|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options
Awards ($)
(1)
|
|
|
|
Change in Pension
Value and Non-Qualified Deferred
Compensation Earnings
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Awards ($) (1)
|
|
|
Non-Equity Incentive Plan
Compensation
|
|
|
|
|
|
|
|
|
|
Year
|
|
Salary ($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bonus($)
|
|
|
|
|
|
|
|
|
Total ($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
and Principal Position
|
|
|
|
|
|
|
|
|
All Other Compensation ($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jamieson A. Karson (2)
|
|
2008
|
|
138,461
|
|
|
|
|
|
1,008,095
|
|
|
|
|
|
|
|
|
|
|
4,014,018
|
(3)
|
|
|
5,160,574
|
|
|
|
|
2007
|
|
500,000
|
|
|
0
|
|
|
322,856
|
|
|
|
|
|
|
|
|
|
|
33,787
|
(12)
|
|
|
856,643
|
|
|
|
|
2006
|
|
500,000
|
|
|
450,000
|
|
|
180,312
|
|
|
|
|
|
|
|
|
|
|
29,585
|
(13)
|
|
|
1,159,897
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Edward Rosenfeld
|
|
2008
|
|
366,250
|
|
|
75,000
|
|
|
231,244
|
|
|
34,999
|
|
|
|
|
|
|
|
5,083
|
(4)
|
|
|
712,576
|
|
|
Chief Executive Officer
|
|
2007
|
|
259,808
|
|
|
75,000
|
|
|
212,738
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
547,546
|
|
|
|
|
2006
|
|
240,385
|
|
|
200,000
|
|
|
90,156
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
530,541
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Arvind Dharia
|
|
2008
|
|
457,406
|
|
|
50,000
|
|
|
207,203
|
|
|
|
|
|
|
|
|
|
|
102,891
|
(5)
|
|
|
817,500
|
|
|
Chief Financial Officer
|
|
2007
|
|
435,625
|
|
|
0
|
|
|
188,696
|
|
|
|
|
|
|
|
|
|
|
91,115
|
(14)
|
|
|
715,436
|
|
|
|
|
2006
|
|
425,000
|
|
|
350,000
|
|
|
72,125
|
|
|
|
|
|
|
|
|
|
|
90,173
|
(15)
|
|
|
937,298
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awadhesh Sinha
|
|
2008
|
|
526,612
|
|
|
|
|
|
222,501
|
|
|
36,595
|
|
|
|
|
|
|
|
369,220
|
(6)
|
|
|
1,154,928
|
|
|
Chief Operating Officer
|
|
2007
|
|
489,976
|
|
|
0
|
|
|
278,126
|
|
|
|
|
|
|
|
|
|
|
7,431
|
(16)
|
|
|
775,533
|
|
|
|
|
2006
|
|
446,250
|
|
|
0
|
|
|
0
|
|
|
|
|
|
1,401,840
|
(7)
|
|
|
|
13,458
|
(16)
|
|
|
1,861,548
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert Schmertz
|
|
2008
|
|
600,000
|
|
|
250,000
|
|
|
787,224
|
|
|
|
|
|
|
|
|
|
|
22,452
|
(8)
|
|
|
1,659,676
|
|
|
President of Wholesale Womens
|
|
2007
|
|
578,901
|
|
|
675,000
|
|
|
696,090
|
|
|
|
|
|
|
|
|
|
|
12,692
|
(16)
|
|
|
1,962,683
|
|
|
Division and Brand Manager
|
|
2006
|
|
488,350
|
|
|
|
|
|
180,312
|
|
|
|
|
|
|
|
|
|
|
5,769
|
(16)
|
|
|
674,431
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amelia Newton Varela
|
|
2008
|
|
349,038
|
|
|
250,000
|
|
|
240,416
|
|
|
140,511
|
|
|
|
|
|
|
|
22,750
|
(9)
|
|
|
1,002,715
|
|
|
Executive Vice President of
|
|
2007
|
|
300,000
|
|
|
0
|
|
|
240,416
|
|
|
|
|
|
|
|
|
|
|
240,000
|
(10)
|
|
|
780,416
|
|
|
Wholesale and Retail
|
|
2006
|
|
300,000
|
|
|
|
|
|
180,312
|
|
|
|
|
|
570,166
|
(11)
|
|
|
|
15,000
|
(16)
|
|
|
1,065,478
|
|
|
(1) The amounts in this column reflect the dollar
amount recognized for financial statement reporting purposes for the fiscal
years ended December 31, 2008, December 31, 2007 and December 31, 2006,
respectively, in accordance with FAS 123R. Assumptions used in the calculation
of these amounts are included in footnote G to the Companys audited financial
statements for the fiscal years ended December 31, 2008 and December 31, 2007,
included in the Companys Annual Report on Form 10-K filed respectively with
the Securities and Exchange Commission on March 12, 2009 and March 12, 2008,
and included in footnote 13 to the Companys audited financial statements for
the fiscal year ended December 31, 2006, included in the Companys Annual
Report on Form 10-K filed with the Securities and Exchange Commission on March
9, 2007.
