pursuant to which Mr. Chen agreed to serve as President of the Madden
Mens division. In March 2004, Mr. Chen's title was changed to Chairman and Lead
Designer of Madden Mens Division. The term of Mr. Chen's employment under the
agreement commenced on January 1, 2003 and ends on June 30, 2005. Mr. Chen
received a signing bonus of $100,000. The Company agreed to pay Mr. Chen an
annual base salary of $250,000 and additional compensation of 1% of the
quarterly reported net sales of the Madden Mens Wholesale Division to be paid
within 45 days following the end of each quarter. Pursuant to the agreement, in
May 2003 Mr. Chen received 100,000 options to purchase the Company's Common
Stock at an exercise price equal to the closing market price on such date. These
options vest quarterly over ten quarters beginning with 20,000 options vesting
on June 30, 2003 and 10,000 options vesting on the last day of each quarter
thereafter through June 30, 2005. In addition, in the event that the Madden Mens
division opens a new division with Mr. Chen's assistance, the Company agreed to
pay Mr. Chen 10% of the reported net income of such new division without any
further compensation related to net sales of that division. Subject to the
approval of the Company's shareholders, if Mr. Chen is employed by the Company
through June 30, 2005, he will be entitled to receive 50,000 shares of Common
Stock. Mr. Chen's employment agreement contains other customary provisions.
-16-
In March 2004, the Company entered into an employment agreement with Andrew
Shames, pursuant to which Mr. Shames agreed to serve as President of the
Company's mens footwear business. The term of Mr. Shames' employment commenced
on March 8, 2004 and ends on March 31, 2007. The Company agreed to pay Mr.
Shames an annual base salary of $150,000. The agreement provides that Mr. Shames
is to receive options to purchase 25,000 shares of the Company's Common Stock on
March 31 of each year with a grant price based on the fair market value on such
date, during the term of the agreement (commencing March 31, 2005). The options
are to vest quarterly over a period of one (1) year from the grant date. If Mr.
Shames is employed by the Company through March 31, 2007, he will be entitled to
receive $100,000 on such date. Mr. Shames' employment agreement contains other
customary provisions. In March 2004, the Company also entered into a commission
agreement between the Steven Madden Mens Wholesale Division and Hev Sales, Inc.
Mr. Shames is the President of Hev Sales Inc. The term of the commission
agreement commenced on March 8, 2004 and ends on March 31, 2007. Under the
commission agreement, Hev Sales serves as sales organization for the Steven
Madden Mens Wholesale Division and receives commissions on sales by Hev Sales,
Inc. in the amount of (i) 0.75% of the first $35 million net sales of Madden
Mens and 2% of net sales of $35 million or greater, (ii) 1.25% of the net sales
of Unionbay or other men's mid-tier brands and (iii) 1.25% of the net sales of
any private label direct from the factory. Hev Sales, Inc. receives a biweekly
draw in the amount of $17,308 against commissions earned with an annual
guaranteed commission of $450,000. Commissions earned on the first sales
generating commission of $150,000 are not deemed earned commissions to Hev
Sales, Inc. Under the terms of the commission agreement Hev Sales, Inc. also
received a one-time start-up fee from the Company in the amount of $150,000.
In May 2002, the Company entered into an employment agreement between the
Company, Adesso Madden, Inc., Joseph Massella and T.J.M. Sales Corporation. Mr.
Massella is the president of T.J.M. Sales Corporation. The agreement was
subsequently amended on September 22, 2003. Under the terms of the agreement as
amended, Mr. Massella agreed to serve as President of the Candie's Wholesale
Division and Executive Vice President of Adesso Madden, Inc. The term of Mr.
Massella's employment under the agreement commenced on June 1, 2002 and ended on
December 31, 2004. Under the agreement as amended, T.J.M. Sales Corporation
receives commissions based on annual sales by Joseph Massella for Adesso Madden
in the amount of 2% on the first $8 million in sales, 1% on sales between $8
million and $10 million in the aggregate, 1/2% on sales between $10 million and
$23.5 million in the aggregate, 3% on sales between $23.5 million and 34 million
in the aggregate and 4% on sales exceeding $34 million in aggregate sales.
T.J.M. Sales Corporation receives a biweekly draw in the amount of $16,000
against commissions earned on sales for Adesso Madden. In addition, T.J.M. Sales
Corporation receives commissions in the amount of 1% of net sales, and receives
1% of earnings before interest and taxes (EBIT), of the Candie's Womens
Division. T.J.M. Sales Corporation receives a biweekly draw with recourse, in
the amount of $4,000 against commissions earned by Mr. Massella on net sales of
the Candie's Women's Wholesale Division. The agreement provides that Mr.
