UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14A
(Rule 14a-101)
INFORMATION
REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the
Securities
Exchange Act of 1934 (Amendment No. __)
Filed by the Registrant
þ
Filed by a Party other than
the Registrant
o
Check the appropriate box:
o
Preliminary
Proxy Statement
o
Confidential,
for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
þ
Definitive
Proxy Statement
o
Definitive
Additional Materials
o
Soliciting
Material Pursuant to §240.14a-12
Steven
Madden, Ltd.
|
(Name
of Registrant as Specified in Its Charter)
|
|
(Name
of Person(s) Filing Proxy Statement, if Other Than the Registrant)
|
Payment of Filing Fee (Check
the appropriate box):
þ
No
fee required.
o
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:
|
|
(2)
|
Aggregate
number of securities to which transaction applies:
|
|
(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):
|
|
(4)
|
Proposed
maximum aggregate value of transaction:
|
|
(5)
|
Total
fee paid:
|
o
Fee
paid previously with preliminary materials.
o
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 the date of
its filing.
|
(1)
|
Amount
Previously Paid:
|
|
|
(2)
|
Form,
Schedule or Registration Statement No.:
|
|
|
(3)
|
Filing
Party:
|
|
|
(4)
|
Date
Filed:
|
|
|
|
|
|
|
|
Dear Shareholders,
2016 was a good year for Steve
Madden in a challenging environment. As changes in consumer shopping behavior and the evolving retail landscape continued to
cause disruption in our industry, we maintained an unwavering focus on building our brands and delivering great products,
enabling us to deliver solid financial results despite the difficult retail climate. For the year, net sales were $1.4
billion, approximately flat to the prior year, and diluted EPS was $2.03, a 10% increase compared to 2015. We also continued
to manage the business with a long-term perspective, making progress on a number of key strategic initiatives that position
us for earnings growth and value creation going forward.
Expanding Our Core Business
The highlight of 2016 was the
outstanding performance in our core Steve Madden Women’s wholesale footwear business, which is our most profitable
business and the foundation of our company. Steve and his design team created an exceptional product assortment with strength
across a range of categories. The trend-right merchandise enabled us to increase net sales in our Steve Madden Women’s
wholesale footwear division by 13% compared to the prior year despite the soft overall performance and de-stocking
initiatives of many of our largest wholesale customers. Strong sell-through at retail and disciplined inventory management
also resulted in significant gross margin expansion in this business.
Growing Our Retail Segment
The on-trend product line
also drove strong performance in our retail segment, where we delivered a 4% comparable store sales increase on top of an 11%
increase in the prior year. In addition, we expanded the store base from 169 stores at the end of 2015 to 189 stores at the end
of 2016, driven primarily by new outlet locations as well as openings in international markets.
Building Our Newer Brands
Another highlight in 2016
was the outstanding progress we made with the newer additions to our brand portfolio. Dolce Vita net sales increased 29%, crossing
the $100 million mark, and operating margin expanded significantly. Blondo also saw strong growth, as customers responded favorably
to our introduction of more fashionable styling combined with the brand’s signature waterproof technology.
Expanding Our Digital
Presence
As consumers continue to migrate
to online purchasing, expanding our digital presence in both the wholesale and retail channels is a key priority for the Company.
Over the last several years, we have invested in people, systems and infrastructure to support our digital commerce initiatives,
and those investments are paying dividends. We recorded double-digit percentage sales increases in both our wholesale and retail
e-commerce businesses in 2016.
Developing Our International
Business
One of our most significant
long-term opportunities is growing our international business, and we took important steps in 2016 to position the Company for
future international expansion. We formed SM Europe, a joint venture with SPM Shoetrade, to manage the Steve Madden footwear and
handbag business in much of Europe. Previously, we operated in this territory through distributors, and by transitioning the business
to the joint venture model, we are able to better control the merchandising and overall brand positioning in the market. The new
joint venture is off to a strong start, and building our business in Europe will be a major area of focus for us going forward.
At the tail end of the year, we also wound down our relationship with our distributor in Asia in preparation for transitioning
to a new business model in that region in 2017.
Returning Capital to
Shareholders
During 2016, we continued
to demonstrate our commitment to returning capital to shareholders. We repurchased more than 2.4 million shares, or approximately
4% of the Company, for a total of $86 million. Since 2013, we have repurchased more than $460 million of our common stock.
2017 and Beyond
In early 2017, we took another
step to enhance the long-term growth potential of the Company when we acquired Schwartz & Benjamin, a company that specializes
in the design, sourcing and sale of licensed and private label footwear and is known for its outstanding capability in the designer
and accessible luxury space. Schwartz & Benjamin had 2016 net sales of $88 million, and its current brand partners include
Kate Spade, Rebecca Minkoff, Alice + Olivia and Avec Les Filles. We see significant opportunity to expand the business and enhance
its profitability by combining Schwartz & Benjamin’s strengths – which include premier execution in the design
and sourcing of high-quality footwear as well as a strong portfolio of brand partners – with our proven business model and
infrastructure. As we look ahead, we are confident that, by building on the strong momentum in our core business and continuing
to focus on the key strategic initiatives outlined above, we can drive sales and earnings growth despite the challenging retail
environment. We believe our strong brands and proven business model position us well relative to the competition. As always, we
will remain focused on creating value for shareholders over the long term.
We want to thank our exceptional
team of associates around the world. Our success is directly attributable to their talent and dedication. We also want to thank
you, our shareholders, for your continued support.
Sincerely,
|
|
Edward R. Rosenfeld
|
|
Chief Executive Officer
|
|
|
|
|
|
Awadhesh Sinha
|
|
Chief Operating Officer
|
|
|
|
|
|
Arvind Dharia
|
|
Chief Financial Officer
|
|
NOTICE OF
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD
ON MAY 26, 2017
TO THE STOCKHOLDERS:
The Annual Meeting
of Stockholders (the “Annual Meeting”) of Steven Madden, Ltd. (the “Company”) will be held on
Friday, May 26, 2017, 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, for the purposes stated below:
|
|
|
|
|
1.
|
to elect
eight (8) directors to the Board of Directors of the Company;
|
|
2.
|
to ratify
the appointment of EisnerAmper LLP as the Company’s independent registered public accounting firm for the fiscal year
ending December 31, 2017;
|
|
3.
|
to approve,
on a non-binding advisory basis, the compensation of certain executive officers as disclosed in the accompanying proxy statement;
|
|
4.
|
to recommend,
on a non-binding advisory basis, the frequency of holding an advisory vote on executive compensation; and
|
|
5.
|
to transact such other business
as may properly come before the Annual Meeting or any adjournments thereof.
|
Only those
stockholders of record at the close of business on March 31, 2017, the record date for the Annual Meeting, are entitled to notice
of and to vote at the Annual Meeting and any adjournments thereof. Stockholders of record at the close of business on March 31,
2017, the record date for the Annual Meeting, will be admitted to the Annual Meeting upon presentation of valid, government-issued
photo identification, such as a driver’s license. Stockholders who own shares of the Company’s common stock beneficially
through a bank, broker or other nominee will be admitted to the Annual Meeting upon presentation of valid, government-issued photo
identification and proof of ownership or a valid proxy signed by the record holder. A recent brokerage statement or a letter from
a bank or broker are examples of proof of ownership. If you own shares of the Company’s common stock beneficially and want
to vote in person at the Annual Meeting, you should contact your broker or applicable agent in whose name the shares are registered
to obtain a broker’s proxy and bring it to the Annual Meeting in order to vote.
IMPORTANT NOTICE REGARDING THE
AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 26, 2017: THE NOTICE OF ANNUAL MEETING
AND PROXY STATEMENT, ANNUAL REPORT, ELECTRONIC PROXY CARD AND ANY OTHER MATERIALS CONCERNING THE ANNUAL MEETING, TOGETHER WITH
ANY AMENDMENTS TO ANY OF THESE MATERIALS, ARE AVAILABLE ON THE INTERNET AT
WWW.PROXYVOTE.COM
.
|
|
|
|
BY ORDER OF THE
BOARD OF DIRECTORS
|
|
April 5, 2017
|
|
|
Long Island City,
New York
|
|
|
|
Arvind Dharia
|
|
|
Secretary
|
|
WHETHER OR NOT YOU EXPECT
TO BE PRESENT AT THE ANNUAL MEETING, PLEASE MARK, DATE AND SIGN THE ACCOMPANYING FORM OF PROXY AND MAIL IT PROMPTLY IN THE ENVELOPE
PROVIDED TO: VOTE PROCESSING, C/O BROADRIDGE, 51 MERCEDES WAY, EDGEWOOD, NEW YORK 11717. ALTERNATIVELY, YOU MAY VOTE YOUR
SHARES BY TELEPHONE OR THROUGH THE INTERNET AS DESCRIBED ON THE ACCOMPANYING PROXY CARD.
TABLE
OF CONTENTS
STEVEN MADDEN,
LTD.
52-16 Barnett
Avenue
Long
Island City, New York 11104
PROXY
STATEMENT
GENERAL
INFORMATION
The
Board of Directors of Steven Madden, Ltd. requests your proxy in connection with the Annual Meeting of Stockholders (the “Annual
Meeting”) of Steven Madden, Ltd. (the “Company”, “we” or “us”). The Annual Meeting
will be held at the Company’s showroom located at 1370 Avenue of the Americas, 14th Floor, New York, New York on Friday,
May 26, 2017 at 10:00 a.m., local time. Proxies also may be voted at any adjournments or postponements of the Annual Meeting.
On
or about April 7, 2017, a notice containing instructions on how to access this Proxy Statement, the accompanying proxy card and
related materials online is being mailed to holders of record of common stock, $0.0001 par value, of the Company (the “Common
Stock”) at the close of business on March 31, 2017 (the “Record Date”). The Company’s Annual Report
for the fiscal year ended December 31, 2016 (the “2016 Fiscal Year”), including audited financial statements,
is included in the materials that are accessible online. This Proxy Statement contains information about the Annual Meeting as
well as information regarding the voting process, director elections, our corporate governance programs and executive and director
compensation, among other things. We recommend that you read all of these materials.
The Annual
Meeting has been called to consider and take action on the following proposals:
|
·
|
to
elect eight (8) directors to the Board of Directors of the Company to serve until
the next annual meeting of the Company’s stockholders;
|
|
·
|
to
ratify the appointment of EisnerAmper LLP as the Company’s independent registered
public accounting firm for the fiscal year ending December 31, 2017;
|
|
·
|
to
approve, on a non-binding advisory basis, the compensation of certain executive officers
as disclosed in this Proxy Statement;
|
|
·
|
to
recommend, on a non-binding advisory basis, the frequency of holding an advisory vote
on executive compensation; and
|
|
·
|
to
transact such other business as may properly come before the Annual Meeting and 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 for director
in accordance with their best judgment. With respect to the proposal concerning the frequency of advisory votes on executive compensation,
the Company’s Board of Directors recommends that the advisory vote take place every year. The Company’s Board of Directors
recommends that the stockholders vote “FOR” each of the other proposals. Only holders of record of Common Stock of
the Company at the close of business on the Record Date will be entitled to vote at the Annual Meeting.
The
Company is incorporated in the State of Delaware. The principal executive offices of the Company are located at 52-16 Barnett
Avenue, Long Island City, New York 11104 and the telephone number of the Company is (718) 446-1800.
Notice of Internet Availability
of Proxy Materials
We
continue to take advantage of the Securities and Exchange Commission (the “SEC”) “e-proxy” rules
allowing us to furnish proxy materials through the Internet for the benefit and convenience of our stockholders. By using the
e-proxy rules, we can expedite the receipt by stockholders of proxy materials while lowering the costs and reducing the environmental
impact associated with our Annual Meeting. On or about April 7, 2017, we will furnish a Notice of Internet Availability of Proxy
Materials (the “Availability Notice”) to most of our stockholders containing instructions on how to access the
proxy materials and to vote online. In addition, instructions on how to request a printed copy of these materials will be found
on the Availability Notice. If you received an Availability Notice by mail, you will not receive a paper copy of the proxy materials
unless you request such materials by following the instructions contained in the Availability Notice.
For
more information on voting your Common Stock, please refer to the following “Questions and Answers” section.
QUESTIONS AND ANSWERS
ABOUT THE ANNUAL MEETING AND VOTING
1.
What is included in the proxy materials? What is a proxy statement and what is a proxy?
The
proxy materials for our Annual Meeting include the Notice of Annual Meeting, this Proxy Statement and our Annual Report on Form
10-K for the year ended December 31, 2016. If you received a paper copy of these materials, the proxy materials also include
a proxy card or voting instruction form.
A
proxy is the delegation of your right to vote the Common Stock you own to another person, who is called your proxy. When you designate
someone as your proxy in a written document, that document is called a proxy or a proxy card. SEC regulations require that we
furnish a proxy statement to you when we ask you to sign a proxy designating individuals to vote your shares of Common Stock on
your behalf. We have designated our officers Edward R. Rosenfeld and Arvind Dharia as proxies for the Annual Meeting.
2.
Who may vote at the Annual Meeting?
Only
stockholders of record are entitled to vote at the Annual Meeting. A stockholder of record is a stockholder of the Company as
of the close of business on the Record Date. On the Record Date, there were 59,754,670 shares of our Common Stock outstanding
(excluding treasury shares) held by approximately 138 registered holders of record and 18,559 beneficial owners.
3. What is the difference
between holding shares as a stockholder of record and as a beneficial owner?
If
your shares are registered directly in your name with the Company’s registrar and transfer agent, American Stock Transfer
& Trust Company, you are a “stockholder of record” with respect to those shares and, in such case, this Proxy
Statement and the accompanying proxy materials have been provided directly to you by the Company. If your shares are held in a
stock brokerage account or by a bank or nominee, your shares are held in “street name” and you are considered the
“beneficial owner” of those shares and, in such case, this Proxy Statement and the accompanying proxy materials have
been provided to you by your broker, bank or other stockholder of record. As the beneficial owner, you have the right to direct
your broker, bank or other stockholder of record how to vote your shares held in “street name.”
4. What is considered a
quorum to conduct the Annual Meeting?
The
presence, in person or by proxy, of the holders of a majority of the shares eligible to vote is necessary to constitute a quorum
for the purpose of transacting business at the Annual Meeting. Under Delaware law (under which the Company is incorporated), abstentions
and broker non-votes (meaning proxies from brokers, banks or nominees indicating that such persons have not received instructions
on how to vote from the beneficial owner or other persons eligible to vote shares as to matters with respect to which the brokers,
banks or nominees do not have discretionary power to vote) are counted as present for purposes of determining the presence
or absence of a quorum for the transaction of business. If a quorum is not present, the Annual Meeting may be adjourned until
a quorum is obtained.
5. What is a “broker
non-vote”?
As
discussed in the response to question 3, if your shares are held in “street name” by a broker, bank or other nominee,
your broker, bank or other nominee is the record holder; however, the broker, bank or other nominee is required to vote the shares
in accordance with your instructions. If you do not give instructions to your broker, bank or other nominee, as the case may be,
the broker, bank or other nominee may, if permitted by the organizations of which it is a member, exercise discretionary voting
power to vote your shares. A “broker non-vote” occurs when a broker, bank or other nominee of record holding shares
for a beneficial owner has not received voting instructions from the beneficial owner and either chooses not to vote the shares
on a particular proposal as to which the holder has discretionary voting power or does not vote on a particular proposal because
that holder does not have discretionary voting power for that particular item. Broker non-votes are considered present in determining
whether a quorum is present.
If
you hold your shares in “street name,” we strongly encourage you to provide instructions regarding the voting of your
shares as your broker, bank or other nominee cannot vote your shares with respect to certain of the proposals being presented
at the Annual Meeting without voting instructions from you.
6. How many votes do I
have? What shares are included on the proxy card?
For
each share of Common Stock that you own on the Record Date you are entitled to one vote on each matter presented at the Annual
Meeting.
If
you are a record holder, you will receive an Availability Notice or proxy card for all of the shares of Common Stock you hold
in certificate form, in book-entry form and in any Company benefit plan. If you are a beneficial owner, you will receive information
containing voting instructions from the broker, bank or other nominee through which you own your shares of Common Stock.
7. How many votes are required
to approve each proposal and what is the effect of abstentions and broker non-votes?
Proposal
One (Election of Directors):
Under Delaware law, directors are elected by the affirmative vote of a plurality of the shares
of Common Stock present in person or represented by proxy at the Annual Meeting and entitled to vote. This means that the director
nominees who receive the greatest number of affirmative votes cast are elected as directors, subject to our Director Election
(Majority Voting) Policy discussed in Proposal One below.
Proposal
Two (Ratification of Appointment of EisnerAmper LLP):
The affirmative vote of a majority of the shares of Common Stock present
in person or represented by proxy at the Annual Meeting and entitled to vote is required to approve the ratification of the appointment
of EisnerAmper LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31,
2017.
Proposal
Three (Non-Binding Advisory Vote on Executive Compensation):
The affirmative vote of a majority of the shares of Common Stock
present in person or represented by proxy at the Annual Meeting and entitled to vote is required to approve, on a non-binding
advisory basis, the compensation of the Company’s Named Executive Officers as described in this Proxy Statement.
Proposal
Four (Non-Binding Advisory Vote on Frequency of Advisory Vote on Executive Compensation):
The voting requirement applicable
to the advisory vote on the frequency of the advisory vote on executive compensation is the affirmative vote of a majority of
the shares of Common Stock present in person or represented by proxy at the Annual Meeting and entitled to vote. This means that
the frequency (every one, two or three years) receiving a majority of the votes will be deemed to be the choice of the stockholders
with respect to the frequency of the advisory vote on executive compensation.
Other
Matters:
If any other matters are presented at the Annual Meeting, they must receive the affirmative vote of a majority of
the shares of Common Stock present in person or represented by proxy at the Annual Meeting and entitled to vote in order to be
approved.
Abstentions
will have no effect on the election of directors and the advisory vote on the frequency of the advisory vote on executive compensation,
but will be treated as present and entitled to vote on the remaining proposals and, therefore, abstentions will have the effect
of votes “AGAINST” such proposals.
Proposal
One (Election of Directors) will be decided by a plurality of the votes of the shares represented in person or by proxy.
The approval of each of Proposals Two (Ratification of EisnerAmper LLP) and Three (Advisory Vote on Executive Compensation) requires
a favorable vote of a majority of the shares present and entitled to vote on the applicable matter. Proposal Four (Advisory Vote
on Frequency of Advisory Vote on Executive Compensation) will be decided by any of the three frequency choices (every one, two
or three years) receiving the vote of a majority of the shares present and entitled to vote. As noted above, an abstention will
have no effect on the election of directors and the advisory vote on the frequency of the advisory vote on executive compensation,
but will have the same effect as a vote “AGAINST” each other proposal. If you do not provide your broker, bank or
other nominee with instructions on how to vote your shares held in “street name”, your broker, bank or other nominee
will not be permitted to vote your shares on non-routine matters, and your shares will not affect the outcome of proposals concerning
non-routine matters. Proposals One, Three and Four are considered “non-routine” matters, which means that your broker
or other nominee does not have discretion to vote your shares with respect to these proposals without voting instructions from
you. If you hold your shares in “street name,” we strongly encourage you to provide instructions regarding the voting
of your shares to your broker, bank or other nominee.
8. How can I vote my shares?
Your
vote is important. Your shares can be voted at the Annual Meeting only if you are present in person or represented by proxy. Even
if you plan to attend the Annual Meeting, we urge you to authorize your proxy in advance. You may vote your shares by authorizing
a proxy over the Internet or by telephone. In addition, if you received a paper copy of the proxy materials by mail, you can also
submit a proxy by mail by following the instructions on the proxy card. Voting your shares by authorizing a proxy over the Internet,
by telephone or by written proxy card will ensure your representation at the Annual Meeting regardless of whether you attend in
person.
If
you are the record holder of your shares, please authorize your proxy electronically by going to the
http://www.proxyvote.com
website or by calling the toll-free number listed below and on the proxy card. Please have your Proxy Statement or proxy card
in hand when going online or calling. If you authorize your proxy via the Internet or by phone you do not need to return your
proxy card. If you choose to authorize your proxy by mail, simply mark your proxy card and then date, sign and return it in the
postage-paid envelope provided.
VOTE
BY INTERNET
http://www.proxyvote.com
Use the Internet to transmit
your voting instructions and for electronic delivery of information.
|
VOTE
BY PHONE
1-800-690-6903
Use any touch-tone telephone
to transmit your voting instructions.
|
VOTE
BY MAIL
Vote
Processing, c/o Broadridge
51 Mercedes Way
Edgewood, New York 11717
If you receive paper
proxy materials, mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return
it to the address shown above.
|
If
you hold your shares beneficially in “street name” through a broker or nominee you may be able to authorize your proxy
by telephone or the Internet as well as by mail, but you will need to obtain and follow instructions from your broker or nominee
to vote these shares.
9.
May I revoke my proxy for the Annual Meeting once I have given it?
You may revoke
your proxy at any time before it is voted at the Annual Meeting by:
|
·
|
properly
executing and delivering a later dated proxy (including a telephone or Internet proxy
authorization);
|
|
·
|
voting
by ballot at the Annual Meeting; or
|
|
·
|
sending
a written notice of revocation to the Secretary of the Company at Steven Madden, Ltd.,
52-16 Barnett Avenue, Long Island City, New York 11104.
|
10. How does the Board
of Directors recommend that I vote my shares?
The Board of
Directors of the Company recommends that you vote:
|
·
|
“FOR”
the election of each of the eight director nominees;
|
|
·
|
“FOR”
the ratification of the appointment of EisnerAmper LLP as the Company’s independent
registered public accounting firm for the fiscal year ending December 31, 2017;
|
|
·
|
“FOR”
the approval, on a non-binding advisory basis, of the executive compensation of the Company’s
Named Executive Officers, as disclosed in this Proxy Statement; and
|
|
·
|
“FOR”
the approval, on a non-binding advisory basis, of the recommendation to hold the advisory
vote on the approval of executive compensation every year.
|
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 PROPERLY COME BEFORE THE ANNUAL MEETING OR ANY ADJOURNMENTS OR POSTPONEMENTS
THEREOF. AS NOTED ABOVE, IF YOU HOLD YOUR SHARES BENEFICIALLY THROUGH A BROKER, BANK OR OTHER NOMINEE AND FAIL TO PROVIDE SPECIFIC
VOTING INSTRUCTIONS TO THAT BROKER, BANK OR OTHER NOMINEE, YOUR SHARES WILL NOT BE VOTED IN THE ELECTION OF DIRECTORS OR WITH
RESPECT TO THE ADVISORY VOTES ON EXECUTIVE COMPENSATION AND THE FREQUENCY OF THE ADVISORY VOTE ON EXECUTIVE COMPENSATION.
11. Who will bear the expenses
of this solicitation and how are proxies being solicited?
The
Company will pay the costs of soliciting proxies, including preparing, printing and mailing this Proxy Statement, any exhibits
hereto and the proxies solicited hereby. In addition to the use of the mails, proxies may be solicited on the Company’s
behalf by officers, directors and employees of the Company, without additional remuneration, by personal interviews, telephone
or electronic 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 by them and will provide reimbursements for the cost
of forwarding the material in accordance with customary charges. The Company has entered into an agreement with D.F. King &
Co., Inc. to assist in the solicitation of proxies and provide related advice and informational support. The total expense of
this engagement, which will be borne by the Company, including customary disbursements, is not expected to exceed $20,000 in the
aggregate.
12. How will the voting
results be reported?
The
preliminary results of the voting on the proposals will be reported at the Annual Meeting. The final certified results will be
reported in a Current Report on Form 8-K that will be filed with the SEC within four business days following the Annual Meeting.
13. How do I submit a proposal
for action at the Company’s 2018 Annual Meeting of Stockholders?
In
accordance with rules promulgated by the SEC, any stockholder who wishes to submit a proposal for inclusion in the proxy materials
to be distributed by the Company in connection with the 2018 Annual Meeting of Stockholders of the Company (the “2018 Annual
Meeting”) must do so no later than December 8, 2017.
In addition, in accordance with Article I, Section 7(f) of the Company’s Amended and Restated By-Laws (the
“By-Laws”), in order to be properly brought before the 2018 Annual Meeting, a matter must be either (i) specified
in the notice of such meeting given by or at the direction of the Board of Directors (or any duly authorized committee thereof),
(ii) otherwise properly brought before such meeting by or at the direction of the Board of Directors (or any duly authorized
committee thereof) or (iii) specified in a notice in proper written form 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 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
2017 Annual Meeting. Accordingly, any written notice given by or on behalf of a stockholder pursuant to the foregoing clause (iii) in
connection with the 2018 Annual Meeting must be received no later than January 26, 2018 and no earlier than December 27,
2017. In addition, for business to be properly brought before the 2018 Annual Meeting by a stockholder pursuant to the foregoing
clause (iii), such stockholder shall have complied with any other applicable requirements, including, but not limited to, the
requirements of Rule 14a-8 promulgated by the SEC.