(2) Effective March 24, 2008, Mr. Karson resigned
from his position as Chief Executive Officer, director and Chairman of the
Board of Directors of the Company, and entered into a Mutual Release with the
Company (the Mutual Release).
(3) Includes the following: $2,117 automobile
allowance, reimbusement of $11,209 for membership dues, $692 in annual matching
contributions to Mr. Karsons 401(k) plan and $4,000,000 pursuant to the Mutual
Release. See -Employment Arrangements.
(4) Includes the following: $2,020 automobile
allowance and $3,063 in annual matching contributions to Mr. Rosenfelds 401(k)
plan.
(5) Includes the following: $9,226 automobile
allowance, $83,331 life insurance premiums and $10,334 in annual matching
contributions to Mr. Dharias 401(k) plan.
(6) Includes the following: $8,115 automobile
allowance, $351,688 for deferred compensation and $9,417 in annual matching
contributions to Mr. Sinhas 401(k) plan.
(7) Represents non-equity incentive payment made
pursuant to a bonus formula in Mr. Sinhas employment agreement. See
-Employment Arrangements.
(8) Includes the following: $15,000 automobile
allowance and $7,452 in annual matching contributions to Mr. Schmertzs 401(k)
plan.
(9) Includes the following: $15,000 automobile
allowance and $7,750 in annual matching contributions to Ms. Varelas 401(k)
plan.
(10) Includes the following: (i) Deferred
compensation in the amount of $225,000, paid for the period ended December 31,
2007, pursuant to Ms. Varelas employment agreement; (ii) $15,000 in automobile
allowance.
(11) Represents non-equity incentive payment made
pursuant to a bonus formula in Ms. Varelas employment agreement. See
-Employment Arrangements.
(12) Includes the following: $6,081 automobile
allowance and reimbursement of $27,706 for membership dues pursuant to Mr.
Karsons amended and restated employment agreement.
(13) Includes the following: $6,271 automobile
allowance and reimbursement of $23,314 for membership dues pursuant to Mr.
Karsons amended and restated employment agreement.
(14) Includes the following: $7,789 automobile
allowance and $83,326 life insurance premiums.
(15) Includes the following: $7,196 automobile
allowance and $82,977 life insurance premiums.
(16) Represents automobile allowance.
-22-
EMPLOYMENT ARRANGEMENTS
Edward R.
Rosenfeld. In April 2008 (effective in March 2008), the Company entered into an
employment agreement with Edward R. Rosenfeld pursuant to which Mr. Rosenfeld
agreed to serve as interim Chief Executive Officer of the Company for a term
expiring on December 31, 2009. Effective August 8, 2008, the Company appointed
Mr. Rosenfeld to serve as Chief Executive Officer and executive Chairman of the
Board. The terms of Mr. Rosenfelds employment agreement remained unchanged.
Under the agreement, the Company agreed to pay Mr. Rosenfeld an annual base
salary of $400,000 and Mr. Rosenfeld is entitled to receive such additional
compensation and annual bonus as may be determined from time to time by the
Board of Directors in its sole discretion. In addition, the agreement provides
that Mr. Rosenfeld is entitled to receive, as additional compensation, an
option to purchase 40,000 shares of Common Stock, exercisable to the extent of
8,000 shares on each of March 24, 2009, March 24, 2010, March 24, 2011, March
24, 2012 and March 24, 2013, said option to remain exercisable for seven years
from the effective date of the agreement. The Company may terminate the
agreement for cause (as such term is defined in the agreement) or without
cause. In the event that Mr. Rosenfelds 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. Rosenfelds employment is terminated by the
Company without cause, as liquidated damages, he will be entitled to receive
all compensation to which he would be entitled under the agreement through
December 31, 2009. In the event that Mr. Rosenfelds employment is terminated
by the Company without cause during the period commencing 90 days prior to a
change of control (as defined in the agreement) and ending 180 days following a
change of control, he is entitled to receive an amount equal to the lesser of
(1) the average amount of total compensation actually received by him during
the preceding three calendar years multiplied by 3, and (2) 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, pursuant to which Mr.