Massella is to receive options to purchase 25,000 shares of the Company's Common
Stock on June 30 of each year with a grant price based on the fair market value
on such date, during the term of the agreement (commencing June 30, 2003). The
options are to vest quarterly over a period of one (1) year beginning on
September 30, 2003. As noted above, Mr. Masella's employment contract expired on
December 31, 2004. Mr. Masella's employment agreement contains other customary
provisions. Mr. Masella continues to be employed by the Company and receives the
same levels of compensation as he received during the term of his employment
agreement.
Agreement with Steven Madden
In May 2001, the Company entered into an 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 agreement amends and restates the prior agreement
dated July 29, 1997 (and amended February 28, 2000). The agreement was further
amended in connection with a settlement and release of a class action lawsuit
against Mr. Madden and the Company, which settlement and release was finalized
on May 25, 2004. The term of Mr. Madden's employment under the agreement, as
amended is eleven (11) years commencing on July 1, 2001 and ending on June 30,
2012. 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. Mr.
Madden is entitled to receive base salary payments during periods that he is not
actively engaged in the duties of Creative and Design Chief. 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
-17-
in the duties of Creative and Design Chief for at least six months. Subject to
availability of shares under the Company's 1999 Stock 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 2004), 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 100% 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 (the "Base Amount").
Both the approval of the Board of Directors and an opinion of a qualified
outside compensation consultant are required for Mr. Madden to receive annual
options to purchase between 100%-150% of the Base Amount. Approval by the
stockholders of the Corporation is required for Mr. Madden to receive annual
options in excess of 150% of the Base Amount. The annual options will vest
quarterly over the 1 year period following the date of grant and will 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 National 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 is payable in equal monthly
installments; however, the Company is not 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 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 the
agreement had not been terminated, fifty percent (50%) upon termination and the
remaining fifty percent (50%) in equal annual installments until June 30, 2012.
In the event there is a "change of control" transaction and Mr. Madden's
employment is terminated, 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) at Mr. Madden's discretion either (i) the total compensation
(base salary, cash bonus and non-accountable expense allowance) for the full
term remaining hereunder (as though there had been no Change of Control event)
in a lump sum payment discounted back to present value at a rate of 5%; or (ii)
three (3) times the total compensation received by Mr. Madden (base salary, cash
bonus and non-accountable expense allowance) 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, 2012 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 agreement contains other customary provisions.
In May 2001, Mr. Madden entered into a plea agreement with the U.S.
Attorney's Office, pursuant to which he pled guilty to four securities fraud and
money laundering charges that had been previously filed against him. In 2002,
Mr. Madden was sentenced to forty-one (41) months' imprisonment in connection
-18-
with the charges. Mr. Madden began serving his sentence in September of 2002.
While serving his sentence, Mr. Madden is not actively engaged in the duties of
Creative and Design Chief and is therefore only entitled to receive base salary
payments under the agreement. Mr. Madden was released on April 14, 2005 and
returned to being actively engaged in the duties of Creative and Design Chief.
On April 26, 2004, the SEC sent the Company a letter requesting information
and documents relating to, among other things, Steven Madden's employment with
the Company. The Company has responded to this request.
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. Under this agreement, the firm
provided financial advisory and investment banking services to the Company. This
agreement was amended in March 2004. Pursuant to this agreement, which expired
on March 31, 2005, the Company paid fees and expenses to Peter J. Solomon &
Company of $161,000, $33,000 and $150,000 for 2004, 2003 and 2002 respectively.
Under the amended agreement, the Company paid fees to Peter J. Solomon & Company
in the amount of $161,000 during 2004, and will pay fees in the amount of
$50,000 plus expenses incurred during 2005.
In July 2004, the Company entered into a consulting agreement with Charles
Koppelman, who served as a director of the Company from June 1998 through May
2004 and as Chairman of the Board from July 2001 through May 2004. Under this
agreement, Mr. Koppelman provided consulting services that included enhancing
and promoting the Company's brands and seeking licensing and acquisition
opportunities. Pursuant to this agreement, Mr. Koppelman received 100,000 stock
options and a fee of $105,000 in 2004. This agreement expires on June 30, 2005.
In October 2002, the Company entered into an agreement with Jeffrey
Birnbaum, one of the Company's directors. Under this agreement, Mr. Birnbaum
provided consulting services with respect to the designing and manufacturing of
shoes and general consulting services to the Company. Pursuant to this
agreement, Mr. Birnbaum received a fee of $250,000 in 2004 besides for fees
received for service to the Company as a director. Mr. Birnbaum has been the
Product Development Manager of Dolphin Shoe Company since August 1982. Dolphin
Shoe Company is one of the Company's domestic suppliers. In addition, Jeffrey
Birnbaum's brother, Steven Birnbaum owns a trading company, Bulls Eye Trading
("Bullseye") that acts as a selling agent for the Company. Jeffrey Birnbaum does
not own an interest in Bullseye nor is he a director of Bullseye nor does
Bullseye pay him any compensation.