PROPOSAL
ONE:
ELECTION OF DIRECTORS
The
Company’s By-Laws provide that the Board of Directors of the Company shall be comprised of a minimum of one director and
that, subject to this limitation, the number of directors may be fixed from time to time by action of the directors. The Company’s
Board of Directors has fixed the number of directors to comprise the Board of Directors at eight directors and the Board of Directors
presently is comprised of eight directors. Directors serve a one-year term and the term of each of the directors will expire at
the Annual Meeting.
Stockholder Nominations
for Board Membership
The
Nominating/Corporate Governance Committee of the Board of Directors recommends to the Board director candidates for nomination
and election at each annual meeting of stockholders or for appointment to fill vacancies on the Board. The Nominating/Corporate
Governance Committee will review and evaluate the qualifications of proposed director candidates recommended to it from various
sources, including candidates proposed by stockholders of the Company in accordance with the procedures established for that purpose.
In accordance with Article II, Section 5 of the By-Laws, director nominations for the 2018 Annual Meeting can only be
made by a stockholder of the Company who (i) is a stockholder of record on the date of the giving of the notice of such director
nominations and on the record date for the determination of stockholders entitled to vote at the 2018 Annual Meeting and (ii) complies
with the notice requirements and procedures set forth in Article II, Section 5 of the By-Laws. A stockholder’s
notice to the Secretary of the Company with respect to any such nominations must be timely and in proper written form pursuant
to Article II, Section 5 of the Company’s By-Laws, including containing certain information concerning the nominating
or proposing stockholder and certain information concerning the nominee, and the notice must be 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 2017 Annual Meeting. Accordingly, any written notice given by or on behalf of a
stockholder pursuant to Article II, Section 5 of the Company’s By-Laws in connection with the 2018 Annual Meeting
must be received no later than January 26, 2018 and no earlier than December 27, 2017.
Nominees for Election
to the Board of Directors
Upon
recommendation of the Nominating/Corporate Governance Committee of the Board of Directors, the Board of Directors has nominated
and is recommending to the stockholders the election of each of the eight nominees named below to serve as a director of the Company
until the next annual meeting of the Company’s stockholders and until his or her successor is duly elected and qualified
or until his or her earlier death, resignation or removal from office. All of the nominees were elected directors at last year’s
Annual Meeting of Stockholders and each has agreed to be named in this Proxy Statement and to serve if elected.
The
names and biographical summaries of the eight persons who have been recommended by the Nominating/ Corporate Governance Committee
of the Board of Directors and nominated by the Board of Directors to stand for election at the Annual Meeting are provided below
for your information.
Our
Board of Directors is responsible for overseeing our business in a manner consistent with the Board’s fiduciary duty to
our stockholders. This significant responsibility requires that our directors consist of individuals who are well-qualified for
service on our Board and its committees and demonstrate a commitment to the success of the Company and to service in the best
interests of our stockholders. The Board and the Nominating/Corporate Governance Committee select nominees with a view to establishing
a Board of Directors that is comprised of individuals who have extensive business leadership experience, are independent, bring
diverse perspectives to the Board, possess high ethical standards and sound business judgment and acumen and a willingness to
devote the time necessary for the Board to effectively fulfill its responsibilities. We believe that all of the director nominees
possess these qualifications and provide the Board with a full complement of knowledge, business skills and expertise for the
effective management of our Company. In addition to these general qualifications, provided below for each nominee for director
is a discussion of the experience, qualifications, attributes and skills that led to the Board’s conclusion that the nominee
should serve as a director.
Name
|
|
Principal Occupation
|
|
|
Age
|
|
|
Year
Became a
Director
|
|
Edward R. Rosenfeld
|
|
Chairman of the Board and Chief
Executive Officer, Steven Madden, Ltd.
|
|
|
41
|
|
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
Rose Peabody Lynch
|
|
Owner of Marketing Strategies, LLC, New York
based consulting firm of which she is founder and President, which focuses on strategic marketing and operating issues for
small to medium-sized companies
|
|
|
67
|
|
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
|
|
Peter Migliorini
|
|
Sales Manager, Greschlers, Inc., a building
supplies company
|
|
|
68
|
|
|
|
1996
|
|
|
|
|
|
|
|
|
|
|
|
|
Richard P. Randall
|
|
Retired Executive Vice President and Chief Financial
Officer, Direct Holdings Worldwide, LLC, the parent company of Lillian Vernon Corp., a catalog and online retailer of gifts
and household goods, and Time-Life, a music and video marketing company
|
|
|
79
|
|
|
|
2006
|
|
|
|
|
|
|
|
|
|
|
|
|
Ravi Sachdev
|
|
Partner, Clayton Dubilier & Rice, LLC
|
|
|
40
|
|
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
Thomas H. Schwartz
|
|
Owner, Sumner and Forge Investors LLC, a real
estate investment and property management company
|
|
|
69
|
|
|
|
2004
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert Smith
|
|
Chief Merchandising Officer, Haddad Brands,
a global children’s apparel and accessories licensing partner for iconic American brands such as Levi’s, Hurley,
Nike, Jordan and Converse
|
|
|
51
|
|
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
|
|
Amelia Newton Varela
|
|
President, Steven Madden, Ltd.
|
|
|
45
|
|
|
|
2016
|
|
Additional Information About
the Director Nominees
Other
Public Company Directorships
Two
of our directors also currently serve as directors of other public companies:
|
·
|
Mr. Rosenfeld
is a director and member of the Audit Committee of PVH Corp., one of the world’s
largest apparel companies.
|
|
·
|
Mr. Randall
serves as a director and member of the Audit Committee of P&F Industries Inc., a
manufacturer and importer of tools sold principally to the industrial, retail and automotive
markets.
|
Other
Employment Information
Each
of our directors has been engaged in the principal occupation indicated in the foregoing table for more than the past five years,
with the exceptions of Mr. Smith and Mr. Sachdev. Mr. Smith has held his position with Haddad Brands since 2013. Prior thereto,
from 2010 to 2012, Mr. Smith served as Executive Vice President, Merchandising for Limited Brands, at Victoria’s Secret
Direct, the largest direct-to-consumer women’s apparel retailer in the United States. From 1998 through 2010, Mr. Smith
held various senior merchandising positions at Macy’s Inc. beginning with Vice President, Merchandise Manager, Macy’s
West and culminating with Executive Vice President, Merchandising for Juniors, Kids, Intimate Apparel, Dresses, Suits, Coats and
Swimwear. Mr. Sachdev has been a partner of Clayton Dubilier & Rice, LLC since 2015. Previously, from November 2010, he served
as a Managing Director and Co-Head of Healthcare Services at J.P. Morgan.
Specific
Qualifications, Attributes, Skills and Experience of Director Nominees
Edward
R. Rosenfeld
has served as Chairman of the Board since August 2008 and has been a director of the Company since February
2008. Mr. Rosenfeld, who
joined our
executive management team in May 2005, has more than 19 years of experience
focused on the retail, apparel and footwear industries and possesses particular knowledge of and experience in the industry that
strengthens the Board’s collective qualifications, skills and experience. His background in finance and his analytical skills
gained through his years as a Vice President with Peter J. Solomon Company, an investment banking boutique, where he specialized
in mergers and acquisitions in the retail, apparel and footwear industries, provide the Board with insight and guidance with respect
to, among other things, strategic business development matters. Mr. Rosenfeld has strong leadership skills and an in-depth
understanding of the Company and its goals from his positions as the Chairman of the Board and Chief Executive Officer. Mr. Rosenfeld
serves as a director and member of the Audit & Risk Management Committee of PVH Corp., one of the world’s largest apparel
companies.
Rose
Peabody Lynch
has served as a director of the Company since April 2014 and as a member of the Audit Committee and the
Compensation Committee since June 2014. She possesses over 30 years of business experience, including tenures as the President
and in other senior executive officer positions of major companies in the beauty and fashion industries, and has extensive executive
level financial and operating experience. Her experience serving as a director and as a senior executive for a range of companies,
including Victoria’s Secret, Trowbridge Gallery (a supplier of fine art to the interior design trade) and Danskin,
Inc., a leading manufacturer of women’s dance and active wear, enhances the Board’s leadership and oversight capabilities.
Ms. Lynch has served on a number of boards, including The Harmony Group-LeRoi Princeton (a manufacturer of children’s
apparel), Salant Corporation (Perry Ellis Menswear) and Frederick’s of Hollywood (a retailer of women’s apparel
and lingerie). She was a member of the Audit and Nominating and Governance Committees during her tenure at Salant and chaired
the Compensation Committee during her tenure on the board of Frederick’s of Hollywood. In addition, Ms. Lynch has held
leadership positions with a variety of charities and currently serves as a director of S.O.S. Children’s Villages, the U.S.
arm of an international non-profit organization dedicated to providing assistance to children. She currently serves on the Board
of Directors of the Princeton University Varsity Club, is President of her Princeton University class and serves on the Executive
Committee of the Princeton University Alumni Council. She also serves on the Board of Trustees of Concord Academy in Concord,
Massachusetts. Ms. Lynch is a member of the Women and Foreign Policy Advisory Council at the Council on Foreign Relations.
Peter
Migliorini
has served as a director of the Company since October 1996 and has served on the Company’s
Audit Committee since October 1996, the Nominating/Corporate Governance Committee, as its Chair, since July 2004 and the
Compensation Committee, as its Chair, since July 2004. Mr. Migliorini is also Presiding Director over all executive sessions
of the independent directors. Mr. Migliorini possesses extensive executive level financial, sales and operations experience.
Prior to serving as sales manager for Greschlers, Inc., from 1987 to 1994, Mr. Migliorini served as Director of Operations
for Mackroyce Group, a construction company. Earlier, Mr. Migliorini held various positions of increasing responsibility
from Assistant Buyer to Chief Planner/Coordinator for several shoe companies, including Meldisco Shoes, Perry Shoes and Fasco
Shoes. His numerous years of business experience at various levels and in various industries provide the Board with a measure
of practical orientation regarding the Company’s operations and growth endeavors. Mr. Migliorini’s early experience
in the shoe industry also provides relevant knowledge and expertise in the Company’s specific industry.
Richard
P. Randall
has served as a director of the Company since April 2006 and has served on the Company’s
Audit Committee, as its Chair, since 2006, and on the Nominating/Corporate Governance Committee since September 2008. Mr. Randall
has decades of business experience, including tenures as Chief Financial Officer and Chief Operating Officer of both publicly
traded and privately held companies in the retail industry, including Direct Holdings Worldwide, LLC, the parent company of Lillian
Vernon Corp. and Time-Life, a music and video marketing company, and, prior thereto, Coach, Inc., a luxury leather goods company.
Mr. Randall possesses extensive knowledge of accounting and finance, the retail industry and the issues impacting a publicly
traded company. Mr. Randall has extensive executive level experience establishing his capabilities in management of complex
organizations and is a certified public accountant. His expertise in finance qualifies him to serve as the Audit Committee “audit
committee financial expert” and his service on the boards and board committees of other companies has allowed him to gain
broad-based experience and sensitivity regarding best practices, which he shares with the Board. Mr. Randall also provides
a perspective on proper governance for public companies. He currently serves as a member of the board of directors and Audit Committee
of P&F Industries, Inc., a manufacturer and importer of tools sold principally to the industrial, retail and automotive markets,
as well as residential hardware and, until December 31, 2014, served as a member of the board of directors and chair of the
Audit and Risk Committee of Aceto Corporation, a generic pharmaceutical, nutraceutical and chemical distribution company. Mr. Randall
is a former director and member of the Executive, Finance, Audit and Research Committees of The Burke Rehabilitation Hospital
(“Burke”). He currently serves as a Member Emeritus of Burke’s Executive Committee and retains a board seat
on The Burke Foundation’s board. Mr. Randall served as a director and chair of the Audit Committee of Universal Travel
Group, a travel services provider in the People’s Republic of China, and of Home Systems Group, a manufacturer and distributor
of household appliances in the People’s Republic of China, from 2007 until 2008 when he resigned from these boards.
Ravi
Sachdev
has been a director of the Company since September 2008 and has served on the Company’s Audit Committee
since September 2008. As a Partner of the private equity firm Clayton Dubilier & Rice, LLC since June 2015, Mr. Sachdev
focuses on the healthcare sector. Earlier, Mr. Sachdev was a Managing Director and Co-Head of Healthcare Services at J.P.
Morgan from November 2010 and prior to that held the positions of Managing Director at Deutsche Bank Securities, Inc. from January 2009
until November 2010 and Director at Deutsche Bank from January 2007 until January 2009. Prior to joining Deutsche Bank
in 2006 as a Vice President, Mr. Sachdev served as a Vice President at Peter J. Solomon Company, an investment banking boutique,
specializing in mergers and acquisitions in the healthcare sector, from 1998 to 2006.
Mr. Sachdev possesses knowledge
of finance and the financial analytics used to measure business performance. His 19 years of professional experience in investment
banking and private equity brings to the Board a thorough understanding of the financial issues affecting public companies and
greater insights in business valuation together with a practical orientation with respect to acquisitions and integrations. Mr. Sachdev
also serves on the Board of Directors of Healogics, a leading provider of wound healing services, Vets First Choice, a veterinary
internet pharmacy, and Agilon Health, a technology-enabled services platform for the physicians market.
Thomas
H. Schwartz
has served as a director of the Company since May 2004 and has served on the Company’s Compensation
Committee since July 2004. With more than twenty years of experience as a Managing Director of Helmsley-Spear, Inc. and eight
years as the owner of his own real estate investment firm, Mr. Schwartz brings to the Board extensive executive level experience
in handling operations issues and practical expertise in management.
Robert
Smith
has served as a director of the Company since April 2014 and as a member of the Compensation Committee and
the Nominating/Corporate Governance Committee since June 2014. Prior to his current and former positions with Haddad Brands and
Victoria’s Secret Direct, respectively, Mr. Smith held various senior merchandising positions at Macy’s Inc.
between 1998 and 2010, beginning with Vice President, Merchandise Manager, Macy’s West and culminating with Executive Vice
President, Merchandising for Juniors, Kids, Intimate Apparel, Dresses, Suits, Coats and Swimwear. Earlier, Mr. Smith was
a Merchandiser for XOXO Apparel Company and held various positions with Burdine’s Department Stores. Mr. Smith possesses
nearly 30 years of business experience in the fashion industry and has extensive executive level expertise in merchandising. His
experience in this area will further enhance the Board’s depth of understanding of the industry.
Amelia
Newton Varela
has been President of the Company since September 2015. Prior to this tenure, Ms. Varela was Executive
Vice President of Wholesale of the Company since April 2008 and Executive Vice President of Wholesale Footwear of the Company
from November 2004 to April 2008. Previously, she was Vice President of Sales for Steve Madden Women’s Wholesale Division from
January 2000. Ms. Varela began her career with the Company in 1998 in the role of Account Executive for Steve Madden Women’s
Wholesale Division. She graduated from The Fashion Institute of Technology in 1995.
Required
Vote
Proxies
will be voted for the election of the eight nominees as directors of the Company unless otherwise specified in the proxy. A plurality
of the votes cast by the holders of shares of Common Stock present in person or represented by proxy and entitled to vote at the
Annual Meeting will be necessary to elect the nominees as directors. This means that the director nominees who receive the greatest
number of affirmative votes cast are elected as directors subject to our Director Election (Majority Voting) Policy, which
is described below. If, for any reason, any nominee is 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 accompanying proxy. Abstentions will be counted separately and used for purposes of calculating whether
a quorum is present at the Annual Meeting, but will have no effect on the outcome of the vote.
Director Election (Majority
Voting) Policy
It
is the policy of the Company that any nominee for director who receives a greater number of “WITHHOLD” votes than
“FOR” votes for his or her election must promptly submit a letter offering his or her resignation to the Nominating/Corporate
Governance Committee following the certification of the stockholder vote. In such event, the Nominating/Corporate Governance Committee
would then consider the offer of resignation and make a recommendation to the Board of Directors as to whether or not the resignation
should be accepted. This policy does not apply in contested elections. For more information about this policy, see “Corporate
Governance – Director Election (Majority Voting) Policy” below.
Recommendation of the Board
of Directors
The
Nominating/Corporate Governance Committee of the Board and the entire Board of Directors unanimously recommend a vote “FOR”
the election of Ms. Rose Peabody Lynch, Ms. Amelia Newton Varela and Messrs. Edward R. Rosenfeld, Peter Migliorini, Richard
P. Randall, Ravi Sachdev, Thomas H. Schwartz and Robert Smith.
CORPORATE
GOVERNANCE
The Board of Directors
Our
business is managed under the direction and oversight of the Board of Directors who are elected by the Company’s stockholders.
Directors meet their responsibilities by participating in meetings of the Board of Directors and the various committees of the
Board on which they sit, as well as through communicating with our Chairman and Chief Executive Officer, other officers and employees
of the Company and by consulting with our independent registered public accounting firm and other third parties.
As
noted below, our Board is currently comprised of six independent and two non-independent directors.
Director Independence
The
Board of Directors has determined that the following director nominees are “independent” for purposes of the criteria
of the SEC and The Nasdaq Global Select Market listing standards: Ms. Lynch and Messrs. Migliorini, Randall, Sachdev, Schwartz
and Smith. If the eight nominees set forth above are elected, the Board will be comprised of a majority of independent directors.
The Board of Directors has held regularly scheduled executive sessions for the independent directors, with Peter Migliorini serving
as Presiding Director of such executive sessions.
Director Attendance at
Meetings
Attendance
at Annual Meetings of Stockholders
The
Company has no specific policy regarding director attendance at its annual meetings of stockholders. The Company encourages all
of its directors to attend annual meetings of the Company’s stockholders and two directors attended the Company’s
2016 annual meeting of stockholders.
Attendance
at Meetings of the Board of Directors
The
Board of Directors held four regularly scheduled meetings during the 2016 Fiscal Year. In the 2016 Fiscal Year, each director
attended at least 75% of the aggregate number of Board meetings, and each director attended at least 75% of the aggregate number
of meetings held by all committees on which he or she then served.
Director Election (Majority
Voting) Policy
The
Company has adopted a Director Election (Majority Voting) Policy. Pursuant to this policy, in an uncontested election of
directors (that is, an election where the number of nominees is equal to the number of seats open) any nominee for director
who receives a greater number of “WITHHOLD” votes than “FOR” votes for his or her election must promptly
submit an offer of resignation to the Nominating/Corporate Governance Committee following the certification of the stockholder
vote for consideration in accordance with the following procedures.
In
such event, upon receipt of the resignation, the Nominating/Corporate Governance Committee would promptly consider the appropriateness
of the director’s continued service on the Board of Directors and recommend to the Qualified Independent Directors (as defined
below) the action to be taken with respect to the resignation, which could include (1) accepting the resignation; (2) rejecting
the resignation; (3) retaining the director but addressing what the Qualified Independent Directors believe to be the underlying
cause of the “WITHHOLD” votes; or (4) determining that the director will not be renominated by the Board of Directors
in future elections. The Nominating/Corporate Governance Committee would consider factors such as (a) the reasons expressed
by the stockholders for withholding votes from such director; (b) any possibilities for curing the underlying cause of the
“WITHHOLD” votes; (c) the tenure and qualifications of the director and his or her past and expected future contributions
to the Company; (d) the overall composition of the Board of Directors, including, without limitation, whether accepting the
resignation would cause the Company to fail to meet any applicable SEC or Nasdaq requirement; (e) the availability of other
qualified candidates; and (f) the Company’s Board of Director Candidate Guidelines.
The
Qualified Independent Directors would then act on the Nominating/Corporate Governance Committee’s recommendation no later
than 90 days following the date of the stockholders’ meeting at which the director election occurred. In considering the
Nominating/Corporate Governance Committee’s recommendation, the Qualified Independent Directors would review the factors
considered by the Nominating/Corporate Governance Committee and such additional information and factors that they believe to be
relevant. Following the Qualified Independent Directors’ decision, the Company would promptly disclose the decision in a
Current Report on Form 8-K. The Form 8-K would include a full explanation of the process by which the decision of the Qualified
Independent Directors was reached and, if applicable, the reasons why the offer of resignation was rejected.
In
the event that an offer of resignation were to be accepted, the Nominating/Corporate Governance Committee would recommend to the
Board of Directors whether to fill the vacancy or reduce the size of the Board of Directors accordingly. Any director required
to submit his or her resignation pursuant to this policy would not participate in the Nominating/Corporate Governance Committee’s
recommendation or the Qualified Independent Directors’ consideration of the resignation but, prior to voting on the director’s
resignation offer, the Qualified Independent Directors would provide to the director an opportunity to submit any information
or statement that he believes relevant to the Qualified Independent Directors’ consideration of the resignation.
For
purposes of this policy, “Qualified Independent Directors” means all directors who (1) are “independent”
for purposes of The Nasdaq Global Select Market listing standards and (2) are not required to offer their resignation in
accordance with this policy. If there are fewer than three independent directors then serving on the Board of Directors who are
not required to submit their resignations in accordance with this policy, then the Qualified Independent Directors shall consist
of all of the independent directors and each independent director who is required to offer his or her resignation in accordance
with this policy shall recuse himself or herself from the deliberations and voting only with respect to his or her individual
offer to resign.
Committees of the Board
Among
other committees, the Board of Directors has a standing Audit Committee, Compensation Committee and Nominating/Corporate Governance
Committee. Each committee has a written charter. The table below provides current membership for each Board committee.
Committees
of the Board of Directors
Director
|
Audit
|
Compensation
|
Nominating/
Corporate
Governance
|
Edward
R. Rosenfeld
|
|
|
|
Rose
Peabody Lynch
|
Member
|
Member
|
|
Peter
Migliorini
|
Member
|
Chair
|
Chair
|
Richard
P. Randall
|
Chair
|
|
Member
|
Ravi
Sachdev
|
Member
|
|
|
Thomas
H. Schwartz
|
|
Member
|
|
Robert
Smith
|
|
Member
|
Member
|
Amelia
Newton Varela
|
|
|
|
Number
of meetings in
2016 Fiscal Year
|
4
|
3
|
1
|
Audit
Committee
The
Audit Committee is comprised of directors who are “independent” for purposes of The Nasdaq Global Select Market listing
standards and who meet the independence requirements contained in Securities Exchange Act of 1934, as amended (the “Exchange
Act”) Rule 10A-3(b)(1). The Board has determined that each of Messrs. Randall and Sachdev meets the SEC criteria
of an “audit committee financial expert” as defined in Item 407 of Regulation S-K under the Exchange Act. The
Audit Committee is primarily responsible for reviewing the services performed by the Company’s independent registered public
accountants, evaluating the Company’s accounting policies and its system of internal controls, and reviewing significant
financial transactions.
The
Audit Committee is responsible for reviewing and striving to ensure the integrity of the Company’s financial statements
and oversight of our compliance with legal and regulatory requirements and our internal audit function. 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 registered
public accountants. In addition, the Audit Committee 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.
Management
has primary responsibility for the Company’s financial statements and the overall reporting process, including the Company’s
system of internal controls. The Company’s independent registered 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 and
discuss with the Audit Committee any issues they believe should be raised with the Audit Committee.
The
Audit Committee is also responsible for the oversight of the Company’s risk management process, which is discussed in the
“Risk Oversight” section below.
In
performing its functions, the Audit Committee meets with management on at least a quarterly basis to review and discuss the annual
audited financial statements, quarterly financial statements and related reports and 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 registered public accountants and with appropriate Company financial personnel. Meetings are held with the independent
registered public accountants, who have unrestricted access to the Audit Committee. In addition, the Audit Committee reviews the
Company’s financing plans and reports and makes recommendations to the full Board of Directors for approval and to authorize
action. The Board has adopted a written charter setting out the functions the Audit Committee is to perform. A copy of the Audit
Committee Charter is available on the Company’s website at
www.stevemadden.com
.
Nominating/Corporate
Governance Committee
The
Nominating/Corporate Governance Committee is comprised of directors who are “independent” for purposes of The Nasdaq
Global Select Market listing standards.
The
Nominating/Corporate Governance Committee provides oversight with respect to a wide range of issues relating to the composition
and operation of the Board, including consideration of and recommendations regarding the size and composition of the Board of
Directors and identification of 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 of the Company
or other sources, including 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.