Dharia agreed to serve as the Companys Chief Financial Officer. The term of
Mr. Dharias employment under his agreement, as amended, commenced on January
1, 1998 and ends on December 31, 2009. The term 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. The amended agreement provides that
the Company pay Mr. Dharia an annual salary of $435,625 for the 2007 Fiscal
Year, with the following increases thereafter: (i) on January 1, 2008, his base
salary shall be increased by 5% of the then-current base salary; and (ii) on
January 1, 2009, his base salary shall be increased by 5% of the then-current
base salary. In addition, the agreement provides that Mr. Dharia 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, as amended, or any other plan designated by the
Board of Directors and approved by the Companys 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. Dharias death, for the
payment to Mr. Dharias estate of his base salary for the 12-month period
immediately subsequent to the date of
-23-
Mr. Dharias death. In the event Mr. Dharias employment agreement is
terminated due to Mr. Dharias total disability (as defined in the agreement)
or 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 Mr. Dharias 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 the event that there
is a change of control transaction and Mr. Dharias employment has been
terminated by the Company other than for cause or by Mr. Dharia 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,
unless said amount (or portion thereof) is determined to constitute an excess
parachute payment under Sections 280G and 4999 of the Code, in which case the
payment to Mr. Dharia shall be reduced to the maximum amount that is tax
deductible to the Company under Section 280G of the Code.
Jamieson A.
Karson. In May 2001, the Company entered into an employment agreement with
Jamieson A. Karson pursuant to which Mr. Karson agreed to serve as the
Companys Chief Executive Officer and Vice Chairman of the Board. On July 22,
2004, at a regularly scheduled meeting of the Board of Directors of the
Company, Mr. Karson was appointed Chairman of the Board of Directors. Mr.
Karsons employment agreement was amended and restated in January 2006. The
term of Mr. Karsons employment under his amended and restated employment
agreement was three years commencing on January 1, 2006 and ending on December
31, 2008. The amended and restated employment agreement provided that the term
would be automatically extended for successive one-year periods unless the
Company timely notified Mr. Karson of its intention not to extend the term. The
amended and restated employment agreement provided that the Company pay Mr.
Karson an annual salary of $500,000. In addition, the amended and restated
employment agreement provided that Mr. Karson receive an annual bonus in such
amount, if any, and at such time or times, as the Board of Directors, or a
committee thereof, may determine in its absolute discretion. Subject to
availability of shares under the 2006 Plan, as amended, or any other plan
designated by the Board of Directors and approved by the Companys
stockholders, Mr. Karson was entitled to awards under such plan as determined
by the Board of Directors, or a committee thereof, from time to time in its
absolute discretion. In addition, in the event of Mr. Karsons total disability
or his death, the Company was obligated to continue to pay Mr. Karson (or Mr.
Karsons estate) his base salary for the 12-month period immediately subsequent
to the date of such total disability or death. The amended and restated
employment agreement provided that, in the event Mr. Karsons employment was
terminated (or
-24-
not extended) by the Company
for any reason other than for cause (as defined in the amended and restated
employment agreement) or due to his death or his total disability, the Company
would be obligated to pay Mr. Karson (i) the amount of compensation that is
accrued and unpaid through the date of termination; plus (ii) an amount equal
to the lesser of (A) the sum of three times Mr. Karsons highest total
compensation (as defined in the amended and restated employment agreement) in
any given fiscal year of his employment with the Company, and (B) $4,000,000.
In the event that there was a change of control (as defined in the amended
and restated employment agreement) transaction, all unvested options to
purchase shares of Common Stock or restricted stock awards or other
equity-related awards under the 1999 Stock Plan and/or the 2006 Plan, as
amended, held by Mr. Karson would vest on the date of the change of control and
Mr. Karson would be entitled to receive a lump sum cash payment equal to the
amount described in the immediately preceding sentence. Mr. Karsons amended
and restated employment agreement also contained provisions regarding
confidentiality, solicitation and competition. Effective March 24, 2008, Mr.