In January 2004, the Company entered into an agreement with John Madden and
JLM Consultants, a company wholly-owned by John Madden, one of the Company's
directors. Under this agreement, Mr. Madden provided consulting services with
respect to the development of international sales of the Company. Under the
agreement, in 2004, JLM Consultants received a monthly draw with recourse in the
amount of $16,000 against sales commissions earned by Mr. Madden. Mr. Madden
also received a $1,000 per month travel allowance and $1,700 per month toward
health insurance premiums. Pursuant to this agreement, JLM Consultants received
a total of $224,400 in 2004, besides for Mr. Madden's fees received for service
to the Company as a director. In March 2005, JLM Consultants' draw against
commissions with recourse was raised to $20,000 per month. JLM Consultants will
receive an estimated total of $272,400 in 2005.
The Madden Mens division of the Company purchases a significant amount of
shoes from La Tandem International, Inc. Mr. James Chen, the brother of Harry
Chen, is the President of La Tandem International, Inc., and La Tandem
International, Inc. is owned or controlled by members of the Chen family. Harry
Chen is the chairman and lead designer of the Madden Mens Division of the
Company.
In May 2002, the Company entered into an employment agreement between the
Company, Adesso Madden, Inc., Joseph Masella and T.J.M. Sales Corporation. The
agreement was subsequently amended on September 22, 2003. Mr. Masella is the
president of T.J.M. Sales Corporation. Under the agreement as amended, T.J.M.
Sales Corporation receives a biweekly draw in the amount of $16,000 against
commissions earned by Mr. Masella on sales of Adesso Madden, Inc., and a
biweekly draw with recourse, in the amount of $4,000 against commissions earned
by Mr. Masella on net sales of the Candie's Women's Wholesale Division and
Adesso Madden, Inc. T.J.M. Sales Corporation received commissions in the amount
of $606,886 in 2004.
-19-
In March 2004, the Company entered into a commission agreement between the
Steven Madden Mens Wholesale Division and Hev Sales, Inc. Mr. Andrew Shames is
the President of Hev Sales Inc. Under the agreement, Hev Sales serves as sales
organization for the Steven Madden Mens Wholesale Division and receives an
annual guaranteed commission of $450,000. Hev Sales, Inc. received commissions
in the amount of $513,468 in 2004.
The Company has an agreement with Steven Madden, a beneficial holder of
more than 10% of the Company's outstanding shares of common stock. See
"Agreement with Steven Madden."
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. During 2004, the Compensation Committee was comprised of directors
Peter Migliorini (chairman) and Thomas Schwartz. Each member of the Compensation
Committee was a non-employee director of the Company during 2004.
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.
In 2004, Mr. Karson's compensation consisted of $467,500 in base salary payments
and no bonus payment. In addition, in 2004 the Company paid Mr. Karson $116,112
in lieu of granting him the option to purchase 58,056 shares of Common Stock
that he was entitled to under his employment agreement. In February 2004, the
Compensation Committee approved an amendment to Mr. Karson's employment
agreement which extended the term of the agreement to June 30, 2006. The
Compensation Committee believes that Mr. Karson's compensation should 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.
-20-
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 2004 any officer
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
Peter Migliorini (chairman)
Thomas Schwartz
Compensation Committee Interlocks and Insider Participation
The Compensation Committee makes all compensation decisions. During 2004,
the following directors served on the Compensation Committee: Peter Migliorini
(chairman) and Thomas Schwartz. During the fiscal year 2004, 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.
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, 1999 and ending on December 31, 2004 with the cumulative total
return on the Russell 2000 Index and the S&P 500 Footwear Index. The comparison
assumes that $100 was invested on December 31, 1999 in the Company's Common
Stock and in the foregoing indices and assumes the reinvestment of dividends.