Stockholders
wishing to submit recommendations for director nominations for the 2018 Annual Meeting should write to the Secretary, Steven Madden,
Ltd., 52-16 Barnett Avenue, Long Island City, New York 11104. Any such stockholder must (i) comply with the director nomination
provisions of the Company’s By-Laws, (ii) meet and evidence the minimum eligibility requirements specified in Exchange
Act Rule 14a-8, and (iii) 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 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 candidates for the Board of Directors, the Nominating/Corporate Governance Committee considers the Company’s
Board of Director Candidate Guidelines and Director Election (Majority Voting) Policy, available on the Company’s website
at
www.stevemadden.com
, the Company’s policy regarding stockholder recommended director candidates, as set forth
above, and all other factors that are deemed appropriate including, but not limited to, the individual’s character, education,
experience, knowledge and skills. While the Nominating/Corporate Governance Committee’s Board of Directors Candidate Guidelines
does not expressly identify diversity as a factor for consideration regarding the evaluation of director candidates, diversity
is among the many factors the Nominating/Corporate Governance Committee considers in the candidate evaluation process. To assess
the effectiveness of the mandate set forth in the Nominating/Corporate Governance Committee’s charter, the Nominating/Corporate
Governance Committee reviews annually with the Board the composition of the Board as a whole and recommends, if necessary, measures
to be taken so that the Board reflects the appropriate balance of knowledge, experience, skills, expertise and diversity required
for the Board as a whole.
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. The Nominating/Corporate Governance
Committee operates under a formal charter that governs the Committee’s composition, powers and responsibilities. A copy
of the Nominating/Corporate Governance Committee Charter is available on the Company’s website at
www.stevemadden.com
.
Compensation
Committee
The
Compensation Committee is comprised of directors who are “independent” for purposes of The Nasdaq Global Select Market
listing standards and applicable tax and securities rules.
The
Compensation Committee is responsible for establishing and overseeing the Company’s compensation and incentive plans and
programs; determining and approving compensation for the Company’s executive officers, including salaries, bonuses, perquisites
and equity awards; reviewing and approving compensation and awards for the Company’s executive officers under the Company’s
compensation and incentive plans and programs; administering the Company’s equity compensation plans; reviewing and approving
a compensation program for independent members of the Board; and assisting the Board in discharging the Board’s responsibilities
relating to management organization, performance, compensation and succession. The Compensation Committee operates under a formal
charter adopted by the Board of Directors that governs its composition, powers and responsibilities. A copy of the Compensation
Committee Charter is available on the Company’s website at
www.stevemadden.com
.
Board Leadership Structure,
Risk Oversight, Executive Sessions of Non-Employee Directors, and Communications Between Stockholders and the Board
Board
Leadership Structure
As
noted above, our Board is currently comprised of six independent and two non-independent directors.
Mr. Rosenfeld
has served as Chairman of the Board and Chief Executive Officer since August 2008, and has been a member of the Board since February 2008.
The Board has designated one of the independent directors as Presiding Director to preside over executive sessions. We believe
that the number of independent, experienced directors that comprise our Board, along with the independent oversight of our Presiding
Director, benefits the Company and its stockholders.
We
recognize that different board leadership structures may be appropriate for companies in different situations and believe that
no one structure is suitable for all companies. We believe our current Board leadership structure is optimal for the Company because
it demonstrates to our employees, suppliers, customers, and other stakeholders that the Company is under strong leadership, with
a single person setting the tone and having primary responsibility for managing our operations and leading the Board in setting
long-term strategy. Having a single leader for both the Company and the Board eliminates confusion and duplication of efforts,
and provides clear leadership for the Company. We believe the Company, like many U.S. companies, has been well-served by this
leadership structure.
Because
the positions of Chairman of the Board and Chief Executive Officer are held by the same person, the Board believes it is appropriate
for the independent directors to elect one independent director to serve as a Presiding Director. In addition to presiding at
executive sessions of the independent directors, the Presiding Director has various responsibilities including coordinating with
the Chairman of the Board and Chief Executive Officer in establishing agenda and discussion items for Board meetings; retaining
independent advisors on behalf of the Board as the Board may determine to be necessary or appropriate and performing such other
functions as the independent directors may designate from time to time. Mr. Migliorini is currently serving as the Presiding
Director.
Our
Board conducts an annual evaluation in order to determine whether it and its committees are functioning effectively. As part of
this annual self-evaluation, the Board evaluates whether the current leadership structure continues to be optimal for the Company
and its stockholders.
Risk
Oversight
Our
Board is responsible for overseeing the Company’s risk management process. The Board focuses on the Company’s general
risk management strategy, the most significant risks facing the Company, and ensures that appropriate risk mitigation strategies
are implemented by management. The Board is also apprised of particular risk management matters in connection with its general
oversight and approval of corporate matters.
The
Board has delegated to the Audit Committee oversight of the Company’s risk management process. Among its duties, the Audit
Committee reviews with management (a) the Company’s policies with respect to risk assessment and management of risks
that may be material to the Company, (b) the Company’s system of disclosure controls and system of internal controls
over financial reporting, and (c) the Company’s compliance with legal and regulatory requirements. The Audit Committee
is also responsible for reviewing major legislative and regulatory developments that could materially impact the Company’s
contingent liabilities and risks. Our other Board committees also consider and address risks as they perform their respective
committee responsibilities. All committees report to the full Board as appropriate, including when a matter rises to the level
of a material or enterprise level risk.
The
Company’s management is responsible for day-to-day risk management. Our risk management and internal audit areas serve as
the primary monitoring and testing function for company-wide policies and procedures, and manage the day-to-day oversight of the
risk management strategy for the ongoing business of the Company. This oversight includes identifying, evaluating, and addressing
potential risks that may exist at the enterprise, strategic, financial, operational, and compliance and reporting levels.
We
believe the division of risk management responsibilities described above is an effective approach for addressing the risks facing
the Company and that our Board leadership structure supports this approach.
Executive
Sessions of Independent Directors
The
Board holds executive sessions of its independent directors generally at each regularly scheduled meeting. The Presiding Director
serves as the chairperson for these executive sessions.
Communications
between Stockholders and the Board
The
Company has adopted a procedure by which stockholders may send communications to one or more members of the Board of Directors
by writing to such director(s) or to the entire Board of Directors in care of the Secretary, Steven Madden, Ltd., 52-16 Barnett
Avenue, Long Island City, New York 11104. The Board has instructed the Secretary of the Company to review all communications so
received and to exercise his discretion not to forward to the Board correspondence that is inappropriate, such as business solicitations,
frivolous communications and advertising, routine business matters (i.e. business inquiries, complaints, or suggestions) and
personal grievances. However, any director may at any time request the Secretary to forward to such director any and all communications
received by the Secretary but not forwarded to the directors.
Codes of Business Conduct
and Ethics
The
Company has adopted a Code of Ethics for the Chief Executive Officer and Senior Financial Officers, which is applicable to our
Chief Executive Officer, Chief Financial Officer, controller, principal accounting officer, head of internal audit and other employees
of the Company who are designated from time to time as “senior financial officers” of the Company. In addition, the
individuals who serve on our Board of Directors are subject to a Code of Business Conduct and Ethics for the Board of Directors
and all of the Company’s employees are held accountable for adherence to the Company’s Code of Business Conduct and
Ethics. Each of the Code of Ethics for the Chief Executive Officer and Senior Financial Officers, the Code of Business Conduct
and Ethics for the Board of Directors and the Code of Business Conduct and Ethics (collectively, the “Conduct Code”) is
included as an exhibit to our Annual Report on Form 10-K for the fiscal year ended December 31, 2014 and are available on the
Company’s website at
www.stevemadden.com
and, in addition, may be obtained by any stockholder without charge upon
request by writing to the Secretary, Steven Madden, Ltd., 52-16 Barnett Avenue, Long Island City, New York 11104. The Conduct
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 Conduct 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 Conduct Code without fear of retaliation. Waiver of any
provision of the Conduct Code for executive officers and directors may only be granted by the Board of Directors or the Nominating/Corporate
Governance Committee and any such waiver or modification of the Conduct Code relating to such individuals will be disclosed by
the Company.
Corporate Governance
Guidelines
The
Board of Directors has adopted Corporate Governance Guidelines as a set of guiding principles by which the Company is governed.
Various matters of corporate governance are addressed in the Corporate Governance Guidelines, such as board size and composition,
director qualifications and responsibilities, director compensation, limitations on service on other boards, board committees,
director orientation and education, director access to management, management development and succession planning and annual performance
evaluations for the Board. The Corporate Governance Guidelines also include a clawback of executive incentive compensation paid
to senior executive officers in the event of an accounting restatement by the Company due to intentional misconduct of an executive
officer.
The
Nominating/Corporate Governance Committee reviews the Corporate Governance Guidelines annually to determine whether to recommend
changes to the Corporate Governance Guidelines to reflect new laws, rules and regulations and developing governance practices.
A copy of the Corporate Governance Guidelines may be obtained by any stockholder without charge upon request by writing to the
Secretary, Steven Madden, Ltd., 52-16 Barnett Avenue, Long Island City, New York 11104.
Stock Ownership Guidelines
The
Board of Directors has adopted Stock Ownership Guidelines, which require a level of ownership of shares of our Common Stock by
our directors and executive officers in order to align their interests with those of our stockholders. The Stock Ownership Guidelines
require our Chief Executive Officer to own shares of our Common Stock equal in value to five times his annual base salary. Other
executive officers of the Company are required to own shares of our Common Stock equal in value to two times their annual base
salary. The Stock Ownership Guidelines further require that non-employee directors of the Company must own shares of our Common
Stock equal in value to two times the cash portion of the directors’ annual retainer or the equivalent if a retainer is
not received in certain circumstances. Individuals subject to the Stock Ownership Guidelines must attain the required level of
share ownership by the fifth anniversary of the later of the Stock Ownership Guidelines’ adoption date and the date that
the individual became an executive officer or director and must retain an amount equal to 25% of the net shares of our Common
Stock received as a result of the exercise, vesting or payment of any equity award made by the Company until the share ownership
requirement is satisfied.
Prohibition on Hedging
and Pledging of Our Common Stock
Our directors
and executive officers and certain other persons designated from time to time by the Company’s Chief Financial Officer are
prohibited from entering into hedging transactions and from pledging our Common Stock pursuant to a formal policy concerning such
activities adopted by the Board of Directors.
Corporate Social Responsibility
Policy
The
Company is committed to operating its business in a socially responsible manner. We strive to incorporate this commitment into
every aspect of our business, including the design of our products, the quality, safety and sourcing of our products, the safety
and fair treatment of our employees, animal welfare and compliance with laws, including the Foreign Corrupt Practices Act and
the SEC’s Conflict Minerals rule. These guiding principles are set forth in our Corporate Social Responsibility Policy and
we expect all of our employees to be familiar with and to adhere to them. We strive to do business with vendors and suppliers
that share our views and commitments to quality products and ethical business principles. We will only engage vendors and suppliers
that demonstrate a commitment to meeting our standards.
Certain Relationships
and Related Party Transactions
Steven
Madden Employment Agreement.
Effective as of July 1, 2005, the Company amended and restated its employment agreement with
the Company’s founder and Creative and Design Chief, Steven Madden, pursuant to which Mr. Madden agreed to continue
to serve as the Company’s Creative and Design Chief. The term of Mr. Madden’s employment under his employment
agreement commenced on July 1, 2005 and, in accordance with the amendment of the agreement effective December 31, 2011, will
end on December 31, 2023. Prior to this recent amendment, the agreement had provided for an annual salary of $600,000, with
a 7% increase of base salary on a compound basis in each of the third, fifth, seventh and ninth years of the agreement. The agreement
had also provided for an annual cash bonus in an amount equal to at least 2% of the Company’s EBITDA (the “Annual
Bonus”) and an annual cash bonus in relation to “new business” (as defined in the agreement) in an
amount equal to at least (i) 2.5% of new business gross direct revenues plus (ii) 10% of all license or other fee income
above $2,000,000 (the “New Business Bonus”). The agreement, as amended, increases Mr. Madden’s annual base
salary but eliminates the Annual Bonus and the New Business Bonus and provides that all cash bonuses subsequent to the fiscal
year ended December 31, 2011 will be at the sole discretion of the Company’s Board of Directors. Under the agreement,
as amended, Mr. Madden’s annual base salary was fixed at $5,416,667 in 2012, $7,416,667 in 2013, $9,666,667 in 2014,
$11,916,667 in 2015 and $10,697,917 in 2016 and in each year thereafter through the end of the term of employment. In addition,
the amended agreement entitles Mr. Madden to an annual life insurance premium reimbursement of up to $200,000. The amendment
also eliminates an annual non-accountable expense allowance of $200,000 that had been previously provided to Mr. Madden under
the agreement. Pursuant to the amended agreement, on February 8, 2012, Mr. Madden was granted 1,463,056 restricted shares
of Common Stock (the number of shares indicated having been adjusted for an October 1, 2013 three-for-two stock split effected
as a stock dividend), valued at approximately $40 million, under the 2006 Plan. The restricted Common Stock will vest in
equal annual installments over seven years commencing on December 31, 2017 through December 31, 2023, subject to Mr. Madden’s
continued employment with the Company on each such vesting date.
On
June 30, 2012, pursuant to an election right granted to him under the agreement, as amended, Mr. Madden notified the Company
of his election to receive an additional restricted stock award valued at $40 million in consideration of a reduction in
his annual base salary in years subsequent to 2012. Accordingly, on July 3, 2012, Mr. Madden was issued 1,893,342 restricted
shares of Common Stock (the number of shares indicated having been adjusted for an October 1, 2013 three-for-two stock split
effected as a stock dividend) under the 2006 Plan. The restricted Common Stock will vest in equal annual installments over
six years commencing on December 31, 2018 through December 31, 2023, subject to Mr. Madden’s continued
employment with the Company on each such vesting date. As a result of his election to receive an additional restricted stock award,
Mr. Madden’s annual base salary for years subsequent to 2012 has been reduced as follows: $4,000,000 in 2013, $6,125,000
in 2014, $8,250,000 in 2015 and $7,026,042 in 2016 and in each year thereafter through the end of the term of employment.
Mr. Madden
is also eligible to receive annually, on or about the date of the Company’s annual meeting of stockholders (but not later
than June 30
th
), an option grant (the “Annual Option”) to purchase a number of shares of Common Stock,
with such number to be equal to the greater of (a) 100% of the largest aggregate number of shares of Common Stock available
upon the exercise of an option or options granted to any other continuing full-time employee of the Company during the preceding
twelve-month period and (b) 100,000 shares of Common Stock; provided, however, that a grant to Mr. Madden in excess
of 150% of the number of shares of Common Stock subject to options granted to such other continuing full-time employee would require
stockholder approval. Any Annual Option granted to Mr. Madden would vest quarterly over a one-year period following the grant
date and would be exercisable at a price equal to the closing price of the Company’s Common Stock on the grant date for
a period of five years following the grant date. In addition to the Annual Option, the agreement, as amended, provides for a potential
additional one-time stock option grant to purchase 750,000 shares of the Company’s Common Stock (the number of shares subject
to this potential stock option award having been adjusted for an October 1, 2013 three-for-two stock split effected as a
stock dividend) in the event that the Company achieves earnings per share, on a fully-diluted basis, equal to $3.00 in any
fiscal year ending December 31, 2015 or after. If granted, the option would vest in equal annual installments of 20% over
a five-year period and be exercisable for a period of seven years at a price equal to the closing price of the Company’s
Common Stock on the date immediately preceding the grant date.
In
the event of Mr. Madden’s death, his employment agreement provides for the payment to Mr. Madden’s estate
of his base salary for the 12-month period immediately subsequent to the date of his death. Further, in the event that Mr. Madden’s
employment agreement is terminated due to Mr. Madden’s total disability (as defined in the agreement), “for cause”
(as defined in the agreement) or due to Mr. Madden’s resignation, the Company is obligated to pay Mr. Madden
the amount of compensation that is accrued and unpaid through the date of termination. In the event Mr. Madden’s employment
agreement is terminated for any reason (other than “for cause” or due to his death, total disability or resignation),
the Company is obligated to pay Mr. Madden, in installments, the balance of his base salary that would have been paid by
the Company under the agreement for the full term of the agreement. If, during the period commencing 120 days prior to a
“change of control” (as defined in the employment agreement) transaction and ending on the first anniversary
of a change of control transaction, Mr. Madden’s employment is terminated by the Company other than for cause or by
the resignation of Mr. Madden for “good reason” (as defined in the employment agreement), or if Mr. Madden
resigns for good reason or without good reason within 30 days following a change of control transaction, all unvested options
to purchase shares of Common Stock held by Mr. Madden will vest on the date of termination or resignation and Mr. Madden
will be entitled to receive a lump sum cash payment equal to the amount of compensation that is accrued and unpaid through the
date of termination plus $35 million. Mr. Madden’s employment agreement contains other customary provisions, including
provisions regarding expense reimbursement, confidentiality, solicitation and competition.
For
the 2016 Fiscal Year, Mr. Madden earned $7,026,042 in base salary and received $200,000 for the payment of an annual life
insurance premium. Mr. Madden also received as his Annual Option for the 2016 Fiscal Year an option to purchase 150,000 shares
of Common Stock at a price per share of $34.42.
Loan
to Steven Madden.
On June 25, 2007, the Company made a loan to Steven Madden, its Creative and Design Chief and a principal
stockholder of the Company, in the amount of $3,000,000, in order for Mr. Madden to satisfy a personal tax obligation resulting
from the exercise of a stock option which was due to expire and hold the underlying shares of Common Stock. The loan is evidenced
by a secured promissory note executed by Mr. Madden in favor of the Company, the security for which is a security interest in
a certain securities brokerage account maintained by Mr. Madden with his broker; none of the securities in the securities brokerage
account are shares of the Company’s Common Stock. There have been successive amendments to the secured promissory note,
the most recent of which occurred in April 2016, at which time the secured promissory note was amended to substitute the collateral
securing the secured promissory note from shares of the Company’s Common Stock to the security interest in Mr. Madden’s
securities brokerage account. Previously, on January 3, 2012, the secured promissory note was amended and restated to extend the
maturity date of the obligation to December 31, 2023 and eliminate the accrual of interest after December 31, 2011.
Prior to the January 3, 2012 amendment, the secured promissory note had been accruing interest at the rate of 6% per annum. In
addition, the secured promissory note provides that, commencing on December 31, 2014 and annually on each December 31
thereafter through the maturity date, one-tenth of the principal amount thereof, together with accrued interest, will be cancelled
by the Company provided that Mr. Madden continues to be employed by the Company on each such December 31. Contemporaneously,
the Company will release its security interest in a portion of the securities held in Mr. Madden’s securities brokerage
account generally correlating to the amount of indebtedness cancelled on such date. As of December 31, 2011, interest in
the amount of $1,090,000 had accrued on the principal amount of the secured promissory note and, as noted above, interest was
eliminated after December 31, 2011. On December 31, 2016, the required one-tenth of the principal amount of the secured
promissory note, together with accrued interest, was written-off by the Company.
Review, Approval or Ratification
of Transactions with Related Persons
The
Company’s written Conduct Code and Employee Handbook prohibit all conflicts of interest. Under the Conduct Code, conflicts
of interest occur when private or family interests interfere in any way, or even appear to interfere, with the interests of the
Company. The Company’s prohibition on conflicts of interest under the Conduct Code includes any related person transaction.
Related
person transactions must be approved by the Board, or by a committee of the Board consisting solely of independent directors,
who will approve the transaction only if they determine that it is in the best interests of the Company. In considering the transaction,
the Board or committee will consider all relevant factors, including, as applicable, (i) the Company’s business rationale
for entering into the transaction; (ii) the alternatives to entering into a related person transaction; (iii) whether
the transaction is on terms comparable to those available to third parties or, in the case of employment relationships, to employees
generally; (iv) the potential for the transaction to lead to an actual or apparent conflict of interest and any safeguards
imposed to prevent such actual or apparent conflicts; and (v) the overall fairness of the transaction to the Company.
The
Company has multiple processes for reporting conflicts of interests, including related person transactions. Under the Conduct
Code, all employees are required to report any actual or apparent conflict of interest, or potential conflict of interest, to
management. The Chief Financial Officer distributes a questionnaire to the Company’s executive officers and management personnel
on a quarterly basis and distributes a questionnaire to the members of the Board of Directors on an annual basis requesting certain
information regarding, among other things, their immediate family members, employment and beneficial ownership interests, which
information is then reviewed for any conflicts of interest under the Conduct Code.
The
Board of Directors, the Audit Committee and the Disclosure Committee, which is comprised of management personnel, discuss the
related party transactions, specifically, and in connection with the regular review processes attendant to the Company’s
periodic filings, including related party transaction disclosures.
If
a director is a party to or in some manner involved in a transaction involving the Company, he or she will be recused from all
discussions and decisions about the transaction. The transaction must be approved in advance whenever practicable, and if not
practicable, must be ratified as promptly as practicable.
COMPENSATION
OF DIRECTORS IN THE 2016 FISCAL YEAR
The
Compensation Committee is responsible for establishing and overseeing all matters pertaining to compensation paid to directors
for service on the Board and its committees.
The
following table sets forth information concerning the compensation of the Company’s non-employee directors in the 2016 Fiscal
Year. Following the table is a discussion of material factors related to the information disclosed in the table.
Name
|
|
Fees Earned or
Paid in Cash
($)
|
|
|
Stock
Awards
($)(1)
|
|
|
All Other
Compensation
($)
|
|
|
Total
($)
|
|
Rose Peabody Lynch
|
|
|
95,000
|
|
|
|
100,027
|
(2)
|
|
|
—
|
|
|
|
195,027
|
|
Peter Migliorini
|
|
|
110,000
|
|
|
|
100,027
|
(3)
|
|
|
—
|
|
|
|
210,027
|
|
Richard P. Randall
|
|
|
110,000
|
|
|
|
100,027
|
(4)
|
|
|
—
|
|
|
|
210,027
|
|
Ravi Sachdev
|
|
|
85,000
|
|
|
|
100,027
|
(5)
|
|
|
—
|
|
|
|
185,027
|
|
Thomas H. Schwartz
|
|
|
85,000
|
|
|
|
100,027
|
(6)
|
|
|
—
|
|
|
|
185,027
|
|
Robert Smith
|
|
|
95,000
|
|
|
|
100,027
|
(7)
|
|
|
—
|
|
|
|
195,027
|
|
(1) Reflects
the grant date fair value of stock awards calculated in accordance with the Financial Accounting Standards Board (“FASB”) Accounting
Standards Codification (“ASC”) Topic 718. Assumptions used in the calculation of these amounts are included in
Note H to the Company’s audited financial statements for the fiscal year ended December 31, 2016 included in the Company’s
Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 28, 2017.
(2)
At December 31, 2016, the aggregate number of shares of restricted Common Stock held by Ms. Lynch was 2,977, and Ms. Lynch
had no options outstanding.
(3)
At December 31, 2016, the aggregate number of shares of restricted Common Stock held by Mr. Migliorini was 2,977, and
Mr. Migliorini had no options outstanding.
(4) At
December 31, 2016, the aggregate number of shares of restricted Common Stock held by Mr. Randall was 2,977, and Mr. Randall
had no options outstanding.
(5) At
December 31, 2016, the aggregate number of shares of restricted Common Stock held by Mr. Sachdev was 2,977, and Mr. Sachdev
had no options outstanding.
(6) At
December 31, 2016, the aggregate number of shares of restricted Common Stock held by Mr. Schwartz was 2,977, and Mr. Schwartz
had no options outstanding.
(7) At
December 31, 2016, the aggregate number of shares of restricted Common Stock held by Mr. Smith was 2,977, and Mr. Smith
had no options outstanding.
Directors
who are also employees of the Company are not paid any fees or other remuneration for service on the Board of Directors or any
of its committees. In the 2016 Fiscal Year, each non-employee director received the following compensation: (i) a grant of
2,977 shares of restricted Common Stock, vesting on the first anniversary of the grant date, June 14, 2017 and (ii) $75,000.
In
the 2016 Fiscal Year, members of the Audit Committee, Nominating/Corporate Governance Committee and Compensation Committee each
received an additional $10,000 for serving on such committees, except that the Chairman of the Audit Committee and the Chairman
of the Compensation Committee received $25,000 and $15,000, respectively, instead of $10,000. The Company reimburses its directors
for any out-of-pocket expenses incurred by them in connection with services provided in such capacity.
STOCK
OWNERSHIP
Security Ownership of
Certain Beneficial Owners
The
following table sets forth information as of the Record Date (unless otherwise indicated) with respect to the beneficial
ownership of the Common Stock of the Company by each person known by the Company to be the beneficial owner of more than 5% of
the outstanding shares of the Common Stock of the Company. A person is deemed to be a beneficial owner of any securities which
that person has the right to acquire within 60 days.
|
|
|
|
|
|
|
Name and Address of Beneficial Owner
|
|
Amount and Nature
of Beneficial
Ownership (1)
|
|
|
Percentage
of Class
|
|
|
|
|
|
|
|
|
|
BlackRock
Inc.
55 East 52
nd
Street
New York, NY 10055
|
|
|
6,571,653
|
|
|
|
11.00
|
%(2)
|
|
|
|
|
|
|
|
|
|
Steven Madden
c/o Steven Madden, Ltd.