Karson resigned from his position as Chief Executive Officer, director and
Chairman of the Board of Directors of the Company, and entered into a Mutual
Release with the Company (the Mutual Release). Pursuant to the Mutual
Release, the Company shall consider Mr. Karsons resignation to be a
termination without cause (as defined under Mr. Karsons amended and restated
employment agreement), and shall (1) pay Mr. Karson, on April 1, 2008, the sum
of $4,000,000, less such deductions as shall be required to be withheld by
applicable law and regulations; (2) vest Mr. Karsons restricted stock awards
granted under the Restricted Stock Agreements dated as of March 24, 2006 and
March 27, 2007 such that all restrictions on such shares shall lapse; (3) in
connection with the vesting of Mr. Karsons restricted stock award granted
under the Restricted Stock Agreement dated as of March 24, 2006, pay Mr.
Karson, promptly following such vesting, the sum of $22,500 in respect of the
$1.00 per share special dividend paid by the Company in November 2006
applicable to the remaining 22,500 shares being vested pursuant to the Mutual
Release; and (4) continue, pursuant to the terms of Mr. Karsons amended and
restated employment agreement, to pay all costs of Mr. Karsons use of the automobile
leased for Mr. Karson through the end of the lease term. Pursuant to the terms
of the Mutual Release, the Company releases Mr. Karson from certain claims, and
Mr. Karson releases the Company from certain claims.
Awadhesh
Sinha. In June 2005, the Company entered into an employment agreement with
Awadhesh Sinha, pursuant to which Mr. Sinha agreed to serve as the Companys
Chief Operating Officer. Mr. Sinhas employment agreement was amended in
November 2007 and in October 2008. The term of Mr. Sinhas employment under his
employment agreement, as amended, commences on July 1, 2005 and ends on
December 31, 2010. The term will be automatically extended for successive
one-year periods unless either party timely notifies the other of its intention
not to extend the term. The agreement, as amended, provides that the Company
pay Mr. Sinha an annual salary of $540,000 (which is equal to the base salary
amount payable to Mr. Sinha pursuant to the original employment agreement at
the time of the October 2008 amendment). Upon entering the agreement, Mr. Sinha
received a signing bonus of $100,000. In addition, with respect to the fiscal
year ended December 31, 2005, Mr. Sinha was entitled to an annual bonus equal
to the greater of (i) $50,000, and (ii) 3% of the increase in the Companys
EBIT for such fiscal year over the EBIT of the immediately prior fiscal year;
with respect to each of the Companys remaining fiscal years through the 2008
fiscal year, Mr. Sinha was entitled to an annual bonus equal to 3% of the
increase in the Companys EBIT for such fiscal year over the EBIT of the
immediately prior fiscal year. In respect of each of the
-25-
Companys 2009 and 2010 fiscal years during the Term, Mr. Sinha will be
eligible to receive a cash bonus under the Companys 2006 Stock Incentive Plan,
as amended, equal to 3% of the increase in the Companys EBIT for such fiscal
year over the EBIT of the immediately prior fiscal year. The agreement, as
amended, provides for certain deferred compensation with respect to 2008, 2009
and 2010. For the period commencing July 1, 2008 and ending December 31, 2008,
the agreement, as amended, provides for a mandatory deferral in an amount equal
to 25% of Mr. Sinhas annual base salary, and the Company agrees to pay to Mr. Sinha
such amount provided that Mr.
Sinha remains in the employ of the Company on December 31, 2010. For the period
commencing January 1, 2009 and ending December 31, 2009, the agreement, as
amended, provides for a mandatory deferral in an amount equal to 12.5% of Mr.
Sinhas annual base salary, and the Company agrees to pay to Mr. Sinha such
amount provided that Mr. Sinha
remains in the employ of the Company on December 31, 2010. For the period
commencing January 1, 2010 and ending December 31, 2010, the agreement, as
amended, provides for a mandatory deferral in an amount equal to 7.5% of Mr.