[GRAPHIC OMITTED]
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12/31/1999 12/29/2000 12/31/2001 12/31/2002 12/31/2003 12/31/2004
------------------------------------------------------------------------------------------------------
Steven Madden, Ltd. $100.00 $ 39.98 $ 73.82 $94.81 $107.03 $ 98.95
------------------------------------------------------------------------------------------------------
Russell 2000 Index $100.00 $ 95.80 $ 96.78 $75.90 $110.33 $129.09
------------------------------------------------------------------------------------------------------
S&P 500 Footwear Index $100.00 $119.79 $120.19 $98.66 $149.30 $194.23
------------------------------------------------------------------------------------------------------
-21-
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 executive
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)
---------------------------------------------- --------------------------------- ----------------
Jamieson A. Karson 155,000 (3) 1.16
Arvind Dharia 1,895,828 (4) 13.62
Robert Schmertz 100,000 (5) *
Harry Chen 150,000 (6) 1.12
Andrew Shames 0 *
Joseph Masella 29,202 (7) *
Marc Cooper 40,000 (8) *
John Madden 1,794,000 (9) 12.98
Peter Migliorini 40,000 (10) *
Jeffrey Birnbaum 30,000 (11) *
Awadhesh Sinha 20,000 (12) *
Harold Kahn 3,500 *
Thomas Schwartz 20,600 (13) *
Walter Yetnikoff -0- *
Steven Madden (14) 1,754,000 (15) 12.73
BOCAP Corp. 1,754,000 (16) 12.73
T. Rowe Price Associates, Inc. (17) 1,183,200 8.94
T. Rowe Price Small-Cap Value Fund, Inc. (18) 1,000,000 7.55
Columbia Wanger Asset Management, L.P. (19) 1,289,000 (20) 9.73
WAM Acquisition GP, Inc. (18) 1,289,000 (20) 9.73
Columbia Acorn Trust (18) 862,000 (20) 6.51
Wells Fargo & Company (21) 888,700 6.71
Wells Capital Management Incorporated (22) 888,700 6.71
Royce & Associates, LLC(23) 1,661,700 12.55
FMR Corp. (24) 1,510,244 11.41
Barington Group and related entities(25) 1,005,420 (26) 7.59
Directors, Director Nominee and Executive
Officers as a Group (19 persons) 2,918,330 (27) 19.64
-------------------
* 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 13d-3 of the Securities Exchange Act, and based upon 13,241,617
shares of Common Stock outstanding (excluding treasury shares) as of the
Record Date.
(3) Includes (i) 145,000 shares of Common Stock issuable upon the exercise of
options held by Mr. Karson and (ii) 10,000 shares of Common Stock held by
Mr. Karson's wife.
-22-
(4) Includes 141,828 shares of Common Stock issuable upon the exercise of
options held by Mr. Dharia and 1,754,000 shares of Common Stock which Mr.
Dharia may beneficially own pursuant to a power of attorney dated as of
September 17, 2002, whereby Steven Madden appointed John Madden and Arvind
Dharia as his attorneys-in-fact.
(5) Includes 100,000 shares of Common Stock issuable upon the exercise of
options held by Mr. Schmertz.
(6) Includes 150,000 shares of Common Stock issuable upon the exercise of
options held by Mr. Chen.
(7) Includes 29,202 shares of Common Stock issuable upon the exercise of
options held by Mr. Masella.
(8) Includes 40,000 shares of Common Stock issuable upon the exercise of
options held by Mr. Cooper.
(9) Includes 40,000 shares of Common Stock issuable upon the exercise of
options held by Mr. J. Madden and 1,754,000 shares of Common Stock which
Mr. J. Madden may beneficially own pursuant to a power of attorney dated as
of September 17, 2002, whereby Steven Madden appointed John Madden and
Arvind Dharia as his attorneys-in-fact.
(10) Includes 40,000 shares of Common Stock issuable upon the exercise of
options held by Mr. Migliorini.
(11) Includes 10,000 shares of Common Stock issuable upon the exercise of
options held by Mr. Birnbaum.
(12) Includes 20,000 shares of Common Stock issuable upon the exercise of
options held by Mr. Sinha.
(13) Includes 10,000 shares of Common Stock issuable upon the exercise of
options held by Mr. Schwartz.
(14) Mr. Madden resigned as Chief Executive Officer of the Company effective as
of July 1, 2001.
(15) Includes (i) 809,000 shares of Common Stock held by BOCAP, a corporation
wholly-owned by Mr. S. Madden, (ii) 405,000 shares of Common Stock held by
Mr. S. Madden and (iii) 540,000 shares of Common Stock issuable upon the
exercise of options held by Mr. S. Madden.
(16) Includes (i) 809,000 shares of Common Stock held by BOCAP, a corporation
wholly-owned by Mr. S. Madden, (ii) 405,000 shares of Common Stock held by
Mr. S. Madden and (iii) 540,000 shares of Common Stock issuable upon the
exercise of options held by Mr. S. Madden.
(17) Based upon a Schedule 13G/A filed with the SEC on March 1, 2005. The
address for such stockholder is 100 E. Pratt Street, Baltimore, MD 21202.
(18) Based upon a Schedule 13G filed with the SEC on March 1, 2005. The address
for such stockholder is 100 E. Pratt Street, Baltimore, MD 21202.
(19) Based upon a Schedule 13G/A filed with the SEC on February 11, 2005. The
address for such stockholder is 227 West Monroe Street, Suite 3000,
Chicago, IL 60606.