52-16 Barnett Avenue
Long Island City, NY 11104
|
|
|
4,928,536
|
|
|
|
8.23
|
%(3)
|
|
|
|
|
|
|
|
|
|
FMR LLC
245 Summer Street
Boston, Massachusetts 02210
|
|
|
4,612,180
|
|
|
|
7.72
|
%(4)
|
|
|
|
|
|
|
|
|
|
The Vanguard Group
100 Vanguard Boulevard
Malvern, Pennsylvania 19355
|
|
|
4,597,751
|
|
|
|
7.69
|
%(5)
|
|
|
|
|
|
|
|
|
|
Wellington Management Group LLP
280 Congress Street
Boston, MA 02210
|
|
|
2,743,346
|
|
|
|
4.59
|
%(6)
|
|
|
|
|
|
|
|
|
|
(1) Beneficial
ownership as reported in the table below has been determined in accordance with Item 403 of Regulation S-K and Rule 13d-3
of the Exchange Act and based upon 59,754,670 shares of Common Stock outstanding (excluding treasury shares) as of the Record
Date.
(2) Based
solely on a Statement on Schedule 13G filed with the SEC on January 17, 2017 by BlackRock, Inc. (“BlackRock”),
BlackRock has sole voting power with respect to 6,439,394 of such shares and sole dispositive power with respect to all such shares.
(3) Mr. Madden’s
beneficial ownership includes: (i) 958,062 shares of Common Stock held by BOCAP Corp, a corporation wholly-owned by Mr. Madden;
(ii) 3,356,398 shares of restricted Common Stock granted under the 2006 Plan (which restricted stock includes 1,463,056 shares
which will vest in equal annual installments over seven years commencing on December 31, 2017 through December 31, 2023
and 1,893,342 shares which will vest in equal annual installments over six years commencing on December 31, 2018 through
December 31, 2023, in each case subject to forfeiture pursuant to the terms of the 2006 Plan and of Mr. Madden’s
employment agreement, as amended); (iii) 112,500 shares of Common Stock that may be acquired through the exercise of options that
are exercisable as of, or will become exercisable within 60 days of, the Record Date; and (iv) 501,576 shares of Common Stock
held by Mr. Madden directly.
(4)
Based solely on a Statement on Schedule 13G filed with the SEC on February 14, 2017 by FMR LLC (“FMR”), FMR has
sole voting power with respect to 1,031,150 of such shares and sole dispositive power with respect to all such shares.
(5) Based
solely on a Statement on Schedule 13G filed with the SEC on February 10, 2017 by The Vanguard Group (“Vanguard”),
Vanguard has sole voting power with respect to 119,659 of such shares, shared voting power with respect to 6,367 of such shares,
sole dispositive power with respect to 4,474,508 of such shares and shared dispositive power with respect to 123,243 of such shares.
(6) Based
solely on a Statement on Schedule 13G filed with the SEC on February 9, 2017 by Wellington Management Group LLP (“Wellington”),
Wellington has shared voting power with respect to 2,415,970 of such shares and shared dispositive power with respect to all such
shares.
Security Ownership of
Directors and Executive Officers
The
following table sets forth information as of the Record Date (unless otherwise indicated) with respect to the beneficial
ownership of Common Stock held by (a) each current director and nominee; (b) the Chief Executive Officer, the Chief
Financial Officer and the three most highly compensated executive officers of the Company other than the Chief Executive Officer
and the Chief Financial Officer (the “Named Executive Officers”); and (c) all current directors and executive
officers as a group. A person is deemed to be a beneficial owner of any securities which that person has the right to acquire
within 60 days. Each director and executive officer has sole voting power and sole dispositive power with respect to all shares
beneficially owned by him or her.
|
|
|
|
|
|
|
Name of Beneficial Owner (1)
|
|
Amount and Nature
of Beneficial
Ownership (2)
|
|
|
Percentage
of Class
|
|
|
|
|
|
|
|
|
|
Edward R. Rosenfeld
|
|
|
491,148
|
|
|
|
*
|
%(3)
|
Amelia Newton Varela
|
|
|
357,849
|
|
|
|
*
|
%(4)
|
Arvind Dharia
|
|
|
86,662
|
|
|
|
*
|
%(5)
|
Awadhesh Sinha
|
|
|
77,183
|
|
|
|
*
|
%(6)
|
Michael Paradise
|
|
|
9,212
|
|
|
|
*
|
%(7)
|
Rose Peabody Lynch
|
|
|
6,994
|
|
|
|
*
|
%(8)
|
Peter Migliorini
|
|
|
2,977
|
|
|
|
*
|
%(9)
|
Richard P. Randall
|
|
|
24,675
|
|
|
|
*
|
%(10)
|
Ravi Sachdev
|
|
|
33,800
|
|
|
|
*
|
%(11)
|
Thomas H. Schwartz
|
|
|
11,419
|
|
|
|
*
|
%(12)
|
Robert Smith
|
|
|
8,716
|
|
|
|
*
|
%(13)
|
All Directors and Executive Officers as a Group (12 persons)
|
|
|
1,238,851
|
|
|
|
2.06
|
%(14)
|
|
|
|
|
|
|
|
|
|
*
Indicates beneficial
ownership of less than 1%.
(1) The address for each
of the named individuals below 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 and Rule 13d-3
of the Exchange Act and based upon 59,754,670 shares of Common Stock outstanding (excluding treasury shares) as of the Record
Date.
(3) Mr. Rosenfeld’s
beneficial ownership includes: (i) 242,046 shares of restricted Common Stock; and (ii) 249,102 shares of Common Stock
held by Mr. Rosenfeld.
(4) Ms. Varela’s
beneficial ownership includes: (i) 243,750 shares of Common Stock that may be acquired through the exercise of options that
are exercisable as of, or will become exercisable within 60 days of, the Record Date; (ii) 42,570 shares of restricted Common
Stock; and (iii) 71,529 shares of Common Stock held by Ms. Varela.
(5) Mr. Dharia’s
beneficial ownership includes: (i) 15,579 shares of restricted Common Stock; and (ii) 71,083 shares of Common Stock
held by Mr. Dharia.
(6) Mr. Sinha’s
beneficial ownership includes: (i) 33,248 shares of restricted Common Stock; and (ii) 43,935 shares of Common Stock
held by Mr. Sinha.
(7) Mr.
Paradise’s beneficial ownership consists of 9,212 shares of restricted Common Stock.
(8) Ms. Lynch’s
beneficial ownership includes: (i) 2,977 shares of restricted Common Stock; and (ii) 4,017 shares of Common Stock held
by Ms. Lynch.
(9) Mr. Migliorini’s
beneficial ownership consists of 2,977 shares of restricted Common Stock.
(10) Mr. Randall’s
beneficial ownership includes: (i) 2,977 shares of restricted Common Stock; and (ii) 21,698 shares of Common Stock held
by Mr. Randall.
(11) Mr. Sachdev’s
beneficial ownership includes: (i) 2,977 shares of restricted Common Stock; and (ii) 30,823 shares of Common Stock held
by Mr. Sachdev.
(12) Mr. Schwartz’s
beneficial ownership includes: (i) 2,977 shares of restricted Common Stock; and (ii) 8,442 shares of Common Stock held
by Mr. Schwartz.
(13) Mr. Smith’s
beneficial ownership includes: (i) 2,977 shares of restricted Common Stock; and (ii) 5,739 shares of Common Stock held
by Mr. Smith.
(14) Includes,
in the aggregate, 303,750 shares of Common Stock that may be acquired through the exercise of options that are exercisable as
of, or will become exercisable within 60 days of, the Record Date; (ii) 380,909 shares of restricted Common Stock; and (iii) 554,192
shares of Common Stock held by such beneficial owners.
Section 16(a) Beneficial
Ownership Reporting Compliance
Section 16(a) of
the Exchange Act requires that the Company’s directors and officers, and persons who beneficially own more than 10% of a
registered class of the Company’s equity securities, file with the SEC reports of initial ownership of Common Stock and
subsequent changes in that ownership and furnish the Company with copies of all forms they file with the SEC pursuant to Section 16(a) of
the Exchange Act. A late report was filed on March 23, 2016 to report the sale by Richard P. Randall of 1,000 shares of Common
Stock on March 18, 2016. Subject to the foregoing, to the Company’s knowledge, based solely on a review of the copies of
the reports furnished to the Company and/or written representations received from the Company’s directors, officers and
greater than 10% beneficial owners that no other reports were required, all Section 16(a) filing requirements applicable
to its officers, directors and greater than 10% beneficial owners were complied with during, or in respect of, the 2016 Fiscal
Year.
EXECUTIVE
COMPENSATION
Compensation Discussion
and Analysis
Executive
Summary
This
Compensation Discussion and Analysis describes the overall principals and objectives and specific features of our executive compensation
program, primarily focused on the executive compensation program’s application to our Chief Executive Officer and the other
executive officers of the Company included in the Summary Compensation Table, whom we refer to collectively in this Proxy Statement
as the “Named Executive Officers.”
Over
the last ten years our stock price has increased at an annual rate of 16.1%. Our 2016 year-end stock price increased 18.3% from
our 2015 year-end stock price. Our one-year total stockholder return was at the 76th percentile as compared with our peer group
for 2016. By mid-March 2017, our stock price had increased 6.3% from our 2016 year-end stock price.
During
2016, the Company delivered solid financial results, expanded our core Steve Madden Women’s business, recorded strong growth
in our retail and e-commerce business, continued to build our newer brands, including the Dolce Vita® and Blondo® brands,
expanded our digital presence, further developed our international business and continued to return capital to our shareholders.
However, the overall retail environment continued to be challenging and our consolidated sales for the year were approximately
flat. For the full year ended December 31, 2016, net sales decreased 0.4% to $1.40 billion from $1.41 billion in the prior
year. Net income was $120.9 million, or $2.03 per diluted share, in the 2016 Fiscal Year. Net income in the fiscal year ended
December 31, 2015 was $112.9 million, or $1.85 per diluted share.
With
the increase in our stock price in 2016, overall Named Executive Officer bonus awards, which are primarily paid in the form of
time-vested restricted stock grants, increased 40.2% from the previous year. As our general practice is to award bonuses and grant
equity based on Named Executive Officer performance for the preceding year, we are able to maintain relative alignment between
pay and performance.
Compensation
Objectives and Strategy
The
Company’s executive officer compensation program is designed to attract and retain the caliber of officers needed to ensure
the Company’s continued growth and profitability and to reward them for their performance, for the Company’s performance
and for creating longer-term value for our stockholders. The primary objectives of the program are to:
|
·
|
align
rewards with performance that creates stockholder value;
|
|
·
|
support
the Company’s strong team orientation;
|
|
·
|
encourage
high-potential team players to build a career at the Company; and
|
|
·
|
provide
rewards that are cost-efficient, competitive with other similarly-positioned organizations
and fair to employees and stockholders.
|
The
Company’s executive compensation programs are approved and administered by the Compensation Committee of the Board of Directors.
Working with management and outside advisors, the Compensation Committee has developed a compensation and benefits strategy that
rewards performance and reinforces a culture that the Compensation Committee believes will drive long-term success.
The
compensation program rewards team accomplishments while promoting individual accountability. The executive officer compensation
program depends in significant measure on Company results, but business unit results and individual accomplishments are also very
important factors in determining each executive’s compensation. The Company has a robust planning and goal-setting process
that is fully integrated into the compensation system, enhancing a strong relationship among individual efforts, Company results
and financial rewards.
A
major portion of total compensation is placed at risk through annual and long-term incentives. As noted below, discretionary bonuses
were paid to the Named Executive Officers. The combination of incentives is designed to balance annual operating objectives and
Company earnings performance with longer-term stockholder value creation.
To
implement its primary objectives, the Company seeks to provide competitive compensation that is commensurate with performance.
The Company targets compensation at the median of the market and calibrates both annual and long-term incentive opportunities
to generate less-than-median awards when goals are not fully achieved and greater-than-median awards when goals are exceeded.
The
Company believes that there is great value to the Company in having a team of long-tenured, seasoned managers and seeks to promote
a long-term commitment from its senior executives. The Company’s team-focused culture and management processes are designed
to foster this commitment. In addition, restricted Common Stock awards granted to Named Executive Officers in the 2016 Fiscal
Year reinforce this long-term orientation with annual vesting over four to five-year periods.
Role
of the Compensation Committee
General.
The Compensation Committee provides overall guidance for the Company’s executive compensation policies and determines
the amounts and elements of compensation for the Company’s executive officers and outside directors. The Compensation Committee
currently consists of four members of the Company’s Board of Directors, Ms. Lynch and Messrs. Peter Migliorini, Thomas
Schwartz and Robert Smith, each of whom is an independent director under Rule 5605 of The Nasdaq Global Select Market listing
standards, a “non-employee director” as defined under the SEC’s rules and an “outside director”
as defined under Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”).
When
considering decisions concerning the compensation of executives, other than the Chief Executive Officer, the Compensation Committee
asks for the recommendations of the Chief Executive Officer, including his detailed evaluation of each executive’s performance.
No executive has a role in recommending compensation for outside directors. With respect to the application of the 2006 Plan to
non-employee directors, the Board of Directors functions as the Compensation Committee.
Use
of Outside Advisors.
In making its determinations with respect to executive compensation, the Compensation Committee has historically
engaged the services of an independent compensation consulting firm. The Compensation Committee has retained the services of Arthur
J. Gallagher & Co.’s Human Resources & Compensation Consulting Practice (“Gallagher”) since
2005 to assist with its review of the compensation packages and employment agreements of the Chief Executive Officer and other
executive officers. In 2016 and 2017, Gallagher worked with the Compensation Committee to assess the reasonableness of discretionary
cash bonus payments and equity grants to Messrs. Rosenfeld, Dharia, Sinha and Paradise and Ms. Varela based on the Company’s
and the individual’s performance in the fiscal year ended December 31, 2016 and the reasonableness of the terms of
new employment agreements for Ms. Varela, Mr. Sinha and Mr. Paradise as compared with comparable positions in the peer group listed
below. Executive compensation for the other Named Executive Officers was based on prior employment agreements with pay structures
and levels guided by Gallagher’s market studies just prior to the consummation of the agreements. Position-specific market
studies were completed at the time of the employment agreement extension in support of the design of these agreements. The Compensation
Committee also consulted Gallagher with respect to the establishment of a performance-based bonus pool based on a percentage of
the Company’s net income in the 2016 Fiscal Year. Gallagher provides only executive compensation consulting services and
works with management only at the behest of the Compensation Committee.
The
Compensation Committee retains Gallagher directly, although in carrying out assignments, Gallagher also interacts with Company
management, when necessary and appropriate, in order to obtain compensation and performance data for the executives and the Company.
In addition, Gallagher may, in its discretion, seek input and feedback from management regarding its consulting work product for
the Compensation Committee in order to confirm alignment with the Company’s business strategy and identify data questions
or other similar issues, if any, prior to completion of a project for the Compensation Committee.
Independence
of Outside Advisors.
The Compensation Committee has the sole authority to retain, terminate, approve the fees and set the
terms of the Company’s relationship with any outside advisors who assist the Committee in carrying out its responsibilities,
and may select or receive advice from any compensation consultant or other advisor only after taking into consideration all factors
relevant to the consultant’s independence from management, including the factors set forth in the Nasdaq’s rules.
Accordingly,
the Compensation Committee reviews annually its relationship with Gallagher to ensure its independence on executive compensation
matters. Prior to selecting and receiving advice from Gallagher with respect to executive compensation in the 2016 Fiscal Year,
the Compensation Committee reviewed the independence of Gallagher and the individual representatives of Gallagher who served as
the committee’s advisors. The Compensation Committee determined that no conflicts of interest exist between the Company
and Gallagher (or any individuals working on the Company’s account on behalf of Gallagher). In reaching such determination,
the Compensation Committee considered, among other things, the following factors: (i) that Gallagher provides no services
to the Company other than the executive compensation consulting services; (ii) the fees paid by us to Gallagher as a percentage
of Gallagher’s total revenue; (iii) the representations by Gallagher as to its policies and procedures that are designed
to prevent a conflict of interest; (iv) any business or personal relationships between the individual representatives of
Gallagher who advised the Compensation Committee and any member of the Compensation Committee; and (v) any business or personal
relationships between our executive officers and Gallagher or the individual representatives of Gallagher.
Consideration
of
2016 Stockholder
Say on Pay Vote.
At our 2016 Annual Meeting of Stockholders, our stockholders overwhelmingly
approved, on an advisory basis, the compensation of our Named Executive Officers (97% of votes cast). This continues the string
of 94% or higher approvals that began with the initial say on pay vote in 2011. The Compensation Committee believes this level
of stockholder support reflects a very strong endorsement of our compensation policies and decisions. The Compensation Committee
has considered the results of this advisory vote on executive compensation in determining the Company’s compensation policies
and decisions for 2017, and has determined that these policies and decisions are appropriate and in the best interests of the
Company and its stockholders at this time.
Compensation
Structure
Pay
Elements - Overview
The Company
utilizes four main components of compensation:
|
·
|
base
salary;
|
|
·
|
annual
performance-based bonuses;
|
|
·
|
long-term
equity incentives (consisting of stock options and/or restricted stock); and
|
|
·
|
benefits
and perquisites.
|
Pay
Elements - Details
Base
Salary
. The Company paid base salaries to each of the Named Executive Officers to provide them with fixed pay commensurate
with the Named Executive Officer’s role and responsibilities, experience, expertise and individual performance. As more
fully described in the section of this Proxy Statement captioned “Employment Arrangements,” as of December 31,
2016, the Company had employment agreements with each of the Named Executive Officers. The Compensation Committee, as constituted
at the time the parties entered into the employment agreements or any amendments thereof, reviewed and approved the salary established
in each such agreement or amendment. The Compensation Committee considered each employee’s salary history, value in the
marketplace and performance (including at the Company and previous employment).
The
annual base salary of our Chief Executive Officer, Edward R. Rosenfeld, was fixed at $800,000 for the 2016 Fiscal Year under an
employment agreement dated December 31, 2015, which remains in effect until December 31, 2018 and provides Mr. Rosenfeld
with an annual base salary of $850,000 for the fiscal year ending December 31, 2017. The annual base salary of our President,
Amelia Newton Varela, was fixed at $600,000 for the 2016 Fiscal Year under an employment agreement effective January 1, 2014,
as amended which expired by its terms on December 31, 2016. Ms. Varela’s new employment agreement dated December 30, 2016,
which remains in effect until December 31, 2019, provides Ms. Varela with an annual base salary of $630,000 for the fiscal year
ending December 31, 2017. The annual base salary of our Chief Operating Officer, Mr. Sinha, was fixed at $661,500 for the
2016 Fiscal Year under an employment agreement dated January 10, 2014, which expired by its terms on December 31, 2016.
Mr. Sinha’s new employment agreement dated December 30, 2016, which remains in effect until December 31, 2019, provides
Mr. Sinha with an annual base salary of $681,000 for the fiscal year ending December 31, 2017. Under the employment agreement,
as amended, of our Chief Financial Officer, Arvind Dharia, Mr. Dharia’s annual base salary for the 2016 Fiscal Year
was $582,455 and for the remainder of the term of the employment agreement, which expires on December 31, 2017. Under an
employment agreement dated April 5, 2016, the annual base salary of our Executive Vice President – General Counsel, Michael
Paradise, whose employment with the Company commenced on May 23, 2016, was fixed at $400,000 for the 2016 Fiscal Year and for
the remainder of the term of the employment agreement, which will expire on December 31, 2018. Mr. Paradise’s agreement
provides that his base salary will be subject to periodic increase during the term in the discretion of the Board of Directors
or the Compensation Committee. Please see the section of this Proxy Statement captioned “Summary Compensation Table”
and “Employment Arrangements” for a more detailed description of their employment agreement and compensation. The
2016 salary increases, if any, for our Named Executive Officers, as reflected in the following table, are generally consistent
with those of other management employees.
Named Executive Officer
|
|
2016
Salary
|
|
|
2017
Salary
|
|
Edward R. Rosenfeld
|
|
$
|
800,000
|
|
|
$
|
850,000
|
|
Amelia Newton Varela
|
|
$
|
600,000
|
|
|
$
|
630,000
|
|
Arvind Dharia
|
|
$
|
582,445
|
|
|
$
|
582,445
|
|
Awadhesh Sinha
|
|
$
|
661,500
|
|
|
$
|
681,000
|
|
Michael Paradise*
|
|
$
|
400,000
|
|
|
$
|
400,000
|
|
|
|
|
|
|
|
|
|
|
*
Mr. Paradise’s employment with the Company commenced on May 23, 2016.
Cash
Bonus – Not Based on Specific Performance Metrics
. In June 2016, Mr. Paradise received a $250,000 cash sign-on bonus
pursuant to his employment agreement dated April 5, 2016 and subject to the terms of a sign-on bonus agreement dated April 5,
2016 between the Company and Mr. Paradise, which provides that if Mr. Paradise voluntarily resigns from his employment with the
Company other than for “good reason” (as defined in the employment agreement) or Mr. Paradise’s employment is
terminated by the Company for “cause” (as defined in the employment agreement) within one year of the date of his
employment, Mr. Paradise will return the sign-on bonus to the Company. The Compensation Committee reviewed and approved the sign-on
bonus provision in Mr. Paradise’s employment agreement.
Annual
Performance-based Bonus - Based on Specific Performance Metrics
. Annual performance-based cash bonuses, if any, for Named
Executive Officers are established in their respective employment agreements. The Compensation Committee reviewed and approved
the bonus provisions fixed in each such employment agreement at the time the parties entered into such agreements and any amendments
thereof. Such bonus provisions generally provide for variable or discretionary bonuses designed to reward attainment of business
goals.
Mr. Sinha’s
employment agreement entitles him to an annual performance-based bonus for the 2016 Fiscal Year in an amount equal to 2% of the
increase in the Company’s EBITDA for that year over the Company’s EBITDA for the immediately preceding year. For any
business acquired after January 1, 2014, EBITDA from the acquired business is included in the bonus calculation starting with
the first full quarter under Company ownership, provided that the prior year’s EBITDA will likewise be adjusted to include
EBITDA from the acquired business for comparable quarters in the prior year on a pro forma basis assuming the Company had owned
the business. The maximum annual bonus is $600,000, the first $300,000 of which is payable in cash and for any amount of the annual
bonus in excess of $300,000 by a grant of restricted shares of the Company’s common stock, which restricted common stock
will vest in three equal annual installments commencing on the first anniversary of the grant date. For the 2016 Fiscal Year,
Mr. Sinha’s annual performance-based cash bonus was $58,584, reflecting 2% of $2,929,206, the increase in 2016 EBITDA (exclusive
of EBITDA attributable to businesses acquired in the period beginning on January 2, 2014 and ending on December 31, 2016) over
that of 2015.
Ms. Varela’s
employment agreement entitles her to an annual performance-based cash bonus for the 2016 Fiscal Year in an amount equal to 2%
of the increase in the Company’s total EBIT for that year over the Company’s EBIT for the immediately preceding year,
less any deductions as shall be required to be withheld by any applicable laws or regulations. EBIT attributable to any business
acquired by the Company after September 4, 2015 will not be included in the calculation of this bonus. This performance-based
bonus was not achieved with respect to the 2016 Fiscal Year.
As
provided in the 2006 Plan, the maximum payment that may be made to an individual under any performance-based cash award during
any fiscal year and subject to the attainment of specified performance goals is $10,000,000. The Compensation Committee may, in
its sole discretion, elect to pay an individual an amount that is less than the individual’s target award regardless of
the degree of attainment of the performance goals.
For
the 2016 Fiscal Year, the Compensation Committee established a bonus pool for Named Executive Officers and other key executives
of the Company based on 6% of net income of the Company achieved in the 2016 Fiscal Year intended to comply with the provisions
of Section 162(m) of the Code. Net income was selected because it is highly correlated with stock price performance.
The Compensation Committee also fixed for each executive his or her maximum share of the 2016 bonus pool, which was 30% for Mr. Rosenfeld
and 14% for each of the other Named Executive Officers. In the 2016 Fiscal Year, the Company achieved net income of $120,911,000,
which resulted in a bonus pool of $7,254,660. The Compensation Committee determined to pay bonuses to certain of the Named Executive
Officers in amounts that were below their individual target awards for the 2016 Fiscal Year and to pay the bonuses in a combination
of cash and restricted shares of Common Stock that vest annually over five years. Accordingly, on March 15, 2017, the Company
paid performance-based cash bonuses of $250,000, $200,000, $141,416 and $75,000 to Messrs. Rosenfeld, Dharia, Sinha and Paradise,
respectively, and on March 15, 2017, the Company paid performance-based bonuses in the form of restricted stock to three
of our Named Executive Officers as indicated in the following table.