Sinhas annual base salary, and the Company agrees to pay to Mr. Sinha such
amount provided that Mr. Sinha
remains in the employ of the Company on December 31, 2010. The agreement, as
amended, provides for, in the event of Mr. Sinhas death, the payment to Mr.
Sinhas estate of his base salary for the 12-month period immediately
subsequent to the date of Mr. Sinhas death. In the event Mr. Sinhas
employment agreement, as amended, is terminated due to Mr. Sinhas total
disability (as defined in the agreement, as amended,), for cause (as defined
in the agreement, as amended,) or due to Mr. Sinhas resignation, the Company
is obligated to pay Mr. Sinha the amount of compensation that is accrued and
unpaid through the date of termination. In addition, in the event of Mr.
Sinhas total disability (as defined in his employment agreement, as amended),
the Company is obligated to continue to pay Mr. Sinhas base salary for the 12-month
period immediately subsequent to the date of determination of such total
disability. Mr. Sinha will be required to repay to the Company the full amount
of his signing bonus if he is discharged for cause and a pro rata portion of
the signing bonus for the portion of the term that he did not fulfill if he
resigns. In the event Mr. Sinhas employment agreement, as amended, is
terminated by the Company for any reason (other than for cause or due to his
death or total disability), the Company is obligated to pay Mr. Sinha an amount
equal to the sum of (x) the base salary that would have been paid by the
Company pursuant to the agreement, as amended, for the longer of the remainder
of the then-current term or 6 months, (y) the cash bonus payable to Mr. Sinha
prorated from the commencement of the then-current term through the termination
date, and (z) a pro-rata portion of the deferred annual base salary. In the
event that there is a change of control transaction (as defined in the
agreement, as amended), and the Company (other than for cause, as defined in
the agreement, as amended) or Mr. Sinha (for good reason, as defined in the
agreement, as amended) terminates the agreement, as amended, Mr. Sinha shall be
entitled to an amount equal to three times the total compensation received by
Mr. Sinha under the agreement, as amended, for the preceding 12-month period
ending on the last previous December 31st, 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. Sinha was entitled to as of the date of his
termination, unless said amount (or portion thereof) is determined to
constitute an excess parachute payment under Sections 280G and 4999 of the
Code, in which case the payment to Mr. Sinha shall be reduced to the maximum
amount that is tax deductible to the Company under Section 280G of the Code.
-26-
Robert
Schmertz. In April 2002, the Company entered into an employment agreement with
Robert Schmertz pursuant to which Mr. Schmertz agreed to serve as President of
Steve Madden Wholesale Womens Division and Brand Manager for Steven Madden,
Ltd. The agreement was extended in March 2005 and again in March 2007. The term
of Mr. Schmertzs employment under his employment agreement (as extended)
commenced on April 1, 2002 and ends on December 31, 2009. Mr. Schmertz received
a signing bonus of $500,000 upon the execution of the March 2007 extension and
100,000 shares of restricted stock, which vests in equal parts on each of the
first five anniversaries of February 27, 2007, pursuant to the 2006 Plan, as
amended. The Company agreed to pay Mr. Schmertz an annual salary of $600,000.
Under the terms of the agreement as extended, the Company shall pay Mr. Schmertz
a discretionary bonus in an amount determined solely by the Companys Board of
Directors. In the event of Mr. Schmertzs death, the Company is obligated to
continue to pay Mr. Schmertzs estate 50% of his base salary for the 12-month
period immediately subsequent to the date of his death. In the event of a
change of control and the termination of Mr. Schmertz thereafter other than
for cause (as defined in the agreement), Mr. Schmertz will be entitled to
receive an amount equal to the lesser of (i) the average amount of total
compensation actually received by Mr. Schmertz for the preceding three calendar
years multiplied by 3 or (ii) the maximum amount which is tax deductible to the
Company under Section 280G of the Code.