(20) As disclosed in the Schedule 13G/A filed with the SEC on February 11, 2005,
the 1,289,000 shares beneficially owned by Columbia Wanger Asset
Management, L.P. include the 1,289,000 shares beneficially owned by its
general partner, WAM Acquisition GP, Inc. and the 862,000 shares owned by
its discretionary client, Columbia Acorn Trust.
(21) Based upon a Schedule 13G filed with the SEC on January 21, 2005. The
address for such stockholder is 420 Montgomery Street, San Francisco, CA
94104. As disclosed in the Schedule 13G, Wells Capital Management
Incorporated is a subsidiary of such stockholder.
(22) Based upon a Schedule 13G filed with the SEC on January 21, 2005. The
address for such stockholder is 525 Market Street, 10th Floor, San
Francisco, CA 94105. As disclosed in the Schedule 13G, such stockholder is
a subsidiary of Wells Fargo & Company.
(23) Based upon a Schedule 13G/A filed with SEC on January 31, 2005. The address
for such stockholder is 1414 Avenue of the Americas, New York, NY 10019.
(24) Based upon a Schedule 13G/A filed with the SEC on February 14, 2005. The
address for such stockholder is 82 Devonshire Street, Boston, MA 02109. As
disclosed in the Schedule 13G/A, Fidelity Management and Research Company,
a wholly-owned subsidiary of FMR Corp. is the beneficial owner of 1,472,344
shares through its role as investment adviser. Fidelity Low Priced Stock
Fund owns 1,310,600 shares. Each of Edward C. Johnson 3rd and FMR Corp.
control the sole power to dispose of the 1,472,344 shares owned by the
funds. Fidelity Management Trust Company, a wholly-owned subsidiary of FMR
Corp. is the beneficial owner of 37,900 shares. Each of Edward C. Johnson
3rd and FMR Corp. control the sole power to dispose of and to direct the
voting of such 37,900 shares.
(25) As disclosed in the Schedule 13D/A, Amendment No. 6 filed with the SEC on
February 3, 2005. The Schedule 13D/A was jointly filed by and on behalf of
Barington Companies Equity Partners, L.P. ("Barington LP"), Barington
Companies Investors, LLC ("Barington Investors LLC"), James Mitarotonda,
Barington Companies Offshore Fund, Ltd. (BVI) ("Barington Offshore"),
Barington Companies Advisors, LLC ("Barington Advisors LLC"), Barington
Capital Group, L.P. ("Barington Capital LP"), LNA Capital Corp. ("LNA"),
Parche, LLC ("Parche"), Starboard Value & Opportunity Fund ("Starboard"),
-23-
Admiral Advisors, LLC ("Admiral"), Ramius Capital Group, LLC ("RCG"), C4S &
Co., LLC ("C4S"), Peter A. Cohen, Morgan B. Stark, Jeffrey M. Solomon,
Thomas W. Strauss, RJG Capital Partners, LP ("RJC LP"), RJG Capital
Management, LLC ("RJC LLC") and Ronald Gross.
The address for Barington LP, Barington Investors LLC, Mr. Mitarotonda,
Barington Advisors LLC, Barington Capital LP, and LNA is 888 Seventh
Avenue, 17th Floor, New York, New York 10019. The address for Barington
Offshore is c/o Bison Financial Services Ltd., Bison Court, Road Town,
Tortola, British Virgin Islands. The address for Parche, Starboard,
Admiral, RCG, C4S and Messrs. Cohen, Stark, Solomon and Strauss is 666
Third Avenue, 26th Floor, New York, New York 10017. The address for RJC LP,
RJC LLC and Mr. Gross is 11517 West Hill Drive, North Bethesda, Maryland
20852.
(26) Based upon the Schedule 13D/A filed with the SEC on February 3, 2005 by the
entities listed in footnote 23. As disclosed therein, Barington LP
beneficially owns an aggregate of 288,937 shares. As the general partner of
Barington LP, Barington Investors LLC may be deemed to beneficially own the
288,937 shares owned by Barington LP. As the managing member of Barington
Investors LLC, which in turn is the general partner of Barington LP, Mr.
Mitarotonda may be deemed to beneficially own the 288,937 shares owned by
Barington LP. Barington Offshore beneficially owns 48,535 shares. As the
investment advisor to Barington Offshore, Barington Advisors LLC may be
deemed to beneficially own the 48,535 shares owned by Barington Offshore.