Named Executive Officer
|
|
2017
Restricted
Stock Grant
Value for 2016
Performance
|
|
|
Number
of
Shares of
Restricted
Stock Awarded*
|
|
|
Annual
Vesting
|
|
Edward R. Rosenfeld
|
|
$
|
1,500,000
|
|
|
|
39,894
|
|
|
|
5
years
|
|
Amelia Newton Varela
|
|
$
|
500,000
|
|
|
|
13,298
|
|
|
|
5
years
|
|
Arvind Dharia
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Awadhesh Sinha
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Michael Paradise
|
|
$
|
75,000
|
|
|
|
1,995
|
|
|
|
5
years
|
|
*
In accordance with applicable SEC rules, the Summary Compensation Table included in this Proxy Statement does not report the grant
date fair value of these restricted stock awards because, while earned in 2016, the grants were not made until after the close
of the 2016 Fiscal Year. The 2017 Summary Compensation Table to be included in our proxy statement for our 2018 Annual Meeting
of Stockholders will contain the grant date fair value of these restricted stock awards provided these individuals are named executive
officers in that proxy statement.
The
decision to pay cash bonuses to Messrs. Rosenfeld, Dharia, Sinha and Paradise and to award restricted shares of Common Stock to
Mr. Rosenfeld, Ms. Varela and Mr. Paradise for the 2016 Fiscal Year and the amount of each such Named Executive Officer’s
bonus was determined at the discretion of the Compensation Committee, but within the parameters of the bonus pool for Named Executive
Officers. The Compensation Committee evaluated a variety of indicators of the Company’s stock price performance and overall
financial performance, including revenue growth and profitability, and assessed and made subjective judgments as to each of these
executive’s individual contribution towards the Company’s performance in the 2016 Fiscal Year in determining whether
to pay bonuses to these executives and establishing the amounts to be paid. With respect to the determination to award bonuses
to Messrs. Dharia, Sinha and Paradise and Ms. Varela, the Compensation Committee also considered the recommendations of the
Chief Executive Officer, Mr. Rosenfeld.
The
Compensation Committee consulted Gallagher regarding the establishment of the bonus pool and the individual target awards for
the 2016 Fiscal Year to ensure the bonus pool and the individual target awards were within market range for each executive.
Long-term
Equity Incentives
. Management and the Compensation Committee believe that equity-based awards are an important factor in aligning
the long-term financial interest of the executive officers and stockholders. The Compensation Committee continually evaluates
the use of equity-based awards and intends to continue to use such awards in the future as part of designing and administering
the Company’s compensation program. Beginning in 2006, the Compensation Committee modified its prior practice of granting
equity incentives solely in the form of stock options with periodic awards of restricted stock in order to grant awards that contain
both substantial incentive and retention characteristics. These awards are designed to provide emphasis on preserving stockholder
value generated in recent years while providing significant incentives for continuing growth in stockholder value.
In
the 2016 Fiscal Year, the Company made grants of 27,563, 13,782, 3,101 and 3,101 restricted shares of Common Stock to Mr. Rosenfeld,
Ms. Varela, Mr. Dharia and Mr. Sinha, respectively, for performance in the fiscal year ended December 31, 2015. The
restricted stock awards made to Mr. Rosenfeld and Ms. Varela vest in five equal annual installments. The restricted stock awards
made to Messrs. Dharia and Sinha vest in four equal annual installments. Gallagher reviewed the individual grant values relative
to market practice. All of the equity awards in the 2016 Fiscal Year were made under the 2006 Plan.
The
restricted stock awards in the 2016 Fiscal Year also included a grant to (a) Mr. Rosenfeld of 75,000 restricted shares of Common
Stock on February 5, 2016 in relation to his new three-year employment agreement dated December 31, 2015, which restricted stock
award will vest in five equal annual installments and (b) Mr. Paradise of 7,217 restricted shares of Common Stock on June 1, 2016
in relation to his employment agreement dated April 5, 2016, which restricted stock award will vest in four substantially equal
annual installments.
The
Committee intends to continue to review the equity mix to achieve the ideal incentive for both performance and retention. With
respect to stock options, the 2006 Plan provides that the exercise price shall be the closing market price per share of the Company’s
Common Stock on the business day immediately preceding the grant date, which is fair market value for purposes of the 2006 Plan.
Other
Benefits and Perquisites
. The Company’s executive compensation program also includes other benefits and perquisites.
These benefits and perquisites include annual matching contributions to executive officers’ 401(k) plan accounts, company-paid
medical benefits, automobile allowances and leased automobiles, and life insurance coverage. The Compensation Committee annually
reviews these other benefits and perquisites and makes adjustments as warranted based on competitive practices, the Company’s
performance and the individual’s responsibilities and performance. The Compensation Committee has approved these other benefits
and perquisites as a reasonable component of the Company’s executive officer compensation program. Please see the section
of this Proxy Statement captioned “Summary Compensation Table and, specifically, the column entitled “All Other Compensation”
and the corresponding footnotes.
Pay
Mix
The
Company utilizes the particular elements of compensation described above because the Company believes that it provides a well-proportioned
mix of secure compensation, retention value and at-risk compensation, which produces short-term and long-term performance incentives
and rewards. By following this approach, the Company provides the executives a measure of security in the minimum expected level
of compensation, while motivating the executives to focus on business metrics and other variables within their particular sector
which will increase sales and margins and at the same time lower costs so as to produce a high level of short-term and long-term
performance for the Company and long-term wealth creation for the executives, as well as reducing the risk of recruitment of top
executive talent by competitors. The mix of metrics used for the annual performance bonuses and the Company’s long-term
incentive program likewise provides an appropriate balance between short-term financial performance and long-term stock performance.
For
the Named Executive Officers, the mix of compensation is weighted heavily toward at-risk pay (annual incentives and long-term
incentives). Maintaining this pay mix results fundamentally in a pay-for-performance orientation for the Company’s executives,
which is aligned with the Company’s stated compensation philosophy of providing compensation commensurate with performance.
Pay
Levels and Benchmarking
Pay
levels for executives are determined based on a number of factors, including the individual’s roles and responsibilities
within the Company, the individual’s experience and expertise, the pay levels for peers within the Company, pay levels in
the marketplace for similar positions and performance of the individual and the Company as a whole. The Compensation Committee
is responsible for approving pay levels for the Named Executive Officers. In determining the pay levels, the Compensation Committee
considers all forms of compensation and benefits.
The
Compensation Committee assesses “competitive market” compensation using a number of sources. The primary data source
used in setting competitive market levels for the Named Executive Officers is the information publicly disclosed by a peer group
of the Company, which will be reviewed annually and may change from year to year. For the 2016 Fiscal Year, executive compensation
and compensation design was reviewed for the purpose of assessing bonus awards in early 2016 in the context of overall compensation
and in relation to the following peer companies:
Caleres,
Inc.
|
Guess,
Inc.
|
Perry
Ellis International, Inc.
|
Cato
Corp.
|
Kate
Spade & Co.
|
Shoe
Carnival, Inc.
|
Crocs,
Inc.
|
Lululemon
Athletica, Inc.
|
Skechers
U.S.A. Inc.
|
Deckers
Outdoor Corp.
|
Movado
Group, Inc.
|
Under
Armour, Inc.
|
G-III
Apparel Group, Ltd.
|
New
York & Co.
|
Wolverine
Worldwide
|
Genesco,
Inc.
|
Oxford
Industries, Inc.
|
|
|
|
|
After
consideration of the data collected on external competitive levels of compensation and internal needs, the Compensation Committee
makes decisions regarding the Named Executive Officer’s target total compensation opportunities based on the need to attract,
motivate and retain an experienced and effective management team. Relative to the competitive market data, the Compensation Committee
generally intends that the base salary and target annual incentive compensation for each Named Executive Officer will be at the
median of the competitive market.
As
noted above, notwithstanding the Company’s overall pay positioning objectives, pay opportunities for specific individuals
vary based on a number of factors such as scope of duties, tenure, institutional knowledge and/or difficulty in recruiting a new
executive. Actual total compensation in a given year will vary above or below the target compensation levels based primarily on
the attainment of operating goals and the creation of stockholder value.
Compensation
Committee Discretion
The
Compensation Committee retains the discretion to decrease all forms of incentive payouts based on significant individual or Company
performance shortfalls, with the exception of any such payouts that are to be made pursuant to contractual commitments, such as
the bonuses that may be paid to Mr. Sinha and Ms. Varela, which are tied to the Company’s EBITDA and EBIT, respectively,
for the preceding year pursuant to their employment agreements. Similarly, the Compensation Committee retains the discretion to
increase payouts and/or consider special awards for significant achievements, including, but not limited to, superior asset management,
investment or strategic accomplishments and/or consummation of acquisitions, divestitures, capital improvements to existing properties,
or sales made by certain of the Company’s divisions.
Risk Assessment
Bonus
payments to executives are based either on the discretion of the Compensation Committee or are tied to growth in various indicators
of financial performance, such as EBITDA and EBIT. Long-term incentives have been granted in the form of stock options and time-vested
restricted stock that generally vest over four or five years. These programs have been in place for several years and have proved
effective in rewarding performance while not encouraging inappropriate risk-taking.
The
Compensation Committee undertook to review and evaluate all of our executive and company-wide compensation plans and programs
to assess whether any aspect of these plans and programs would encourage inappropriate risk-taking by the Company’s executives
and non-executive employees that could have a material adverse effect on the Company and to confirm that the Company has adequate
risk management controls in place to ensure that executive and company-wide compensation is reasonable and achieves its intended
incentive without creating unacceptable risk. Based on such review and evaluation, the Compensation Committee believes there is
no material adverse risk to the Company that is related to our compensation programs for executives and non-executives.
This review
and evaluation of the risks associated with our compensation plans and programs consisted of:
|
·
|
identifying
those business risks that could be material to the Company and identifying our existing
risk management system;
|
|
·
|
reviewing
and analyzing our compensation plans and programs to identify plan and program features
that could potentially encourage or introduce excessive or imprudent risk taking of a
material nature;
|
|
·
|
identifying
the business risks that our compensation plan and program features could potentially
encourage or create;
|
|
·
|
balancing
these business risks against our existing internal control systems designed to manage
and mitigate these business risks; and
|
|
·
|
analyzing
whether the unmitigated risks, as a whole, are reasonably likely to have a material adverse
effect on the Company.
|
Various
persons were consulted during the course of the assessment, including our executive officers and senior members of our human resources
department. The Compensation Committee engages Gallagher to review our executive and company-wide compensation plans and programs
and provide advice regarding appropriate levels of incentive.
The
Compensation Committee noted several features of our compensation structure that mitigate risk, including, for example:
|
·
|
the
Company utilizes a pay mix that is well balanced between short-term financial performance
and long-term stock performance, comprised of secure compensation in the form of base
salary, short-term incentives in the form of potential for cash bonuses, and long-term
incentives in the form of stock options and time-vested restricted stock that generally
vest over four or five years;
|
|
·
|
in
most instances, management or the Compensation Committee retains the discretion to decrease
all forms of incentive compensation based on significant individual or Company performance
shortfalls;
|
|
·
|
we
periodically benchmark our compensation plans and programs and target executive and non-executive
compensation within the normal limits of the competitive market; and
|
|
·
|
the
Compensation Committee provides oversight of the Company’s compensation plans and
programs and compensation philosophy, makes recommendations to the Board with respect
to improvements to our compensation plans and programs, and is responsible for reviewing
and approving executive compensation and administering and awarding incentive, deferred
and equity compensation to our senior executives.
|
In light
of the assessment described above, it was concluded that the risks associated with our compensation plans and programs (executive
and company-wide) are not reasonably likely to have a material adverse effect on the Company.
Implications
of Tax and Accounting Matters
As
a general matter, the Compensation Committee considers the various tax and accounting implications of compensation vehicles employed
by the Company. While the Compensation Committee reviews and considers both the accounting and tax effects of various components
of compensation, these effects are not a significant factor in the Compensation Committee’s allocation of compensation among
the different components.
In
general, the Company believes that compensation paid to executive officers should be deductible for U.S. tax purposes. In certain
instances, however, the Compensation Committee also believes that it is in the Company’s best interests, and that of its
stockholders, to have the flexibility to pay compensation that is not deductible under the limitations of Section 162(m) of
the Code in order to provide a compensation package consistent with the Company’s objectives. For Fiscal Year 2016, the
Compensation Committee believes incentive compensation paid and awarded will not be subject to the limitations of Section 162(m).
As
more fully described below under the heading “Termination, Change-in-Control and Non-Competition/Non-Solicitation,”
all of our Named Executive Officers are entitled to receive certain compensation in the event of a termination of employment in
connection with a change-in-control event for the Company, which payments may trigger the application of the “golden parachute”
provisions of Sections 280G and 4999 of the Code. Section 280G of the Code disallows a tax deduction with respect to
excess parachute payments to certain executives of companies that undergo a change-in-control. In addition, Section 4999
of the Code imposes a 20% excise tax on the individual receiving the excess parachute payment. Excess parachute payments are golden
parachute payments that exceed an amount determined under Section 280G based on the executive’s prior compensation.
In approving the compensation arrangements of our Named Executive Officers, our Compensation Committee considers all elements
of the cost to our Company of providing such compensation, including the potential impact of Sections 280G and 4999, which,
under certain circumstances, may limit the deductibility to the Company of executive compensation. However, our Compensation Committee
may determine, in its judgment, to authorize compensation arrangements that could give rise to loss of deductibility under Section 280G
and the imposition of excise taxes under Section 4999 when it believes that such arrangements are appropriate to attract
and retain executive talent.
Conclusion
The
level and mix of compensation that is finally decided upon as to each executive is considered within the context of both the objective
data from the Company’s competitive assessment of compensation and performance, as well as discussion of the subjective
factors as outlined above. The Compensation Committee believes that each of the compensation packages for the Named Executive
Officers is within the competitive range of practices when compared to the objective comparative data even where subjective factors
have influenced the compensation decisions.
Compensation Committee
Interlocks and Insider Participation
During
the 2016 Fiscal Year, the following directors served on the Compensation Committee: Peter Migliorini (Chairman), Thomas H. Schwartz,
Rose Peabody Lynch and Robert Smith. During the 2016 Fiscal Year:
|
·
|
none of the members of the Compensation Committee was an officer (or former officer) or employee of the Company or any of its subsidiaries;
|
|
|
|
|
·
|
none of the members of the Compensation Committee had a direct or indirect material interest in any transaction in which the Company was a participant and the amount involved exceeded $120,000;
|
|
|
|
|
·
|
none of the Company’s executive officers served on the compensation committee (or another board committee with similar functions or, if none, the entire board of directors) of another entity where one of that entity’s executive officers served on the Company’s Compensation Committee;
|
|
|
|
|
·
|
none of the Company’s executive
officers was a director of another entity where one of that entity’s executive officers served on the Company’s Compensation
Committee; and
|
|
|
|
|
·
|
none of the Company’s executive officers served on the compensation committee (or another board committee with similar functions or, if none, the entire board of directors) of another entity where one of that entity’s executive officers served as a director on the Company’s Board of Directors.
|
Executive Officers
The following
table identifies the executive officers of the Company, and their ages and positions:
|
|
|
|
|
Name
|
|
Age
|
|
Position
|
|
|
|
|
|
Edward R. Rosenfeld
|
|
41
|
|
Chairman of the Board
and Chief Executive Officer
|
Amelia Newton Varela
|
|
45
|
|
President
|
Arvind Dharia
|
|
67
|
|
Chief Financial Officer
and Secretary
|
Awadhesh Sinha
|
|
71
|
|
Chief Operating Officer
|
Michael Paradise
|
|
55
|
|
Executive Vice President – General
Counsel
|
|
|
|
|
|
Karla Frieders
|
|
40
|
|
Chief Merchandising Officer
|
|
|
|
|
|
Amelia
Newton Varela has been President of the Company since September 2015. Previously, Ms. Varela was Executive Vice President of Wholesale
since April 2008. Ms. Varela was Executive Vice President of Wholesale Footwear from November 2004 to April 2008. Prior to this
tenure, she was Vice President of Sales for the Steve Madden Women’s Wholesale Division from January 2000. Prior to that,
she was an Account Executive for the Steve Madden Women’s Wholesale Division. She graduated from The Fashion Institute of
Technology in 1995.
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. Mr. Dharia has been Secretary of the Company since 1993. From December 1988 until joining the
Company in September 1992, Mr. Dharia was Assistant Controller of Millennium III Real Estate Corp., a real estate management
company.
Awadhesh
Sinha became the Chief Operating Officer of the Company in July 2005. Mr. Sinha was a director of the Company, from October 2002
to July 2005, before joining the Company as its Chief Operating Officer. Mr. Sinha was the 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, from 2003 to July 2005. 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.
Michael
Paradise joined the Company in May 2016 as Executive Vice President – General Counsel. From 2009, prior to joining the Company,
Mr. Paradise was a partner at the New York City law firm of McLaughlin & Stern, LLP, where he practiced corporate, securities
and commercial law. He also practiced law at a number of medium and large law firms in New York City. Mr. Paradise received his
J.D. degree, with honors, from George Washington University Law School in 1987, and his B.A. degree,
cum laude
, from the
University of Rochester in 1984.
Karla
Frieders has been the Chief Merchandising Officer of the Company since September 2015. Previously, Ms. Frieders served as the
President of Retail from January 2013 and the Vice President of Retail from October 2009 until January 2013. Prior to these roles,
Ms. Frieders held various buying positions at the Company from 1999.
Please
see the section of this Proxy Statement captioned “Proposal One: Election of Directors -- Biographical Summaries of Nominees
for the Board of Directors” for information concerning the Company’s Chairman of the Board and Chief Executive Officer,
Edward R. Rosenfeld, and the Company’s other director nominees.
SUMMARY
COMPENSATION TABLE
The
following table sets forth the compensation information for the Company’s Chief Executive Officer, Chief Financial Officer
and the three most highly compensated executive officers other than the Chief Executive Officer and Chief Financial Officer relating
to the fiscal years ended December 31, 2016, 2015 and 2014, respectively. In this Proxy Statement, the Company refers to
this group of people as the Company’s “Named Executive Officers.”
In
accordance with applicable SEC rules, the Summary Compensation Table includes, for a particular fiscal year, only those stock
awards made during that fiscal year and not any awards made after year-end even if awarded for services rendered in that year.
SEC rules require that such awards be reflected in the year of grant and, as such, awards made after the end of the 2016 Fiscal
Year will appear in the Summary Compensation Table to be included in our proxy statement for our 2018 Annual Meeting of Stockholders.
Name and Principal Position
|
|
Fiscal
Year
|
|
|
Salary
($)
|
|
|
Bonus
($)
|
|
|
Stock
Awards
($) (1)
|
|
|
Option
Awards
($) (1)
|
|
|
Non-Equity
Incentive Plan
Compensation
($)
|
|
|
All Other
Compensation
($)
|
|
|
Total
Compensation
($)
|
|
Edward R.
Rosenfeld
|
|
|
2016
|
|
|
|
797,510
|
|
|
|
—
|
|
|
|
3,350,593
|
|
|
|
—
|
|
|
|
250,000
|
|
|
|
25,950
|
(2)
|
|
|
4,424,053
|
|
Chief Executive Officer
|
|
|
2015
|
|
|
|
637,791
|
|
|
|
—
|
|
|
|
3,226,490
|
|
|
|
—
|
|
|
|
—
|
|
|
|
25,950
|
(3)
|
|
|
3,890,231
|
|
|
|
|
2014
|
|
|
|
607,754
|
|
|
|
—
|
|
|
|
816,680
|
|
|
|
—
|
|
|
|
—
|
|
|
|
25,800
|
(4)
|
|
|
1,450,234
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amelia Newton Varela
|
|
|
2016
|
|
|
|
600,000
|
|
|
|
—
|
|
|
|
518,065
|
|
|
|
—
|
|
|
|
—
|
|
|
|
22,950
|
(5)
|
|
|
1,141,015
|
|
President
|
|
|
2015
|
|
|
|
531,154
|
|
|
|
—
|
|
|
|
563,801
|
|
|
|
—
|
|
|
|
—
|
|
|
|
22,950
|
(6)
|
|
|
1,117,905
|
|
|
|
|
2014
|
|
|
|
500,000
|
|
|
|
—
|
|
|
|
554,528
|
|
|
|
930,000
|
|
|
|
—
|
|
|
|
22,800
|
(7)
|
|
|
2,007,328
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Arvind Dharia
|
|
|
2016
|
|
|
|
582,455
|
|
|
|
—
|
|
|
|
116,567
|
|
|
|
—
|
|
|
|
200,000
|
|
|
|
108,912
|
(8)
|
|
|
1,007,934
|
|
Chief Financial Officer
|
|
|
2015
|
|
|
|
582,152
|
|
|
|
—
|
|
|
|
720,011
|
|
|
|
—
|
|
|
|
112,500
|
|
|
|
101,817
|
(9)
|
|
|
1,516,480
|
|
|
|
|
2014
|
|
|
|
554,719
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
107,168
|
(10)
|
|
|
661,887
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awadhesh Sinha
|
|
|
2016
|
|
|
|
661,015
|
|
|
|
—
|
|
|
|
116,567
|
|
|
|
—
|
|
|
|
200,000
|
(11)
|
|
|
23,656
|
(12)
|
|
|
1,001,238
|
|
Chief Operating Officer
|
|
|
2015
|
|
|
|
629,654
|
|
|
|
—
|
|
|
|
202,511
|
|
|
|
—
|
|
|
|
112,500
|
|
|
|
22,366
|
(13)
|
|
|
967,031
|
|
|
|
|
2014
|
|
|
|
600,000
|
|
|
|
—
|
|
|
|
999,986
|
|
|
|
—
|
|
|
|
—
|
|
|
|
23,311
|
(14)
|
|
|
1,623,297
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael Paradise
|
|
|
2016
|
|
|
|
238,462
|
|
|
|
250,000
|
|
|
|
249,997
|
|
|
|
—
|
|
|
|
75,000
|
|
|
|
7,154
|
(15)
|
|
|
820,613
|
|
Executive Vice President
– General Counsel
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
The amounts in this column reflect the aggregate grant date fair value of awards granted during the applicable year for the fiscal
years ended December 31, 2016, December 31, 2015 and December 31, 2014, respectively, calculated in accordance
with ASC Topic 718. Assumptions used in the calculation of these amounts are included in Note H to the Company’s audited
financial statements for the fiscal year ended December 31, 2016 included in the Company’s Annual Report on Form 10-K
filed with the Securities and Exchange Commission on February 28, 2017 and in Note I to the Company’s audited financial
statements for the fiscal years ended December 31, 2015 and December 31, 2014 included in the Company’s Annual
Report on Form 10-K filed with the Securities and Exchange Commission on February 26, 2016 and February 26, 2015, respectively.
(2) Consists
of an $18,000 automobile allowance and $7,950 in annual match contributions to Mr. Rosenfeld’s 401(K) plan account.
(3) Consists
of an $18,000 automobile allowance and $7,950 in annual match contributions to Mr. Rosenfeld’s 401(K) plan account.
(4) Consists
of an $18,000 automobile allowance and $7,800 in annual matching contributions to Mr. Rosenfeld’s 401(k) plan
account.
(5) Includes
the following: $15,000 automobile allowance and $7,950 in annual matching contributions to Ms. Varela’s 401(k) plan
account.
(6) Includes
the following: $15,000 automobile allowance and $7,950 in annual matching contributions to Ms. Varela’s 401(k) plan
account.
(7)
Includes the following: $15,000 automobile allowance and $7,800 in annual matching contributions to Ms. Varela’s 401(k) plan
account.
(8) Includes the following:
$14,651 automobile allowance, $86,311 life insurance premiums and $7,950 in annual match contributions to Mr. Dharia’s
401(K) plan account.
(9) Includes the following:
$12,876 automobile allowance, $80,991 life insurance premiums and $7,950 in annual match contributions to Mr. Dharia’s
401(K) plan account.
(10) Includes
the following: $13,427 automobile allowance, $85,941 life insurance premiums and $7,800 in annual matching contributions to Mr. Dharia’s
401(k) plan account.
(11)
Includes a non-equity incentive payment of $58,584 made pursuant to a bonus formula in Mr. Sinha’s employment agreement.
See “Employment Arrangements.”
(12)
Includes the following: $15,706 automobile allowance and $7,950 in annual matching contributions to Mr. Sinha’s 401(k) plan
account.
(13) Includes
the following: $14,416 automobile allowance and $7,950 in annual matching contributions to Mr. Sinha’s 401(k) plan
account.
(14) Includes
the following: $15,511 automobile allowance and $7,800 in annual matching contributions to Mr. Sinha’s 401(k) plan
account.
(15)
Consists of a $7,154 automobile allowance.