As the managing member of Barington Advisors LLC, Barington Capital LP may
be deemed to beneficially own the 48,535 shares owned by Barington
Offshore. As the majority member of Barington Investors LLC, Barington
Capital LP may also be deemed to beneficially own the 288,937 shares owned
by Barington LP, representing an aggregate of 337,472 shares. As the
general partner of Barington Capital LP, LNA may be deemed to beneficially
own the 288,937 shares owned by Barington LP and the 48,535 shares owned by
Barington Offshore, representing an aggregate of 337,472 shares. As the
sole stockholder and director of LNA, Mr. Mitarotonda may be deemed to
beneficially own the 288,937 shares owned by Barington LP and the 48,535
shares owned by Barington Offshore, representing an aggregate of 337,472
shares. Mr. Mitarotonda has sole voting and dispositive power with respect
to the 288,937 shares owned by Barington LP and the 48,535 shares owned by
Barington Offshore by virtue of his authority to vote and dispose of such
shares. Each of Parche and Starboard beneficially own 105,496 shares and
553,852 shares, respectively. As the managing member of each of Parche and
Starboard, Admiral may be deemed to beneficially own the 105,496 shares and
the 553,852 shares, respectively, owned by Parche and Starboard,
representing an aggregate of 659,348 shares. As the sole member of Admiral,
RCG may be deemed to beneficially own the 105,496 shares and the 553,852
shares, owned respectively, by Parche and Starboard. As the managing member
of RCG, C4S may be deemed to beneficially own the 105,496 shares and the
553,852 shares, respectively, owned by Parche and Starboard, representing
an aggregate of 659,348 shares. As the managing members of C4S, each of
Peter A. Cohen, Morgan B. Stark, Jeffrey M. Solomon and Thomas W. Strauss
may be deemed to beneficially own the 105,496 shares and the 553,852
shares, respectfully, owned by Parche and Starboard, representing an
aggregate of 659,348 shares. Each of Messrs. Cohen, Stark, Solomon and
Strauss share voting and dispositive power with respect to the 105,496
shares and 553,852 shares, respectively, owned by Parche and Starboard by
virtue of their shared authority to vote and dispose of such shares.
Messrs. Cohen, Stark, Soloman & Strauss disclaim beneficial ownership of
such shares. RJG LP beneficially owns 8,600 shares. As the general partner
of RJG LP, RJG LLC may be deemed to beneficially own the 8,600 shares owned
by RJG LP. As the managing member of RJG LLC, which in turn is the general
partner of RJG LP, Mr. Gross may be deemed to beneficially own the 8,600
shares owned by RJG LP. Mr. Gross has sole voting and dispositive power
with respect to the 8,600 shares owned by RJG LP by virtue of his authority
to vote and dispose of such shares.
Each of the above mentioned entities is deemed to have sole voting and
dispositive power over the shares reported as beneficially owned by virtue
of their respective positions as described above, with the exception of
Messrs. Cohen, Stark, Solomon and Strauss, who have shared authority to
vote and dispose of such shares. Messrs. Cohen, Stark, Solomon & Strauss
disclaim beneficial ownership of such shares. With the exception of Messrs.
Cohen, Stark, Solomon and Strauss, each of the other above mentioned
entities are deemed to have sole voting and dispositive power with respect
to the shares each beneficially owns, regardless of the fact that multiple
entities within the same chain of ownership are deemed to have sole voting
and dispositive power with respect to such shares. Each such entity reports
sole voting and dispositive power with respect to such shares based on its
relationship to the other entities within the same chain of ownership.
(27) Includes 1,619,030 shares issuable upon the exercise of options.
-24-
PROPOSAL TWO
RATIFICATION OF THE APPOINTMENT OF EISNER LLP AS THE COMPANY'S INDEPENDENT
AUDITORS FOR THE FISCAL YEAR ENDING DECEMBER 31, 2005
The Audit Committee has appointed Eisner LLP as the Company's independent
auditors to conduct the audit of the Company's books and records for the fiscal
year ending December 31, 2005. Eisner LLP also served as the Company's
independent auditors for the previous fiscal year. Representatives of Eisner LLP
are expected to be present at the Annual Meeting to respond to questions and to
make a statement should they so desire.
The affirmative vote of a majority of the shares of Common Stock
represented at the meeting and entitled to vote is required for the ratification
of the appointment of Eisner LLP as the Company's independent auditors. The
Audit Committee is directly responsible for the appointment and retention of the
Company's independent auditors. Although ratification by stockholders is not
required by our organizational documents or other applicable law, the Audit
Committee has determined that requesting ratification by stockholders of its
appointment of Eisner LLP as the Company's independent auditors is a matter of
good corporate practice. If stockholders do not ratify the selection, the Audit
Committee will reconsider whether or not to retain Eisner LLP, but may still
retain them. Even if the selection is ratified, the Audit Committee, in its
discretion, may change the appointment at any time during the year if it
determines that such a change would be in the best interest of the Company and
its stockholders.
Recommendation of the Board of Directors
The Board of Directors unanimously recommends a vote FOR the ratification
of the appointment of Eisner LLP as the Company's independent auditors for the
fiscal year ending December 31, 2005. Unless marked to the contrary, proxies
received from stockholders will be voted in favor of the appointment of Eisner
LLP as the Company's independent auditors for the fiscal year ending December
31, 2005.
FEES PAID TO INDEPENDENT AUDITORS
Audit Fees
The aggregate fees billed by Eisner LLP for professional services rendered
for the audit of the Company's annual financial statements for the fiscal year
ended December 31, 2004, for the reviews of the financial statements included in
the Company's Quarterly Reports on Form 10-Q for that fiscal year, other
statutory and regulatory filings, consents related to registration statements
filed with the SEC and the audit of the Company's internal controls over
financial reporting for the 2004 fiscal year were $625,000. The comparative
amount for the fiscal year ended December 31, 2003 was $196,000.
Audit-Related Fees
In addition to Audit Fees, Eisner LLP has billed the Company $39,000, in
the aggregate, for Audit Related Fees related to assurance and related services
for the fiscal year ended December 31, 2004. These services include, among
others, the audit of the Company's employee benefit plans and other accounting
related consultations. The comparative amount for the fiscal year ended December
31, 2003 was $85,000.
Tax Fees
During the fiscal year ended December 31, 2004, Eisner LLP billed the
Company $116,000, in the aggregate, for services rendered to the Company for tax
compliance, tax advice and tax planning. Eisner LLP billed $98,000 for similar
services in the 2003 fiscal year.
-25-
All Other Fees
There were no fees billed by Eisner LLP for services rendered to the
Company, other than the services described above under Audit Fees, Audit Related
Fees and Tax Fees, for the fiscal years ended December 31, 2004 and 2003.
AUDIT COMMITTEE'S PRE-APPROVAL POLICIES AND PROCEDURES
Consistent with SEC policies regarding auditor independence, the Audit
Committee has responsibility for appointing, setting compensation and overseeing
the work of the independent auditor. In recognition of this responsibility, the
Audit Committee has established a policy to review and pre-approve all audit and
permissible non-audit services provided by the independent auditor. These
services may include audit services, audit-related services, tax services and
other services.
Prior to engagement of the independent auditor for next year's audit, the
Audit Committee will pre-approve all auditing services and all permitted
non-audit services (including the fees and terms thereof), except those excluded
from requiring pre-approval based upon the de minimus exception set forth in
Section 10A(i)(1)(B) of the Exchange Act.
The Audit Committee's pre-approval policies and procedures are as follows:
(a) prior to each fiscal year, the Audit Committee pre-approves a schedule of
estimated fees for proposed non-prohibited audit and non-audit services and (b)
actual amounts paid are monitored by financial management of the Company and
reported to the Audit Committee.
All work performed by Eisner LLP as described above under the captions
Audit Fees, Audit Related Fees, Tax Fees and All Other Fees has been approved or
pre-approved by the Audit Committee pursuant to the provisions of the Audit
Committee's charter. The Audit Committee has considered and concluded that the
provision of non-audit services is compatible with maintaining the principal
accountant's independence.
PROPOSAL THREE
TO APPROVE THE ISSUANCE OF AN AGGREGATE OF 100,000 SHARES OF OUR COMMON STOCK
TO CERTAIN OF OUR EXECUTIVE OFFICERS PURSUANT TO THEIR EMPLOYMENT
AGREEMENTS
In April 2002, the Company entered into an employment agreement with Robert
Schmertz pursuant to which Mr. Schmertz agreed to serve as President of Steve
Madden Wholesale Womens Division and Brand Manager for Steven Madden, Ltd. Under
the terms of Mr. Schmertz's employment agreement, which are set forth above
under "Employment Agreements with Certain Executive Officers" subject to Mr.
Schmertz's continuous employment by the Company from April 1, 2002 through June
30, 2005, Mr. Schmertz will be entitled to receive 50,000 shares of Common
Stock. Under the terms of his employment agreement, Mr. Schmertz's receipt of
such shares is subject to the receipt of stockholder approval. The Company has
set aside reserves totaling $785,000 against this contingent liability and
intends to pay Mr. Schmertz in cash in the event Proposal 3 is not approved.
In October 2002, the Company entered into an employment agreement with
Harry Chen pursuant to which Mr. Chen agreed to serve as President of the Madden
Mens Division commencing on January 1, 2003 and ending on June 30, 2005. Under
the terms of Mr. Chen's employment agreement, subject to Mr. Chen's continuous
employment by the Company from January 1, 2003 through June 30, 2005, Mr. Chen
will be entitled to receive 50,000 shares of Common Stock. Under the terms of
his employment agreement, Mr. Chen's receipt of such shares is subject to the
receipt of stockholder approval. The Company has set aside reserves totaling
$825,000 against this contingent liability and intends to pay Mr. Chen in cash
in the event Proposal 3 is not approved.