Employment Arrangements
Edward
R. Rosenfeld.
On December 31, 2012, the Company
entered into an employment agreement with Mr. Rosenfeld to replace
a prior, expiring employment agreement. Pursuant to the December 31, 2012 employment agreement Mr. Rosenfeld continued to
serve as Chief Executive Officer and executive Chairman of the Board of Directors of the Company and received a base salary of
$607,754 and $638,142 for the fiscal years 2014 and 2015, respectively, until the employment agreement’s expiration on December
31, 2015. The December 31, 2012 employment agreement provided that Mr. Rosenfeld received a monthly automobile allowance of $1,500
and additional compensation and bonuses, if any, at the absolute discretion of the Board of Directors.
On
December 31, 2015, the Company entered into a new employment agreement with Mr. Rosenfeld which replaced the prior employment
agreement with the Company, which expired on December 31, 2015. Pursuant to the new employment agreement, Mr. Rosenfeld continues
to serve as Chief Executive Officer and executive Chairman of the Board of Directors of the Company until the agreement expires
on December 31, 2018 or is sooner terminated in accordance with its terms. Mr. Rosenfeld’s current employment
agreement provides for an annual base salary of $800,000, $850,000 and $900,000 for the fiscal years 2016, 2017 and 2018, respectively,
and a monthly automobile allowance of $1,500. The current agreement provides that Mr. Rosenfeld will receive additional compensation
and bonuses, if any, at the absolute discretion of the Board of Directors. Pursuant to the current agreement, on December 31,
2015, Mr. Rosenfeld was granted 75,000 shares of the Company’s Common Stock, subject to certain restrictions. These
restricted shares of Common Stock, which were issued under the 2006 Plan, will vest in five equal annual installments of 15,000
shares commencing on December 1, 2016. In addition, pursuant to the current employment agreement, on February 5, 2016, Mr.
Rosenfeld received an additional award of 75,000 shares of the Company’s Common Stock, subject to certain restrictions.
These restricted shares of Common Stock, which were issued under the 2006 Plan, will also vest in five equal annual installments
of 15,000 shares in such case commencing on March 5, 2017.
In
the event of his death, Mr. Rosenfeld’s employment agreement provides for the payment to his estate of his base salary
for the 12-month period immediately subsequent to the date of Mr. Rosenfeld’s death. The agreement also provides that
if Mr. Rosenfeld’s employment agreement is terminated due to his “total disability” (as defined in the
agreement), Mr. Rosenfeld will receive payment of his base salary for the 12-month period immediately subsequent to the date
he is determined to be totally disabled. Mr. Rosenfeld’s employment agreement allows the Company to terminate his employment
with “cause” (as defined in the employment agreement) or without cause. In the event that Mr. Rosenfeld’s
employment is terminated by the Company for cause, the Company will have no further obligations to Mr. Rosenfeld, and Mr. Rosenfeld
will be entitled to no further compensation from the Company, except for pro-rata amounts due to him on the date of his termination.
In the event that Mr. Rosenfeld’s employment is terminated by the Company without cause or by Mr. Rosenfeld’s
resignation for “good reason” (as defined in the employment agreement), Mr. Rosenfeld will be entitled to receive
payment of his annual base salary, payable at regular payroll intervals, from the date of termination of employment through the
longer of the remainder of the term of the agreement or six months.
In
addition, if Mr. Rosenfeld’s employment is terminated by the Company without cause or by the resignation of Mr. Rosenfeld
for good reason during the period commencing 90 days prior to a “change of control” (as defined in the employment
agreement) transaction and ending 180 days following a change of control transaction, Mr. Rosenfeld will receive an
amount equal to two and one-half times the sum of (i) the annual base salary to which he was entitled as of the date of termination
or resignation of employment plus (ii) the average cash bonus received by him for the preceding three-year period ending on the
last previous December 31 (the “Change of Control Payment”). However, if the Change of Control Payment (or a portion
thereof) is determined to constitute an “excess parachute payment” under Sections 280G and 4999 of the Code,
Mr. Rosenfeld shall be paid either (i) the Change of Control Payment (which shall be subject to all applicable taxes
to be paid by the executive including the excise tax payable pursuant to Section 4999 and which shall be limited as to deductibility
to the Company) or (ii) a reduced amount, calculated in accordance with Section 280G, that may be paid to the executive
without the imposition of an excise tax under Section 4999 and which shall be fully deductible to the Company, whichever
payment yields the greater after-tax benefit to the executive.
Amelia
Newton Varela.
On January 10, 2014, the Company entered into an employment agreement with Ms. Varela to replace a prior agreement
that expired on December 31, 2013. The term of this employment agreement, which was amended on September 4, 2015 in connection
with Ms. Varela’s promotion from Executive Vice President – Wholesale to the newly-created position of President of
the Company. Prior to its amendment, the employment agreement provided for an annual base salary during the term of $500,000 and
a monthly automobile allowance of $1,250. The amendment of the employment agreement increased Ms. Varela’s annual base salary
to $600,000 for the fiscal years 2015 and 2016 until the employment agreement’s expiration on December 31, 2016. In addition,
pursuant to the employment agreement, on February 3, 2014, Ms. Varela was granted an option to purchase 100,000 shares of the
Company’s Common Stock under the 2006 Plan, at an exercise price of $32.59 per share, which option is exercisable in four
equal annual installments of 25,000 on each anniversary of the date of grant, which commenced on February 3, 2015.
On
December 30, 2016, the Company entered into a new employment agreement with Ms. Varela, which replaced the prior employment agreement
with the Company, which expired by its terms on December 31, 2016. Pursuant to the new employment agreement, Ms. Varela continues
to serve as President of the Company for a term commencing on January 1, 2017 and continuing for three years through December
31, 2019, unless sooner terminated in accordance with the terms of the agreement. Ms. Varela’s current employment agreement
provides for an annual base salary of $630,000, $650,000 and $670,000 for the years 2017, 2018 and 2019, respectively, and a monthly
automobile allowance of $1,250 in each year of the term. In addition, pursuant to the current employment agreement, on January
3, 2017, Ms. Varela was granted an option to purchase 100,000 shares of the Company’s Common Stock under the 2006 Plan,
at an exercise price of $35.75 per share, which option is exercisable in four equal annual installments of 25,000 shares on each
anniversary of the date of grant, commencing on January 3, 2018.
Before
its amendment, the prior employment agreement entitled Ms. Varela to an annual performance-based cash bonus for each of the fiscal
years ended December 31, 2014, 2015 and 2016 in an amount equal to 2% of the increase, if any, in the Wholesale Division EBIT
for each such year over the Wholesale Division EBIT for the immediately preceding year, provided that Wholesale Division EBIT
attributable to any business acquired by the Company after January 10, 2014 will not be included for the purpose of determining
Ms. Varela’s bonus until the acquired business has been owned by the Company for two full calendar years. As amended, with
respect to the 2016 Fiscal Year, the prior employment agreement entitled Ms. Varela to a performance-based cash bonus in an amount
equal to 2% of the increase, if any, in the Company’s total EBIT for the 2016 Fiscal Year over the Company’s total
EBIT for the fiscal year ended December 31, 2015, less any deductions required to be withheld by applicable laws and regulations.
EBIT attributable to any business acquired by the Company after September 4, 2015 will not be included in the calculation for
the purpose of determining Ms. Varela’s annual bonus. This performance-based bonus was not achieved with respect to the
fiscal years ended December 31, 2016, 2015 and 2014.
The
current employment agreement entitles Ms. Varela to an annual performance-based cash bonus for each of the fiscal years ended
December 31, 2017, 2018 and 2019 in an amount equal to 2% of the increase, if any, in the Company’s total EBIT for each
such year over the Company’s total EBIT for the immediately preceding year, less any deductions required to be withheld
by applicable laws and regulations. EBIT attributable to any business acquired by the Company after December 30, 2016 will not
be included in the calculation for the purpose of determining Ms. Varela’s annual bonus.
In
the event that Ms. Varela’s employment agreement is terminated due to Ms. Varela’s “disability”
(as defined in the agreement) or death, the Company is obligated to pay Ms. Varela (or her estate) the amount of
accrued and unpaid salary through the date of termination plus any performance-based cash bonus that has accrued for the year
prior to termination and is unpaid at the time Ms. Varela’s employment is terminated due to her disability or death.
The Company may terminate the agreement for “cause” (as defined in the agreement) and, in such event, Ms. Varela
will be entitled only to accrued and unpaid salary through the date of termination of employment. In the event Ms. Varela’s
employment is terminated by the Company without cause, she would be entitled to receive payment of her annual base salary, payable
at regular payroll intervals, from the date of termination of employment through the remainder of the term plus any performance-based
cash bonus that has accrued but not yet been paid. In the event that Ms. Varela’s employment is terminated by the Company
without cause during the period commencing 30 days prior to a “change of control” (as defined in the agreement) transaction
and ending 180 days following a change of control transaction, she is entitled to receive an amount equal to the lesser of (i) the
average amount of total compensation actually received by her during the preceding three calendar years multiplied by 3 and (ii) the
maximum amount that is tax deductible to the Company under Section 280G of the Code.
Arvind
Dharia.
In January 1998, the Company entered into an employment agreement with Arvind Dharia, which has been amended
from time to time, most recently on February 2, 2015. Pursuant to Mr. Dharia’s amended agreement, Mr. Dharia
continues to serve as the Company’s Chief Financial Officer. The term of Mr. Dharia’s employment under his agreement,
as amended, extends through December 31, 2017, and will be automatically extended for an additional one-year period unless
either party timely notifies the other of its intention not to extend the term. Prior to the most recent amendment of the agreement,
Mr. Dharia received an annual base salary of $554,719 during fiscal year 2014. Commencing January 1, 2015, pursuant
to the most recent amendment of the agreement, Mr. Dharia’s annual base salary increased to and will remain $582,455
for the remaining term of the agreement. Mr. Dharia received a monthly automobile allowance of $1,400 prior to the most recent
amendment of the agreement and, beginning January 1, 2015, his monthly car allowance increased to $1,600. The agreement provides
that the Company will pay life insurance premiums on Mr. Dharia’s behalf of approximately $80,000 per year. The most
recent amendment of the agreement provides for a grant of 15,000 shares of the Company’s Common Stock, subject to certain
restrictions. These restricted shares of Common Stock were issued to Mr. Dharia on February 2, 2015 under the 2006 Plan
and will vest in five equal annual installments commencing on February 2, 2016. In addition, the amended agreement provides
that Mr. Dharia will receive an annual bonus in such amount, if any, and at such time or times, as the Board of Directors
may determine in its absolute discretion. Subject to availability of shares under the 2006 Plan, or any other plan designated
by the Board of Directors and approved by the Company’s stockholders, Mr. Dharia is entitled to awards under such plan
as may be determined by the Board of Directors, or a committee thereof, from time to time in its absolute discretion.
The
agreement provides, in the event of Mr. Dharia’s death, for the payment to Mr. Dharia’s estate of his base
salary for the 12-month period immediately subsequent to the date of Mr. Dharia’s death. The agreement also provides
that if Mr. Dharia’s employment agreement is terminated due to his “total disability” (as defined in the
agreement), Mr. Dharia will receive payment of his base salary for the 12-month period immediately subsequent to the date
he is determined to be totally disabled. In the event that Mr. Dharia’s employment agreement is terminated “for
cause” (as defined in the agreement), the Company is obligated to pay Mr. Dharia the amount of compensation that is
accrued and unpaid through the date of termination. In the event that Mr. Dharia’s employment agreement is terminated
for any reason (other than “for cause” or due to his death or total disability), the Company is obligated to pay Mr. Dharia,
in two installments, (a) an amount equal to the product of (x) his base salary on the effective date of such termination
plus the bonus paid or payable, if any, for the fiscal year ended on the December 31st immediately preceding the termination
date, multiplied by (y) the number of years (and fraction of years) remaining in the term; and (b) the amount payable
to him, or on his account, for what would have been the balance of the term of his employment agreement with respect to certain
benefits and plans as set forth in his employment agreement. If the Company decides not to renew the agreement (other than “for
cause” or due to his total disability), then Mr. Dharia will be entitled to receive severance compensation, in cash,
in an amount equal to his then-current base salary for the 90-day period commencing on the expiration of the term.
In
addition, in the event that there is a “change of control” transaction and Mr. Dharia’s employment has
been terminated by the Company other than “for cause” or if Mr. Dharia resigns “for good reason”
(as such terms are defined in the agreement), Mr. Dharia will receive an amount equal to three times the total compensation
he was entitled to receive under the agreement for the preceding 12-month period ending on the last previous December 31,
except that in lieu of the actual base salary component received during such period, there shall be substituted the annual base
salary to which Mr. Dharia was entitled to as of the date of termination or resignation (the “Change of Control Payment”).
However, if the Change of Control Payment (or a portion thereof) is determined to constitute an “excess parachute payment”
under Sections 280G and 4999 of the Code, Mr. Dharia will be paid either (i) the Change of Control Payment (which
shall be subject to all applicable taxes to be paid by the executive including the excise tax payable pursuant to Section 4999
and which shall be limited as to deductibility to the Company) or (ii) a reduced amount, calculated in accordance with
Section 280G, that may be paid to the executive without the imposition of an excise tax under Section 4999 and which
shall be fully deductible to the Company, whichever payment yields the greater after-tax benefit to the executive.
Awadhesh
Sinha.
On January 10, 2014, the Company entered into an employment agreement with Mr. Sinha to replace a prior employment
agreement with the Company, which had expired on December 31, 2013. Pursuant to the employment agreement, Mr. Sinha, the Chief
Operating Officer of the Company, received a base salary of $600,000, $630,000 and $661,500 for the years 2014, 2015 and 2016,
respectively, until the employment agreement’s expiration on December 31, 2016. The employment agreement also entitled Mr.
Sinha to a monthly automobile allowance of $1,850 and the payment of term life insurance premiums on Mr. Sinha’s behalf
in the amount of approximately $3,500 per year. On January 15, 2014, pursuant to his employment agreement, Mr. Sinha
was granted 29,886 shares of Common Stock, subject to certain restrictions. These restricted shares of Common Stock, which were
issued under the 2006 Plan, will vest in three equal annual installments of 9,962 shares, which commenced on December 15,
2014.
On
December 30, 2016, the Company entered into a new employment agreement with Mr. Sinha, which replaced the prior employment agreement
with the Company, which expired on December 31, 2016. Pursuant to the new employment agreement, Mr. Sinha continues to serve as
Chief Operating Officer of the Company for a term that commenced on January 1, 2017 and will expire on December 31, 2019 unless
the agreement is sooner terminated in accordance with its terms. Mr. Sinha’s current employment agreement provides for an
annual base salary of $681,000, $702,000 and $723,000 for the years 2017, 2018 and 2019, respectively. The new employment agreement
also entitles Mr. Sinha to a monthly automobile allowance of $1,850 and the payment of term life insurance premiums on Mr. Sinha’s
behalf in the amount of approximately $3,500 per year. On January 3, 2017, pursuant to his new employment agreement, Mr. Sinha
was granted 28,169 shares of Common Stock, subject to certain restrictions. These restricted share of Common Stock, which were
issued under the 2006 Plan, will vest in three substantially equal installments commencing on December 15, 2017.
Mr. Sinha’s
prior employment agreement entitled him to an annual performance-based bonus for each of the fiscal years ended December 31,
2014, 2015 and 2016 in an amount equal to 2% of the increase in the Company’s EBITDA for each such year over the Company’s
EBITDA for the immediately preceding year. This performance-based bonus was not achieved with respect to the 2015 and 2014 fiscal
years. Mr. Sinha received a cash bonus of $58,584 for 2016 EBITDA performance.
The
current employment agreement entitles Mr. Sinha to an annual performance-based cash bonus for each of the fiscal years ended December
31, 2017, 2018 and 2019 in an amount equal to 2% of the increase, if any, in the Company’s EBITDA for each such year over
the Company’s EBITDA for the immediately preceding year. For any business acquired after December 30, 2016, EBITDA from
the acquired business is included in the bonus calculation starting with the first full quarter under Company ownership, provided
that the prior year’s EBITDA will likewise be adjusted to include EBITDA from the acquired business for comparable quarters
in the prior year on a pro forma basis assuming the Company had owned the business. The maximum annual bonus is $600,000, the
first $300,000 of which will be payable in cash and for any amount of the annual bonus in excess of $300,000 by a grant of restricted
shares of Common Stock, which restricted shares of Common Stock will vest in three equal annual installments commencing on the
first anniversary of the grant date. Bonuses and other incentive-based compensation paid to Mr. Sinha are subject to recovery
by the Company in the event of a determination that such compensation was based upon materially inaccurate financial statements.
In
the event of his death, Mr. Sinha’s employment agreement provides for the payment to Mr. Sinha’s estate
of his base salary for the 12-month period immediately subsequent to the date of Mr. Sinha’s death. In addition, in
the event of Mr. Sinha’s “total disability” (as such term is defined in the agreement), the Company is
obligated to continue to pay Mr. Sinha’s base salary for the 12-month period immediately subsequent to the date of
determination of such total disability. In the event Mr. Sinha’s employment agreement is terminated “for cause”
(as such terms are defined in the agreement), or due to Mr. Sinha’s resignation without “good reason” (as
such term is defined in the agreement), the Company is obligated to pay Mr. Sinha the amount of compensation that is accrued
and unpaid through the date of termination. In the event Mr. Sinha’s employment agreement is terminated by the Company
without cause or by the resignation of Mr. Sinha for good reason, Mr. Sinha would be entitled to receive payment of
his annual base salary, payable at regular payroll intervals, from the date of termination of employment through the longer of
(i) the remainder of the term or (ii) six months.
In
addition, if Mr. Sinha’s employment is terminated by the Company without cause or if Mr. Sinha resigns for good
reason during the period commencing 120 days prior to a “change of control” (as defined in the agreement) and
ending 90 days after a change of control, Mr. Sinha would be entitled to receive a cash payment within ten days of the date
of his termination or resignation of employment in an amount equal to three times the total W-2 compensation and benefits actually
received by him during the preceding twelve-month period ending on the last previous December 31
st
, except that,
in lieu of the actual base salary compensation received during such period, there shall be substituted the annual base salary
to which Mr. Sinha was entitled to as of the date of termination or resignation (the “Change of Control Payment”).
However, if the Change of Control Payment (or a portion thereof) is determined to constitute an “excess parachute payment”
under Sections 280G and 4999 of the Code, Mr. Sinha will be paid either (i) the Change of Control Payment (which
shall be subject to all applicable taxes to be paid by the executive including the excise tax payable pursuant to Section 4999
and which shall be limited as to deductibility to the Company) or (ii) a reduced amount, calculated in accordance with
Section 280G, that may be paid to the executive without the imposition of an excise tax under Section 4999 and which
shall be fully deductible to the Company, whichever payment yields the greater after-tax benefit to the executive.
Michael
Paradise.
On April 5, 2016, the Company entered into an employment agreement with Mr. Paradise, pursuant to which Mr. Paradise
serves as Executive Vice President – General Counsel of the Company for a term commencing on or about May 10, 2016 and ending
on December 31, 2018, unless the agreement is sooner terminated in accordance with its terms. The employment agreement provides
for an annual base salary of $400,000, subject to periodic increases during the term at the discretion of the Board of Directors
or its Compensation Committee, and a monthly automobile allowance of $1,000 during the term of the agreement. Mr. Paradise’s
agreement entitles him to an annual performance bonus for each of the fiscal years ended December 31, 2016, 2017 and 2018 in an
amount to be determined by the Company, each such bonus, if any, to be paid to him on or about March 15 with respect to the prior
year. On June 1, 2016, pursuant to his employment agreement, Mr. Paradise was granted 7,217 shares of Common Stock, subject to
certain restrictions. These restricted shares of Common Stock, which were issued under the 2006 Plan, will vest in four substantially
equal annual installments, commencing on the first anniversary of the grant date.
Mr.
Paradise received a $250,000 cash sign-on bonus pursuant to his employment agreement subject to the terms of a sign-on bonus agreement
dated April 5, 2016 between the Company and Mr. Paradise, which provides that if Mr. Paradise voluntarily resigns from his employment
with the Company other than for “good reason” (as defined in the employment agreement) or Mr. Paradise’s employment
is terminated by the Company for “cause” (as defined in the employment agreement) within one year of the date of his
employment, Mr. Paradise will return the sign-on bonus to the Company.
In
the event that Mr. Paradise’s employment agreement is terminated due to Mr. Paradise becoming “disabled”
(as defined in the agreement) or death, the Company is obligated to continue to pay Mr. Paradise (or his estate) his
base salary, payable at regular payroll intervals, for a period of six months after termination. The Company may terminate the
agreement for “cause” (as defined in the agreement) and, in such event, Mr. Paradise will be entitled only to
accrued and unpaid salary through the date of termination of employment. In the event Mr. Paradise’s employment is
terminated by the Company without cause or in the event Mr. Paradise resigns for good reason, he would be entitled to receive
payment of his annual base salary, payable at regular payroll intervals, from the date of termination of employment through the
remainder of the term. In the event that Mr. Paradise’s employment is terminated by the Company without cause during the
period commencing 30 days prior to a “change of control” (as defined in the agreement) transaction and ending
180 days following a change of control transaction, he is entitled to receive an amount equal to the lesser of (i) the average
amount of total compensation actually received by him during the preceding three calendar years multiplied by 3 and (ii) the
maximum amount that is tax deductible to the Company under Section 280G of the Code.
GRANTS
OF PLAN-BASED AWARDS IN THE 2016 FISCAL YEAR
The
following table sets forth information concerning awards under the Company’s equity and non-equity incentive plans granted
to each of the Named Executive Officers in the 2016 Fiscal Year, including performance-based awards and those using time-based
vesting. Following the table is a discussion of material factors related to the information disclosed in the table.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
|
|
|
All Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
|
Option
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
|
Awards:
|
|
|
|
|
|
Grant Date
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Number of
|
|
|
Exercise or
|
|
|
Fair Value
|
|
|
|
|
|
|
Estimated
future payouts under equity
incentive plan awards
|
|
|
Shares of
Stock or
|
|
|
Securities
Underlying
|
|
|
Base Price
of Option
|
|
|
of Stock and
Option
|
|
|
|
Grant
|
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
Units
|
|
|
Options
|
|
|
Awards
|
|
|
Awards
|
|
Name
|
|
Date
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
(#)
|
|
|
(#)
|
|
|
($/Sh)
|
|
|
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Edward R. Rosenfeld
|
|
|
02/05/16
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
75,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2,314,500
|
|
|
|
|
08/12/16
|
(1)
|
|
|
—
|
|
|
|
2,032,884
|
(2)
|
|
|
—
|
|
|
|
27,563
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,036,093
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amelia Newton Varela
|
|
|
08/12/16
|
(1)
|
|
|
—
|
|
|
|
948,679
|
(2)
|
|
|
—
|
|
|
|
13,782
|
|
|
|
|
|
|
|
|
|
|
|
518,065
|
|
|
|
|
n/a
|
|
|
|
—
|
|
|
|
—
|
(3)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Arvind Dharia
|
|
|
03/15/16
|
|
|
|
—
|
|
|
|
948,679
|
(2)
|
|
|
—
|
|
|
|
3,101
|
|
|
|
—
|
|
|
|
—
|
|
|
|
116,567
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awadhesh Sinha
|
|
|
08/12/16
|
(1)
|
|
|
—
|
|
|
|
948,679
|
(2)
|
|
|
—
|
|
|
|
3,101
|
|
|
|
—
|
|
|
|
—
|
|
|
|
116,567
|
|
|
|
n/a
|
|
|
|
—
|
|
|
|
—
|
(4)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael Paradise
|
|
|
06/01/16
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
7,217
|
|
|
|
—
|
|
|
|
—
|
|
|
|
249,997
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) The restricted shares
of Common Stock were initially granted to Mr. Rosenfeld, Ms. Varela and Mr. Sinha on March 15, 2016; however, such awards were
forfeited and rescinded pursuant to a Forfeiture and Rescission of Awards Agreement between the Company and the Named Executive
Officer since the awards, while intended as qualified performance-based compensation under Section 162(m) of the Code, did not
qualify as qualified performance-based compensation under Section 162(m) of the Code on the initial grant date because the performance
goals in the 2006 Plan under which the awards were made had not yet been re-approved by the stockholders of the Company, as periodically
required by the 2006 Plan and Section 162(m) of the Code. The Company’s stockholders re-approved the performance goals contained
in the 2006 Plan at the 2016 Annual Meeting of Stockholders and the forfeited and rescinded awards of restricted shares of Common
Stock were re-granted to Mr. Rosenfeld, Ms. Varela and Mr. Sinha on August 12, 2016.
(2) In
the 2016 Fiscal Year, the Compensation Committee established a bonus pool for Named Executive Officers and other key executives
of the Company based on 6% of net income of the Company achieved in the 2016 Fiscal Year and also fixed each executive’s
maximum share of the 2016 bonus pool, which was 30% for Mr. Rosenfeld and 14% for each other Named Executive Officer. Since
the bonus pool was established as a percentage of the Company’s 2016 Fiscal Year net income, it would not be possible to
determine the amount of these potential bonuses until the completion of the Company’s 2016 Fiscal Year. Accordingly, the
amount indicated is a representative payout amount and equals the maximum bonus the Named Executive Officer would have been eligible
to receive from a bonus pool of $6,776,280, which equals 6% of the $112,938,000 in net income of the Company achieved in the fiscal
year ended December 31, 2015. See the discussion of the 2016 bonus pool and the individual target awards of the Named Executive
Officers appearing above in the “Annual Performance-Based Bonus - Based on Specific Performance Metrics” section of
“Compensation Structure.” As disclosed therein, the Company paid these performance bonuses in a combination of cash
and restricted shares of Common Stock granted on March 15, 2017. Accordingly, Mr. Rosenfeld, Mr. Dharia, Mr. Sinha and Mr. Paradise
received performance-based cash bonuses of $250,000, $200,000, $141,416 and $75,000, respectively, and Mr. Rosenfeld, Ms. Varela
and Mr. Paradise received grants of 39,894, 13,298, and 1,995 restricted shares of Common Stock, respectively. In accordance with
applicable SEC rules, these restricted stock awards will appear in the Summary Compensation Table to be included in our proxy
statement for our 2018 Annual Meeting of Stockholders provided the restricted stock award recipient is a named executive officer
in that proxy statement.
(3)
Under an employment agreement dated January 10, 2014 between the Company and Ms. Varela, Ms. Varela is entitled
to receive a cash bonus under the Company’s 2006 Plan on or about March 15, 2017 in an amount equal to 2% of the increase,
if any, in the Company’s total EBIT for the 2016 Fiscal Year over the Company’s total EBIT for the fiscal year ended
December 31, 2015. Since it would not be possible to determine the amount of Ms. Varela’s cash bonus, if any, until
the completion of the 2016 Fiscal Year, the amount indicated as the target bonus payout is a representative amount and based upon
the actual decrease in the EBIT performance of the Company for the fiscal year ended December 31, 2015 from the EBIT performance
of the Company for the fiscal year ended December 31, 2014. See the discussion of this grant to Ms. Varela appearing above
in the “Annual Performance-Based Bonus - Based on Specific Performance Metrics” section of “Compensation Structure”
and above under “Employment Arrangements.” As disclosed therein, this performance-based bonus was not achieved with
respect to the 2016 Fiscal Year.
(4)
Under an employment agreement dated January 10, 2014 between the Company and Mr. Sinha, Mr. Sinha is entitled to
receive a cash bonus under the Company’s 2006 Plan on or about March 15, 2017 in an amount equal to 2% of the increase,
if any, in the Company’s EBITDA for the 2016 Fiscal Year over the Company’s EBITDA for the immediately preceding fiscal
year. The maximum annual bonus is $600,000, the first $300,000 of which is payable in cash and for any amount of the annual bonus
in excess of $300,000 by a grant of restricted shares of the Company’s common stock, which restricted common stock will
vest in three equal annual installments commencing on the first anniversary of the grant date. Since it would not be possible
to determine the amount of Mr. Sinha’s bonus, if any, until the completion of the 2016 Fiscal Year, the amount indicated
as the target bonus payout is a representative amount and based upon the actual decrease in the EBITDA performance of the Company
for the fiscal year ended December 31, 2015 from the EBITDA performance of the Company for the fiscal year ended December 31,
2014. See the discussion of this grant to Mr. Sinha appearing above in the “Annual Performance-Based Bonus - Based
on Specific Performance Metrics” section of “Compensation Structure” and above under “Employment Arrangements.”
As disclosed in the Summary Compensation Table above, Mr. Sinha received a cash bonus of $58,584 for 2016 EBITDA performance of
the Company.
Plan-Based Awards
2006
Stock Incentive Plan
As
of March 10, 2006, the Board of Directors of the Company adopted the Company’s 2006 Stock Incentive Plan and, on May 26,
2006, the Company’s stockholders approved the adoption of the Company’s 2006 Stock Incentive Plan. The 2006 Stock
Incentive Plan was amended in 2007 and 2008. On April 6, 2009, the Board of Directors adopted an Amended and Restated 2006
Stock Incentive Plan and, on May 22, 2009, the Company’s stockholders approved the Amended and Restated 2006 Stock
Incentive Plan. On April 5, 2012, the Board of Directors approved an amendment of the Amended and Restated 2006 Stock Incentive
Plan primarily to increase the number of shares of Common Stock available for issuance thereunder, subject to stockholder approval
of such amendment. The amendment to the Amended and Restated 2006 Stock Incentive Plan was approved by the Company’s stockholders
at the 2012 Annual Meeting of Stockholders on May 25, 2012. The Company’s stockholders re-approved the material terms
of the performance goals currently contained in the 2006 Stock Incentive Plan pursuant to the requirements of Section 162(m) of
the Code at the 2016 Annual Meeting of Stockholders on May 27, 2016.
The
Company’s Amended and Restated 2006 Stock Incentive Plan is referred to as the “2006 Plan” throughout this Proxy
Statement. The purpose of the 2006 Plan is to enhance the profitability and value of the Company for the benefit of its stockholders
by enabling the Company to offer eligible employees, consultants and non-employee directors cash and stock-based incentives in
the Company to attract, retain and reward such individuals and provide additional incentive for such persons to exert maximum
efforts for the success of the Company by encouraging stock ownership in the Company. The 2006 Plan serves as a means to strengthen
the mutuality of interests between such individuals and the Company’s stockholders.
The
maximum number of shares of Common Stock available for issuance under the 2006 Plan is 23,466,000 shares. As of the Record Date,
there were outstanding 4,228,715 unvested shares of restricted stock and options to purchase 2,323,004 shares of Common Stock;
options had been exercised, or restricted stock had vested, with respect to 14,699,600 shares of Common Stock; and 1,937,884 shares
of Common Stock remained available for grant under the 2006 Plan.
OUTSTANDING
EQUITY AWARDS AT END OF THE 2016 FISCAL YEAR
The
following table sets forth information concerning unexercised stock options, restricted stock that has not vested and stock awards
outstanding for each of the Named Executive Officers as of the end of the 2016 Fiscal Year. All awards that occurred prior to
the three-for-two split of the Company’s Common Stock effectuated as a stock dividend on or about April 30, 2010, the
three-for-two split of the Company’s Common Stock effectuated as a stock dividend on or about May 31, 2011 and the
three-for-two split of the Company’s Common Stock effectuated as a stock dividend on or about October 1, 2013 have
been adjusted to account for each such stock split, as applicable.
|
|
Option
Awards
|
|
|
Stock
Awards
|
Name
|
|
Number
of
Securities
Underlying
Unexercised
Options
(#) Exercisable
|
|
|
Number
of
securities
Underlying
Unexercised
Options
(#) Unexercisable
|
|
|
Equity
Incentive Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options (#)
|
|
|
Option
Exercise
Price
($)
|
|
|
Option
Expiration
Date
|
|
|
Number
of
Shares or
Units of Stock
That Have
Not Vested
(#)
|
|
Market
Value
of Shares or
Units of Stock
That Have
Not Vested
($)
|
|
|
Equity
Incentive Plan
Awards:
Number of
Unearned
Shares, Units or
Other Rights
That Have
Not Vested
(#)
|
|
|
Equity
Incentive Plan
Awards:
Market or
Payout Value of
Unearned
Shares, Units or
Other Rights
That Have
Not Vested
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Edward R. Rosenfeld
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
244,183
|
(1)
|
|
8,729,542
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amelia Newton Varela
|
|
|
168,750
|
|
|
|
—
|
|
|
|
—
|
|
|
|
16.9645
|
|
|
|
2/1/2018
|
|
|
44,560
|
(3)
|
|
1,593,020
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
50,000
|
|
|
|
50,000
|
(2)
|
|
|
—
|
|
|
|
32.5900
|
|
|
|
2/3/2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Arvind Dharia
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
18,579
|
(4)
|
|
664,199
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awadhesh Sinha
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
7,329
|
(5)
|
|
262,012
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael Paradise
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
7,217
|
(6)
|
|
258,008
|
|
|
|
—
|
|
|
|
—
|
|
(1) On March 14, 2012, Mr. Rosenfeld was awarded 30,000 shares of restricted Common Stock, which shares vest in five equal annual installments commencing on the first anniversary of the date awarded. On January 2, 2013, Mr. Rosenfeld was awarded 150,000 shares of restricted Common Stock, which shares vest in five equal annual installments commencing on December 1, 2013 and on each December 1
st
thereafter. On March 15, 2013, Mr. Rosenfeld was awarded 30,000 shares of restricted Common Stock, which shares vest in five equal annual installments commencing on the first anniversary of the date awarded. On March 17, 2014, Mr. Rosenfeld was awarded 22,265 shares of restricted Common Stock, which shares vest in five substantially equal annual installments commencing on March 5, 2015. On March 11, 2015, Mr. Rosenfeld was awarded 25,326 shares of restricted Common Stock, which shares vest in five substantially equal annual installments commencing on March 5, 2016. On December 31, 2015, Mr. Rosenfeld was awarded 75,000 shares of restricted Common Stock, which shares vest in five equal annual installments commencing on December 31, 2016. On February 5, 2016, Mr. Rosenfeld was awarded 75,000 shares of restricted Common Stock, which shares vest in five equal annual installments commencing on March 5, 2017. On March 15, 2016, Mr. Rosenfeld was awarded 27,563 shares of restricted Common Stock, which shares vest in five substantially equal annual installments commencing on March 5, 2017. The above-referenced grants of restricted shares on March 11, 2015 and March 15, 2016 were forfeited and rescinded pursuant to a Forfeiture and Rescission of Awards Agreement between Mr. Rosenfeld and the Company because the grants, while intended as qualified performance-based compensation under Section 162(m) of the Code, did not qualify as qualified performance-based compensation under Section 162(m) of the Code on the grant date because the performance goals in the 2006 Plan under which the grants were made had not yet been re-approved by the stockholders of the Company, as periodically required by the 2006 Plan and Section 162(m of the Code. The Company’s stockholders re-approved the performance goals contained in the 2006 Plan at the 2006 Annual Meeting of Stockholders and the forfeited and rescinded grants of restricted shares were re-granted to Mr. Rosenfeld on August 12, 2016.
(2) On
February 3, 2014, Ms. Varela was granted an option to purchase 100,000 shares of the Company’s Common Stock under
the 2006 Plan, which option vests in four equal annual installments commencing on the first anniversary of the date of grant.
(3) On March 14, 2012, Ms. Varela was awarded 17,209 shares of restricted Common Stock, which shares vest in five substantially equal annual installments commencing on the first anniversary of the date awarded. On March 15, 2013, Ms. Varela was awarded 15,000 shares of restricted Common Stock, which shares vest in five equal annual installments commencing on the first anniversary of the date awarded. On March 17, 2014, Ms. Varela was awarded 15,118 shares of restricted Common Stock, which shares vest in five substantially equal annual installments commencing on March 5, 2015. On March 11, 2015, Ms. Varela was awarded 15,329 shares of restricted Common Stock, which shares vest in five substantially equal annual installments commencing on March 5, 2016. On March 15, 2016, Ms. Varela was awarded 13,782 shares of restricted Common Stock, which shares vest in five substantially equal annual installments commencing on March 5, 2017. The above-referenced grants of restricted shares on March 11, 2015 and March 15, 2016 were forfeited and rescinded pursuant to a Forfeiture and Rescission of Awards Agreement between Ms. Varela and the Company because the grants, while intended as qualified performance-based compensation under Section 162(m) of the Code, did not qualify as qualified performance-based compensation under Section 162(m) of the Code on the grant date because the performance goals in the 2006 Plan under which the grants were made had not yet been re-approved by the stockholders of the Company, as periodically required by the 2006 Plan and Section 162(m of the Code. The Company’s stockholders re-approved the performance goals contained in the 2006 Plan at the 2006 Annual Meeting of Stockholders and the forfeited and rescinded grants of restricted shares were re-granted to Ms. Varela on August 12, 2016.
(4) On April 2, 2012, Mr. Dharia was awarded 7,500 shares of restricted Common Stock, which shares vest in five equal annual installments commencing on the first anniversary of the date awarded. On February 2, 2015, Mr. Dharia was awarded 15,000 shares of restricted Common Stock, which shares vest in five equal annual installments commencing on the first anniversary of the date awarded. On March 11, 2015, Mr. Dharia was awarded 5,506 shares of restricted Common Stock, which shares vest in four substantially equal annual installments commencing on December 15, 2015. On March 15, 2016, Mr. Dharia was awarded 3,101 shares of restricted Common Stock, which shares vest in four substantially equal annual installments commencing on December 15, 2016.
(5) On March 14, 2012, Mr. Sinha was awarded 11,250 shares of restricted Common Stock, which shares vest in five equal annual installments commencing on the first anniversary of the date awarded. On March 11, 2015, Mr. Sinha was awarded 5,506 shares of restricted Common Stock, which shares vest in four substantially equal annual installments commencing on December 15, 2015. On March 15, 2016, Mr. Sinha was awarded 3,101 shares of restricted Common Stock, which shares vest in four substantially equal annual installments commencing on December 15, 2016. The grant of restricted shares on March 15, 2016 was forfeited and rescinded pursuant to a Forfeiture and Rescission of Awards Agreement between Mr. Sinha and the Company because the grant, while intended as qualified performance-based compensation under Section 162(m) of the Code, did not qualify as qualified performance-based compensation under Section 162(m) of the Code on the grant date because the performance goals in the 2006 Plan under which the grant was made had not yet been re-approved by the stockholders of the Company, as periodically required by the 2006 Plan and Section 162(m of the Code. The Company’s stockholders re-approved the performance goals contained in the 2006 Plan at the 2006 Annual Meeting of Stockholders and the forfeited and rescinded grant of restricted shares was re-granted to Mr. Sinha on August 12, 2016.
(6) On
June 1, 2016, Mr. Paradise was awarded 7,217 shares of restricted Common Stock, which shares vest in four substantially equal
annual installments commencing on the first anniversary of the date awarded.
OPTION
EXERCISES AND STOCK VESTED IN THE 2016 Fiscal Year
The
following table sets forth information concerning stock options exercised and restricted stock vested during the 2016 Fiscal Year
for each of the Named Executive Officers. The value realized from exercised options is deemed to be the market value of the Common
Stock on the date of exercise, less the exercise price of the option, multiplied by the number of shares of Common Stock underlying
the option. The value realized from the vesting of restricted stock is deemed to be the market value of the Common Stock on the
date of vesting multiplied by the number of shares vesting.
|
|
Option Awards
|
|
|
Stock Awards
|
|
Name
|
|
Number of
Shares
Acquired on
Exercise
(#)
|
|
|
Value
Realized
on Exercise
($)
|
|
|
Number of
Shares
Acquired
on Vesting
(#)
|
|
|
Value
Realized
on Vesting
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Edward R. Rosenfeld
|
|
|
225,000
|
|
|
|
6,878,250
|
|
|
|
66,518
|
|
|
|
2,443,427
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amelia Newton Varela
|
|
|
130,784
|
|
|
|
3,523,812
|
|
|
|
12,531
|
|
|
|
455,520
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Arvind Dharia
|
|
|
—
|
|
|
|
—
|
|
|
|
6,652
|
|
|
|
235,252
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awadhesh Sinha
|
|
|
—
|
|
|
|
—
|
|
|
|
14,365
|
|
|
|
548,620
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael Paradise
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
SECURITIES
AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS
The
following table sets forth information as of December 31, 2016 with respect to compensation plans (including individual compensation
arrangements) under which shares of Common Stock are authorized for issuance, aggregated as follows:
|
|
|
|
·
|
All compensation plans previously approved
by security holders; and
|
|
·
|
All
compensation plans not previously approved by security holders.
|
EQUITY
COMPENSATION PLAN INFORMATION
|
|
Number of
securities to be
issued upon
exercise of
outstanding
options, warrants
and rights
(#)
|
|
|
Weighted average
exercise price of
outstanding options,
warrants and rights
($)
|
|
|
Number of securities
remaining available
for future issuance
under equity
compensation plans
(excluding securities
reflected in column (a))
(#)
|
|
|
|
(a)
|
|
|
(b)
|
|
|
(c)
|
|
|
|
|
|
|
|
|
|
|
|
Equity compensation plans approved by security holders
|
|
|
1,499,000
|
|
|
|
29.72
|
|
|
|
3,151,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity compensation plans not approved by security holders
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
1,499,000
|
|
|
|
29.72
|
|
|
|
3,151,000
|
|
Termination,
Change in Control and Non-Competition/Non-Solicitation
The
employment agreements for Ms. Varela and Messrs. Rosenfeld, Dharia, Sinha and Paradise provide for a severance payment upon a
termination of employment in connection with a change-in-control of the Company. The employment agreements of Messrs. Rosenfeld,
Dharia and Sinha also provide for severance payment if the executive terminates his employment for good reason in connection with
a change-in-control event. The change-in-control severance payments may result in the application of the “golden parachute”
provisions of Section 280G of the Code and, to the extent Section 280G applies, the Company may not deduct from its
taxable income the severance payments made to the Named Executive Officer. Moreover, Section 4999 of the Code would impose
a 20% excise tax on the Named Executive Officer receiving the severance payment. In the case of Ms. Varela and Mr. Paradise,
these severance payments in connection with a change-in-control, however, are reduced if the severance payment, when added to
any other benefits triggered by a change-of-control, is determined to constitute an “excess parachute payment” under
Sections 280G and 4999 of the Code, to the maximum amount that is deductible to the Company under Section 280G of the
Code. In the case of Messrs. Rosenfeld, Dharia and Sinha, the executive’s change-in-control severance payment will only
be reduced to the maximum amount that is deductible to the Company under Section 280G of the Code if the reduction provides
the Named Executive Officer with the best after-tax result; otherwise, the Named Executive Officer will receive the full amount
of the severance payment and other benefits triggered by the change-in-control and be liable for the 20% excise tax on the excess
parachute payment in addition to all other applicable taxes and, in such case, the deduction by the Company of the portion of
the severance payment constituting an excess parachute payment will be disallowed.
The
Company’s employment agreements with Ms. Varela and Messrs. Rosenfeld, Dharia and Sinha also provide for severance payments
to the executive if the Company terminates the executive’s employment without cause, or, in the case of Mr. Rosenfeld,
Mr. Sinha and Mr. Paradise, if the Company gives him good reason to terminate employment.
Please
see the section of this Proxy Statement captioned “Employment Arrangements” for a summary description of the Named
Executive Officers’ employment agreements and such severance and change-in-control provisions. These benefits are described
and quantified in the section of this Proxy Statement captioned “Potential Payments Upon Termination or Change-In-Control”
below.
The
Company believes that the severance payments and payments made upon change-in-control provisions in the employment agreements
provide appropriate protection to the Company’s executives, comparable to that available at peer companies, and, with regard
to the enhanced severance following a change-in-control, protects the Company from losing key executives during a period when
a change-in-control may be threatened or pending. These benefits are described and quantified in the section below captioned “Potential
Payments Upon Termination or Change-In-Control.”
Mr.
Paradise and Ms. Varela have each agreed to a non-compete and non-solicitation restriction through the expiration date of
his or her employment agreement, December 31, 2018 and December 31, 2019, respectively, in the event of a voluntary termination
or termination for cause. Messrs. Rosenfeld and Sinha have each agreed to a non-compete and non-solicitation restriction during
the period of his employment and for a six-month period following the termination of his employment for cause or in the event
of his resignation without good reason. Mr. Dharia does not have non-compete or non-solicitation provisions in his employment
agreement.
POTENTIAL
PAYMENTS UPON TERMINATION OR CHANGE-IN-CONTROL
The
Company’s employment agreements with the Named Executive Officers provide for payments to such individuals upon termination
of employment or a change-in-control of the Company. Please see the section of this Proxy Statement captioned “Employment
Arrangements.” The amounts set forth in the table below shall be payable to the respective Named Executive Officer if such
Named Executive Officer’s employment is terminated under the various scenarios set forth below.
NAME
|
|
CASH
PAYMENT
|
|
|
CONTINUATION
OF MEDICAL /
WELFARE
BENEFITS
(PRESENT
VALUE)
|
|
|
ACCELERATION
AND
CONTINUATION
OF EQUITY
AWARD
|
|
|
REDUCTION
OF
BENEFITS UPON A
CHANGE-IN-
CONTROL (1)
|
|
|
TOTAL
TERMINATION
BENEFITS
|
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
TERMINATION DUE TO DEATH
|
|
|
|
|
|
Edward R. Rosenfeld
|
|
|
850,000
|
(2)
|
|
|
18,499
|
(3)
|
|
|
—
|
|
|
|
—
|
|
|
|
868,499
|
|
Amelia Newton Varela
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Arvind Dharia
|
|
|
582,455
|
(4)
|
|
|
13,330
|
(3)
|
|
|
—
|
|
|
|
—
|
|
|
|
595,785
|
|
Awadhesh Sinha
|
|
|
681,000
|
(5)
|
|
|
13,330
|
(3)
|
|
|
—
|
|
|
|
|
|
|
|
694,330
|
|
Michael Paradise
|
|
|
200,000
|
(6)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
200,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TERMINATION DUE TO TOTAL
DISABILITY
|
|
|
|
|
|
Edward R. Rosenfeld
|
|
|
850,000
|
(2)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
850,000
|
|
Amelia Newton Varela
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Arvind Dharia
|
|
|
582,455
|
(4)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
582,455
|
|
Awadhesh Sinha
|
|
|
681,000
|
(5)
|
|
|
13,330
|
(3)
|
|
|
—
|
|
|
|
—
|
|
|
|
694,330
|
|
Michael Paradise
|
|
|
200,000
|
(6)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
200,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TERMINATION FOR CAUSE;
RESIGNATION WITHOUT GOOD REASON
|
|
Edward R. Rosenfeld
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Amelia Newton Varela
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Arvind Dharia
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Awadhesh Sinha
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Michael Paradise
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TERMINATION OTHER THAN
FOR CAUSE; RESIGNATION FOR GOOD REASON
|
|
Edward R. Rosenfeld
|
|
|
1,750,000
|
(7)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,750,000
|
|
Amelia Newton Varela
|
|
|
1,950,000
|
(8)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,950,000
|
|
Arvind Dharia
|
|
|
582,455
|
(9)
|
|
|
99,641
|
(10)
|
|
|
—
|
|
|
|
—
|
|
|
|
682,096
|
|
Awadhesh Sinha
|
|
|
2,106,000
|
(11)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2,106,000
|
|
Michael Paradise
|
|
|
800,000
|
(12)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
800,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TERMINATION UPON A CHANGE-IN-CONTROL
|
|
|
|
|
|
Edward R. Rosenfeld
|
|
|
1,993,775
|
(13)
|
|
|
—
|
|
|
|
8,729,542
|
(14)
|
|
|
—
|
|
|
|
10,723,317
|
|
Amelia Newton Varela
|
|
|
4,567,974
|
(15)
|
|
|
—
|
|
|
|
1,751,020
|
(14)
|
|
|
—
|
|
|
|
6,318,994
|
|
Arvind Dharia
|
|
|
4,414,374
|
(16)
|
|
|
—
|
|
|
|
664,190
|
(14)
|
|
|
—
|
|
|
|
5,078,564
|
|
Awadhesh Sinha
|
|
|
3,646,908
|
(17)
|
|
|
—
|
|
|
|
1,269,045
|
(14)
|
|
|
—
|
|
|
|
4,915,953
|
|
Michael Paradise
|
|
|
1,486,848
|
(18)
|
|
|
—
|
|
|
|
258,008
|
(14)
|
|
|
(70,281
|
)
|
|
|
1,674,575
|
(19)
|
|
(1)
|
The
employment agreements of Ms. Varela and Mr. Paradise provide that severance
payments in connection with a change-in-control are reduced if the severance payment,
when added to any other benefits triggered by a change-of-control, is determined to constitute
an “excess parachute payment” under Sections 280G and 4999 of the Code,
to the maximum amount that is deductible to the Company under Section 280G of the
Code. The employment agreements of Messrs. Rosenfeld, Dharia and Sinha indicate that
the executive’s change-in-control severance payment will only be reduced to the
maximum amount that is deductible to the Company under Section 280G of the Code
if the reduction provides the Named Executive Officer with the best after-tax result;
otherwise, the Named Executive Officer will receive the full amount of the severance
payment and other benefits triggered by the change-in-control and be liable for the 20%
excise tax on the excess parachute payment in addition to all other applicable taxes
and, in such case, the deduction by the Company of the portion of the severance payment
constituting an excess parachute payment will be disallowed.
|
|
(2)
|
Consists
of Mr. Rosenfeld’s 2017 base salary of $850,000, which would be paid at regular
intervals.
|
|
(3)
|
Consists
of medical benefits.
|
|
(4)
|
Consists
of Mr. Dharia’s 2017 base salary of $582,455, which would be paid at regular
intervals.
|
|
(5)
|
Consists
of Mr. Sinha’s 2017 base salary of $681,000, which would be
paid at regular intervals.
|
|
(6)
|
Consists
of six months of Mr. Paradise’s 2016 base salary of $400,000, which would be paid
at regular intervals.
|
|
(7)
|
Consists
of the base salary of $850,000 and $900,000 for 2017 and 2018, respectively, that would
have been paid to Mr. Rosenfeld during the remainder of the term of his employment
until the expiration of his employment agreement on December 31, 2018. Mr. Rosenfeld
would receive these payments at regular intervals.
|
|
(8)
|
Consists
of the base salary of $630,000, $650,000 and $670,000 for 2017, 2018 and 2019, respectively,
that would have been paid to Ms. Varela during the remainder of the term of her
employment until the expiration of her employment agreement on December 31, 2019.