Although these stock grants will have the effect of diluting our other
shareholders, we believe that these stock grants are important to our ability to
retain these experienced executive officers and will provide them an incentive
and inducement to contribute to the success of the Company and to remain in the
-26-
continuous employ of the Company. The Company's proposed stock grants to Mr.
Schmertz and Mr. Chen will provide these executive officers with the opportunity
to profit from any rise in the market value of our Common Stock.
Recommendation of the Board of Directors
The Board of Directors unanimously recommends a vote FOR the approval of
the issuance of shares of Common Stock to each of Mr. Schmertz and Mr. Chen.
Unless marked to the contrary, proxies received from stockholders will be voted
in favor of the approval of the issuance of shares of Common Stock to each of
Mr. Schmertz and Mr. Chen.
-27-
OTHER MATTERS
At the date of this Proxy Statement, the Company has no knowledge of any
business other than that described above that will be presented at the Annual
Meeting. If any other business should properly come before the Annual Meeting in
connection therewith, it is intended that the persons named in the enclosed
proxy will have discretionary authority to vote the shares which they represent.
STOCKHOLDER PROPOSALS AND SUBMISSIONS
FOR THE COMPANY'S 2006 ANNUAL MEETING
In accordance with rules promulgated by the SEC, any stockholder who wishes
to submit a proposal for inclusion in the proxy material to be distributed by
the Company in connection with the 2006 Annual Meeting must do so no later than
December 28, 2005.
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 2006
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 2005 Annual
Meeting. Accordingly, any written notice given by or on behalf of a stockholder
pursuant to the foregoing clause (iii) in connection with the 2005 Annual
Meeting must be received no later than January 27, 2006 and no earlier than
December 28, 2005.
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 27, 2005 By: /s/ JAMIESON A. KARSON
-----------------------------
Jamieson A. Karson
Chief Executive Officer
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 PROPOSALS
The undersigned stockholder of Steven Madden, Ltd. (the "Company") hereby
appoint(s) Jamieson A. Karson and Arvind Dharia, and each of them, as attorneys
and proxies, each with power of substitution and revocation, to represent the
undersigned at the Annual Meeting of Stockholders of the Company to be held at
the Company's showroom located at 1370 Avenue of the Americas, 14th Floor, New
York, New York at 10:00 a.m., local time, on May 27, 2005, and at any
adjournments or postponements thereof, with authority to vote all shares of
Common Stock of the Company held or owned by the undersigned on April 15, 2005,
in accordance with the directions indicated herein.
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.)
Jamieson A. Karson, Jeffrey Birnbaum, Marc Cooper, Harold Kahn, John L. Madden,
Peter Migliorini, Thomas H. Schwartz, Awadhesh Sinha and Walter Yetnikoff.
2) RATIFICATION OF THE APPOINTMENT OF EISNER LLP AS THE COMPANY'S
--------------------------------------------------------------
INDEPENDENT AUDITORS FOR THE FISCAL YEAR ENDING DECEMBER 31, 2005
-----------------------------------------------------------------
[ ] FOR the ratification of the selection of Eisner LLP
[ ] AGAINST
[ ] ABSTAIN
3) APPROVAL OF THE ISSUANCE OF SHARES TO MR. SCHMERTZ AND MR. CHEN
---------------------------------------------------------------
[ ] FOR the issuance of shares to Mr. Schmertz and Mr. Chen
[ ] AGAINST the issuance of shares to Mr. Schmertz and Mr. Chen
[ ] FOR the issuance of shares to Mr. Schmertz and AGAINST the
issuance of shares to Mr. Chen
[ ] FOR the issuance of shares to Mr. Chen and AGAINST the
issuance of shares to Mr. Schmertz
[ ] ABSTAIN
THIS PROXY WILL BE VOTED AS SPECIFIED ABOVE; UNLESS OTHERWISE INDICATED,
THIS PROXY WILL BE VOTED (1) FOR THE ELECTION OF THE NINE (9) NOMINEES NAMED IN
ITEM 1, (2) FOR THE RATIFICATION OF THE APPOINTMENT OF EISNER LLP AS THE
COMPANY'S INDEPENDENT AUDITORS FOR FISCAL YEAR 2005 IN ITEM 2, (3) FOR THE
ISSUANCE OF SHARES TO MR. SCHMERTZ AND MR. CHEN IN ITEM 3 AND (4) IN THE
DISCRETION OF THE PROXIES ON ANY OTHER MATTER THAT MAY PROPERLY COME BEFORE THE
MEETING.
In their discretion, the proxies are authorized to vote upon such other
business as may properly be presented at the meeting or any adjournments or
postponements thereof.
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