Ms. Varela would receive these payments at regular intervals.
|
|
(9)
|
Consists
of Mr. Dharia’s 2016 base salary of $582,455 multiplied by the number of years
(and fraction of years) remaining in the term of his employment agreement, which
expires on December 31, 2017. Mr. Dharia would receive 50% of this payment
immediately and the remaining 50% would be paid to him one year later (i.e., on December 31,
2017).
|
|
(10)
|
Consists
of one times the sum of Mr. Dharia’s life insurance payment ($86,311 per year) plus
medical benefits ($13,330 per year).
|
|
(11)
|
Consists
of the base salary of $681,000, $702,000 and $723,000 for 2017, 2018 and 2019, respectively,
that would have been paid to Mr. Sinha during the remainder of the term of his employment
until the expiration of his employment agreement on December 31, 2019. Mr. Sinha
would receive these payments at regular intervals.
|
|
(12)
|
Consists
of the base salary of $400,000 that would have been paid to Mr. Paradise during
the remainder of the term of his employment until the expiration of his employment agreement
on December 31, 2018. Mr. Paradise would receive these payments at regular intervals.
|
|
(13)
|
Consists
of two and one-half times the sum of (i) Mr. Rosenfeld’s 2016 base salary of $800,000
plus (ii) the average cash bonus received by Mr. Rosenfeld for the three-year period
ending on December 31, 2015. Upon a change-in-control, payments (or portions thereof) to
Mr. Rosenfeld determined to constitute an “excess parachute payment”
may be reduced to the maximum amount that would be tax deductible by the Company pursuant
to Sections 280G of the Code. Upon a hypothetical December 31, 2016 change-in-control,
no payments to Mr. Rosenfeld would have been subject to reduction. See the “Implications
of Tax and Accounting Matters” section of “Compensation Discussion and Analysis”
for a discussion of the applicability of Sections 280G and 4999 of the Code to change-in-control
payments generally. See also the summary of Mr. Rosenfeld’s employment agreement
under “Employment Arrangements.”
|
|
(14)
|
The
amount disclosed represents the total value of the restricted stock and stock options
which would have received accelerated vesting upon a hypothetical change in control on
December 31, 2016.
|
|
(15)
|
Consists
of three times the average total compensation Ms. Varela actually received for the
preceding three calendar years. Upon a change-in-control, payments (or portions thereof) to
Ms. Varela determined to constitute an “excess parachute payment” may
be subject to reduction to the maximum amount that would be tax deductible by the Company
pursuant to Sections 280G of the Code. Upon a hypothetical December 31, 2016
change-in-control, no payments to Ms. Varela would have been subject to reduction.]
See the “Implications of Tax and Accounting Matters” section of “Compensation
Discussion and Analysis” for a discussion of the applicability of Sections 280G
and 4999 of the Code to change-in-control payments generally. See also the summary of
Ms. Varela’s employment agreement under “Employment Arrangements.”
|
|
(16)
|
Consists
of three times the total compensation Mr. Dharia actually received for the preceding
twelve calendar months, except that in lieu of the actual base salary component received
during such period, there has been substituted the annual base salary to which Mr. Dharia
was entitled as of the date of termination or resignation. Upon a change-in-control,
payments (or portions thereof) to Mr. Dharia determined to constitute an “excess
parachute payment” may be subject to reduction to the maximum amount that would
be tax deductible by the Company pursuant to Sections 280G of the Code. Upon a hypothetical
December 31, 2016 change-in-control, no payments to Mr. Dharia would have been
subject to reduction. See the “Implications of Tax and Accounting Matters”
section of “Compensation Discussion and Analysis” for a discussion of the
applicability of Sections 280G and 4999 of the Code to change-in-control payments
generally. See also the summary of Mr. Dharia’s employment agreement under
“Employment Arrangements.”
|
|
(17)
|
Consists
of three times the sum of base compensation and certain benefits Mr. Sinha actually
received for the preceding twelve calendar months, except that in lieu of the actual
base salary component received during such period, there has been substituted the annual
base salary to which Mr. Sinha was entitled as of the date of termination or resignation.
Upon a change-in-control, payments (or portions thereof) to Mr. Sinha determined
to constitute an “excess parachute payment” may be subject to reduction to
the maximum amount that would be tax deductible by the Company pursuant to Sections 280G
of the Code. Upon a hypothetical December 31, 2016 change-in-control, no payments
to Mr. Sinha would have been subject to reduction. See the “Implications of
Tax and Accounting Matters” section of “Compensation Discussion and Analysis”
for a discussion of the applicability of Sections 280G and 4999 of the Code to change-in-control
payments generally. See also the summary of Mr. Sinha’s employment agreement
under “Employment Arrangements.”
|
|
(18)
|
Consists
of three times the average total compensation Mr. Paradise actually received for the
preceding three calendar years. Upon a change-in-control, payments (or portions thereof) to
Mr. Paradise determined to constitute an “excess parachute payment”
may be subject to reduction to the maximum amount that would be tax deductible by the
Company pursuant to Sections 280G of the Code. Upon a hypothetical December 31,
2016 change-in-control, this amount would have been reduced by $70,281 to reflect the
maximum amount that would be tax deductible by the Company pursuant to Section 280G of
the Code. See the “Implications of Tax and Accounting Matters” section of
“Compensation Discussion and Analysis” for a discussion of the applicability
of Sections 280G and 4999 of the Code to change-in-control payments generally. See
also the summary of Mr. Paradise’s employment agreement under “Employment
Arrangements.”
|
|
(19)
|
The
total amount does not include the amount deducted pursuant to Section 280G of the Code.
|
COMPENSATION
COMMITTEE REPORT
The
Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis with management, and based on the review
and discussions, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis
be included in this Proxy Statement.
Submitted by
the Compensation Committee of the Company’s Board of Directors:
|
|
|
Peter Migliorini (Chairman)
|
|
Rose
Peabody Lynch
Thomas H. Schwartz
Robert Smith
|
PROPOSAL
TWO:
RATIFICATION OF THE APPOINTMENT OF EISNERAMPER LLP AS THE COMPANY’S
INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS
FOR THE FISCAL YEAR ENDING DECEMBER 31, 2017
The
Audit Committee has appointed EisnerAmper LLP as the Company’s independent registered public accounting firm to conduct
the audit of the Company’s books and records for the fiscal year ending December 31, 2017. EisnerAmper LLP has served
as the Company’s independent registered public accountants since 1995.
Before
making its determination on appointment, the Audit Committee carefully considers the qualifications and competence of candidates
for the independent registered public accountants. For EisnerAmper LLP, this has included a review of its performance in prior
years, its independence and processes for maintaining independence, the results of the most recent internal quality control review
or Public Company Accounting Oversight Board inspection, the key members of the audit engagement team, the firm’s approach
to resolving significant accounting and auditing matters including consultation with the firm’s national office, as well
as its reputation for integrity and competence in the fields of accounting and auditing. Although ratification by stockholders
is not required by the Company’s organizational documents or any applicable law, the Audit Committee has determined that
requesting ratification by stockholders of its appointment of EisnerAmper LLP as the Company’s independent registered public
accountants is a matter of good corporate practice. If stockholders do not ratify the selection, the Audit Committee will reconsider
whether or not to retain EisnerAmper LLP, but may still retain the accounting firm. 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.
Representatives
of EisnerAmper LLP are expected to be present at the Annual Meeting to respond to appropriate questions and to make a statement
should they so desire.
Required Vote
The
affirmative vote of the holders of a majority of the outstanding shares of Common Stock present or represented by proxy and entitled
to vote at the Annual Meeting is required to ratify the Audit Committee’s selection of EisnerAmper LLP.
Recommendation of the Board
of Directors
The
Board of Directors unanimously recommends a vote “FOR” the ratification of the appointment of EisnerAmper LLP as the
Company’s independent registered public accountants for the fiscal year ending December 31, 2017. Unless marked to
the contrary, proxies received from stockholders will be voted in favor of ratifying the appointment of EisnerAmper LLP as the
Company’s independent registered public accountants for the fiscal year ending December 31, 2017.
Independent Registered Public
Accounting Firm’s Fees and Services
The
aggregate fees billed to the Company by EisnerAmper LLP for professional services rendered for each of the past two years are
set forth below:
|
|
Year Ended December 31,
|
|
|
|
2016
|
|
|
2015
|
|
Audit Fees
(1)
|
|
$
|
875,500
|
|
|
$
|
854,500
|
|
Audit-Related Fees
(2)
|
|
|
182,131
|
|
|
|
46,000
|
|
Tax Fees
(3)
|
|
|
—
|
|
|
|
95,550
|
|
All Other Fees
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
1,057,631
|
|
|
$
|
996,050
|
|
(1)
Represents the aggregate fees billed for (a) the audit of the Company’s annual financial statements, (b) the
reviews of the financial statements included in the Company’s Quarterly Reports on Form 10-Q, (c) other statutory and
regulatory filings or engagements and (d) the audit of the Company’s internal controls over financial reporting.
(2)
Represents the aggregate fees billed for audit-related fees related to assurance and related services. Includes, among others,
the audit of the Company’s employee benefit plans and other accounting related consultations and, with respect to the 2016
Fiscal Year, services rendered in connection with due diligence performed for the Company’s acquisition of a business.
(3)
Represents the aggregate fees billed for tax compliance, tax advice and tax planning services. These professional services
include assistance in the preparation of the Company’s various federal, state and local tax returns, tax consultation and
various amendments and, with respect to the fiscal year ended December 31, 2015, for services rendered in connection with a transfer
pricing study.
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 registered public accountants. 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 registered
public accountants. 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 EisnerAmper 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 independence
of EisnerAmper LLP.
AUDIT
COMMITTEE REPORT
The
Audit Committee reviewed the Company’s audited financial statements for the 2016 Fiscal Year and met with both management
and representatives of EisnerAmper LLP, the Company’s independent registered public accountants, to discuss such audited
financial statements. Management and the Company’s independent registered 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 EisnerAmper LLP the written disclosures and the letter
regarding EisnerAmper LLP’s communications with the Audit Committee concerning independence as required by applicable requirements
of the Public Company Accounting Oversight Board, and discussed with EisnerAmper LLP the independence of EisnerAmper LLP. The
Audit Committee also discussed with EisnerAmper LLP any matters required to be discussed by Statement on Auditing Standards No.
61, as amended, as adopted by the Public Company Accounting Oversight Board in Rule 3200T. 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 2016 Fiscal Year.
Submitted by
the Audit Committee of the Company’s Board of Directors:
|
|
|
Richard P. Randall (Chairman)
|
|
Rose
Peabody Lynch
Peter Migliorini
|
|
Ravi
Sachdev
|
PROPOSAL
THREE:
NON-BINDING ADVISORY VOTE ON EXECUTIVE COMPENSATION
Section 14A
of the Exchange Act, as created by Section 951 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank
Act”), and the rules and regulations promulgated thereunder, require a publicly traded company to include a resolution in
its proxy statement at least once every three years seeking stockholder approval, on an advisory or non-binding basis, of the
compensation of the named executive officers as disclosed in such company’s proxy statement pursuant to the compensation
rules of the SEC. At our 2011 Annual Meeting of Stockholders, the Company’s stockholders approved, on an advisory basis,
the holding of an advisory vote to approve executive compensation (commonly known as a “say-on-pay” proposal) on
an annual basis. Based on these results, the Board of Directors determined to hold its advisory vote to approve executive compensation
annually until the next frequency vote, which is scheduled to occur at the Annual Meeting this year as described in Proposal Four.
Accordingly, we are providing stockholders with a non-binding advisory vote on the compensation of our Named Executive Officers.
As
described in more detail in the Compensation Discussion and Analysis section, which begins on page 24 of this Proxy Statement,
the overall objective of the Company’s executive compensation programs and practices is to support delivery of sustained
operating and financial performance results with the ultimate goal being to create and maximize value for our stockholders on
a long-term basis. We believe that our executive compensation programs and practices serve the interests of our stockholders by
enabling us to attract and retain an experienced and effective management team whose combined knowledge of our business and the
footwear and accessories industries has proved extremely valuable in delivering results for our stockholders. The Compensation
Committee and the Board of Directors believe that the Company’s compensation programs and practices as articulated in the
Compensation Discussion and Analysis section of this Proxy Statement effectively implement our philosophy of aligning compensation
to stockholder interests and that the compensation received by our Named Executive Officers in the 2016 Fiscal Year reflects and
supports such philosophy and goal and is commensurate with the performance and strategic position of the Company. We will continue
to review and modify our executive compensation programs to address evolving best practices and changing regulatory requirements.
We
encourage stockholders to read the Compensation Discussion and Analysis section of this Proxy Statement, as well as the Summary
Compensation Table and other related compensation tables and narrative disclosure contained in this Proxy Statement, all of which
describe and explain in detail the compensation of our Named Executive Officers in the 2016 Fiscal Year.
The following
resolution is submitted for stockholder approval:
“
RESOLVED
,
that the stockholders of Steven Madden, Ltd. (the ‘Company’) approve, on a non-binding advisory basis, the compensation
paid to the Named Executive Officers of the Company as disclosed pursuant to the compensation disclosure rules of the Securities
and Exchange Commission, including the executive compensation as described in the section captioned ‘Compensation Discussion
and Analysis,’ the Summary Compensation Table and related tabular disclosure and narrative discussion regarding compensation
of Named Executive Officers under the caption ‘Executive Compensation’ contained in the Company’s Proxy Statement
dated April 5, 2017.”
This
vote is not intended to address any specific item of compensation, but rather the overall compensation of our Named Executive
Officers and the compensation programs and practices described in this Proxy Statement. While this advisory vote on executive
compensation, commonly referred to as a “say-on-pay” advisory vote, is required by Section 14A of the Exchange
Act, it is not binding on our Board of Directors and may not be construed as overruling any decision by the Board of Directors
or the Compensation Committee. However, we value the opinions of our stockholders. To the extent there is a significant
vote against the compensation of the Named Executive Officers as disclosed in this Proxy Statement, the Board of Directors and
the Compensation Committee will consider the outcome of the vote when considering future compensation arrangements and evaluate
whether any actions are necessary to address the stockholders’ concerns.
Required Vote
Approval
of this resolution requires the affirmative vote of a majority of the shares of Common Stock present or represented by proxy and
entitled to vote at the Annual Meeting.
Recommendation of the Board
of Directors
The
Board of Directors unanimously recommends a vote “FOR” the resolution approving the overall compensation of the Named
Executive Officers for the 2016 Fiscal Year.
PROPOSAL
FOUR:
NON-BINDING
ADVISORY VOTE ON FREQUENCY OF ADVISORY VOTE ON EXECUTIVE COMPENSATION
Pursuant
to Section 14A of the Exchange Act, as created by Section 951 of the Dodd-Frank Act, and the rules and regulations promulgated
thereunder, we are required, at least once every six years, to afford our stockholders the opportunity to cast an advisory vote
on how often our stockholders shall have a non-binding advisory vote on the compensation of the Named Executive Officers, such
as Proposal Three above. Accordingly, we are asking our stockholders to vote on whether future non-binding advisory votes on the
Named Executive Officers’ compensation should occur every year, every two years, or every three years. In lieu of voting
for one of these options, stockholders may also abstain from voting. Our stockholders last voted on the frequency of
the advisory vote on executive compensation in 2011, when 71% of the votes cast recommended that such votes be held on an annual
basis. Accordingly, our stockholders have voted, on a non-binding advisory basis, on the compensation of our Named Executive Officers
annually since 2011.
After
careful consideration, the Board of Directors believes it is appropriate for executive compensation to continue to be submitted
to an advisory vote of stockholders on an annual basis. An annual advisory vote on the compensation of our Named Executive Officers
will allow us to continue to obtain our stockholders’ views with respect to the compensation of our Named Executive Officers
and our executive compensation program and practices on a consistent basis. Further, a vote every year is consistent with the
Company’s commitment to engage in regular dialogue with our stockholders on corporate governance matters, including our
executive compensation philosophy, policies and programs.
For
the reasons discussed above, the Board of Directors recommends that future non-binding advisory votes on executive compensation
be conducted every year. While the Board of Directors recommends that future non-binding advisory votes on executive compensation
be conducted every year, stockholders are not voting to approve or disapprove the Board’s recommendation. Rather,
stockholders are being asked to vote on the following resolution:
“
RESOLVED
,
that the stockholders of Steven Madden, Ltd. (the ‘Company’) determine, on a non-binding advisory basis, that the
frequency with which the stockholders should have an advisory vote on executive compensation set forth in the Company’s
Proxy Statement for its annual meeting of stockholders, commencing with the 2018 Annual Meeting of Stockholders, is (i) every
year, (ii) every two years, or (iii) every three years.”
Stockholders
may choose among the three choices included in the resolution above, or may abstain from voting on this proposal.
While
this advisory vote is required by Section 14A of the Exchange Act, the voting result is not binding on our Board of Directors
and may not be construed as overruling any decision by the Board of Directors. However, the Board of Directors and the Compensation
Committee value the views of our stockholders and will review and give serious consideration to the outcome of the vote when making
the determination as to the frequency of future say-on-pay votes. It is expected that the next stockholder advisory vote as to
the frequency of presenting “say-on-pay” advisory votes will occur at the 2023 annual meeting of stockholders.
Required
Vote
Approval
of this resolution requires that one of the three frequency choices receive a majority of the votes cast by the holders of shares
of Common Stock present in person or represented by proxy and entitled to vote at the Annual Meeting.
Recommendation
of the Board of Directors
The
Board of Directors recommends a vote for a frequency of every YEAR for future non-binding advisory votes on the compensation of
the Company’s Named Executive Officers.
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 accompanying proxy will have discretionary authority to vote the shares which they represent.
A
copy of the applicable provisions of the Company’s By-Laws may be obtained by any stockholder, without charge, upon written
request to the Secretary of the Company at the address set forth above.
WHETHER
OR NOT YOU EXPECT TO BE PRESENT AT THE ANNUAL MEETING, PLEASE MARK, SIGN, DATE AND RETURN THE ACCOMPANYING PROXY CARD PROMPTLY.
ALTERNATIVELY, YOU MAY VOTE YOUR SHARES BY TELEPHONE OR THROUGH THE INTERNET AS DESCRIBED ON THE ACCOMPANYING PROXY CARD.
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 5, 2017
|
|
|
|
By:
|
|
|
|
|
Arvind
Dharia
|
|
|
Secretary
|
|
|
|
|
|
STEVEN MADDEN, LTD.
ATTN: ARVIND DHARIA
52-16 BARNETT AVENUE
LONG ISLAND CITY, NY 11104
|
VOTE BY
INTERNET - www.proxyvote.com
Use the Internet to
transmit your voting instructions and for electronic delivery of information
up until 11:59 P.M. Eastern Time the day before the meeting date. Have your
proxy card in hand when you access the web site and follow the instructions
to obtain your records and to create an electronic voting instruction form.
ELECTRONIC
DELIVERY OF FUTURE PROXY MATERIALS
If you would like to
reduce the costs incurred by our company in mailing proxy materials, you can
consent to receiving all future proxy statements, proxy cards and annual
reports electronically via e-mail or the Internet. To sign up for electronic
delivery, please follow the instructions above to vote using the Internet
and, when prompted, indicate that you agree to receive or access proxy
materials electronically in future years.
VOTE BY
PHONE - 1-800-690-6903
Use any touch-tone
telephone to transmit your voting instructions up until 11:59 P.M. Eastern
Time the day before the meeting date. Have your proxy card in hand when you
call and then follow the instructions.
VOTE BY
MAIL
Mark, sign and date
your proxy card and return it in the postage-paid envelope we have provided
or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood,
NY 11717.
|
|
|
|
|
|
|
|
|
|
|
|
|
TO
VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
|
KEEP
THIS PORTION FOR YOUR RECORDS
|
DETACH
AND RETURN THIS PORTION ONLY
|
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For
All
|
Withhold
All
|
For All
Except
|
|
To withhold authority to
vote for any individual nominee(s), mark “For All Except” and write the
number(s) of the nominee(s) on the line below.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Board
of Directors recommends you vote
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FOR the
following:
|
|
|
|
o
|
o
|
o
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1.
|
Election of Directors
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nominees
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
01
06
|
Edward R. Rosenfeld 02 Rose Peabody Lynch 03 Peter
Migliorini 04 Richard
P. Randall 05 Ravi
Sachdev
Thomas H. Schwartz
07 Robert Smith
08 Amelia Newton Varela
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Board
of Directors recommends you vote FOR proposals 2 and 3.
|
|
|
|
|
For
|
Against
|
Abstain
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2.
|
TO RATIFY THE APPOINTMENT OF EISNERAMPER LLP AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING DECEMBER 31, 2017.
|
|
o
|
o
|
o
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3.
|
TO APPROVE, BY NON-BINDING ADVISORY VOTE, THE EXECUTIVE COMPENSATION DESCRIBED IN THE STEVEN
MADDEN, LTD PROXY STATEMENT.
|
|
o
|
o
|
o
|
|
|
|
|
|
|
|
|
|
|
The Board of Directors recommends
you vote “1 YEAR” on the following proposal:
|
1 year
|
2 years
|
3 years
|
Abstain
|
|
|
|
|
|
|
|
|
|
4.
|
TO RECOMMEND, BY NON-BINDING ADVISORY VOTE, THE FREQUENCY
OF FUTURE ADVISORY VOTES ON EXECUTIVE COMPENSATION.
|
o
|
o
|
o
|
o
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NOTE:
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.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Yes
|
No
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Please indicate if you plan
to attend this meeting
|
o
|
o
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Please sign exactly as your
name(s) appear(s) hereon. When signing as attorney, executor, administrator,
or other fiduciary, please give full title as such. Joint owners should each
sign personally. All holders must sign. If a corporation or partnership,
please sign in full corporate or partnership name, by authorized officer.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Signature [PLEASE SIGN
WITHIN BOX]
|
|
Date
|
|
|
|
|
Signature (Joint Owners)
|
Date
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0000321214_1 R1.0.1.15
|
|
|
Important
Notice Regarding the Availability of Proxy Materials for the Annual Meeting:
The Notice & Proxy Statement, Annual
Report with 10-K is/are available at
www.proxyvote.com
.
|
|
|
|
|
|
|
|
|
|
|
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 NEXT TO EACH OF THE PROPOSALS
|
|
|
|
|
|
The undersigned
stockholder(s) of Steven Madden, Ltd. (the “Company”) hereby appoint(s)
Edward R. Rosenfeld 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 26, 2017 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 March 31,
2017, in accordance with the directions indicated herein.
|
|
|
|
|
|
THIS PROXY WILL BE VOTED AS SPECIFIED HEREIN; UNLESS OTHERWISE INDICATED, THIS PROXY
WILL BE VOTED (1)
FOR
THE ELECTION OF THE EIGHT(8) NOMINEES NAMED IN ITEM 1, (2)
FOR
THE RATIFICATION OF THE
APPOINTMENT OF EISNERAMPER LLP AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR
2017, (3)
FOR
THE APPROVAL OF THE EXECUTIVE COMPENSATION DESCRIBED IN THE COMPANY’S PROXY STATEMENT AND (4)
FOR
A FREQUENCY OF EVERY 1 YEAR FOR FUTURE ADVISORY VOTES ON EXECUTIVE COMPENSATION. THIS PROXY WILL BE VOTED IN THE DISCRETION OF THE
PROXIES ON ANY OTHER MATTER THAT MAY PROPERLY COME BEFORE THE MEETING.
|
|
|
|
|
|
|
|
|
|
|
|
Continued and to be signed on reverse side
|
|
|
|
|
0000321214_2 R1.0.1.15
Steven Madden (NASDAQ:SHOO)
Historical Stock Chart
From Mar 2024 to Apr 2024
Steven Madden (NASDAQ:SHOO)
Historical Stock Chart
From Apr 2023 to Apr 2024