Amelia
Newton Varela. In October 2004, the Company entered into an employment
agreement with Amelia Newton Varela, pursuant to which Ms. Varela agreed to
serve as Executive Vice President of Wholesale Sales. In April 2008, the
Company entered into a new employment agreement with Ms. Varela, pursuant to
which Ms. Varela agreed to serve as Executive Vice President of Wholesale and
Retail. The term of Ms. Varelas employment under this employment agreement
commenced on April 29, 2008 and ends on December 31, 2010. Pursuant to the
employment agreement, on April 29, 2008, Ms. Varela was granted an option to
purchase 50,000 shares of the Companys Common Stock at an exercise price of
$19.32 per share. The option is exercisable until April 29, 2015 to the extent
of 10,000 shares on each of April 29, 2009, April 29, 2010, April 29, 2011,
April 29, 2012 and April 29, 2013. Further, in the event that Ms. Varela is
still employed by the Company (i) on April 1, 2009, she will be granted an
option to purchase 25,000 shares of Common Stock of the Company, and (ii) on
April 1, 2010, she will be granted an option to purchase 25,000 shares of
Common Stock of the Company. Such options shall vest 20% each year for five
years, commencing on the first anniversary date of the grant of the options, have
a term of seven years and have an exercise price equal to the market price on
the grant date. The Company agreed to pay Ms. Varela an annual base salary of
$350,000 from January 1, 2008 through December 31, 2008 and $400,000 from
January 1, 2009 through December 31, 2010. Under the terms of the agreement,
the Company agreed to pay Ms. Varela an annual bonus for each of 2008, 2009 and
2010 in an amount equal to 2% of the increase, if any, in Wholesale Footwear
division EBIT for that year over Wholesale Footwear division EBIT for the
immediately prior year, plus 1.5% of the increase, if any, in Retail division
EBIT for that year over Retail division EBIT for the immediately prior year. If
Ms. Varela is still employed by the Company on December 31, 2010, she will also
be entitled to a bonus of $200,000. In the event that Ms. Varelas employment
agreement is terminated due to Ms. Varelas 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 accrued and unpaid bonus amounts for the year prior to termination. The
Company may terminate the agreement for cause (as defined in the agreement)
-27-
or without cause. In the event that Ms. Varelas employment is
terminated by the Company for cause, the Company will have no further
obligations to Ms. Varela, and Ms. Varela will be entitled to no further
compensation from the Company, except for any accrued and unpaid salary through
the date of her termination. In the event that Ms. Varelas employment is
terminated by the Company without cause, she will be entitled to (i) salary
payments, at the regular intervals of payment, from the date of termination through
the date the employment agreement would have otherwise terminated but for the
involuntary termination plus (ii) any accrued and unpaid bonus amounts for the
year prior to termination. In the event that Ms. Varelas 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) and ending 180 days
following a change of control, she is entitled to receive an amount equal to
the lesser of (1) the average amount of total compensation actually received by
her during the preceding three calendar years multiplied by 3, or (2) the
maximum amount that is tax deductible to the Company under Section 280G of the
Code.
GRANTS OF PLAN-BASED AWARDS IN THE 2008 FISCAL YEAR
The
following table sets forth information concerning awards under the Companys
equity and non-equity incentive plans granted to each of the Named Executive
Officers in the 2008 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.
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|
|
All Other Stock Awards Number of Shares of Stock
or Units
|
|
All Other Option Awards Number of Securities
Underlying Options
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|
Exercise Price of Option Awards
|
|
Grant Date Fair Value of Stock and Option Awards
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|
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|
|
Estimated Future Payouts Under Non-Equity
Incentive Plan Awards
|
|
Estimated Future Payouts Under Equity Incentive
Plan Awards
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Name
|
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Grant Date
|
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Threshold
|
|
Target
|
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Maximum
|
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Threshold
|
|
Target
|
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Maximum
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Ed Rosenfeld
|
|
3/24/2008
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|
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0
|
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40,000
|
(1)
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18.17
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|
233,328.00
|
Awadesh Sinha
|
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10/3/2008
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0
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50,000
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(2)
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23.46
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439,143.00
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Amelia Newton Varela
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|
4/29/2008
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0
|
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50,000
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(3)
|
|
19.32
|
|
351,278.00
|
(1)
Mr. Rosenfeld was awarded stock options for 40,000 shares of Common Stock on
March 24, 2008. One-fifth of such options shall vest on each of the first five
anniversaries of March 24, 2008. The stock options were granted pursuant to the
Companys 2006 Stock Incentive Plan.
(2)
Mr. Sinha was awarded stock options for 50,000 shares of Common Stock on
October 3, 2008. One-third of such options shall vest on each of the first
three anniversaries of October 3, 2008. The stock options were granted pursuant
to the Companys 2006 Stock Incentive Plan.
(3)
Ms. Varela was awarded stock options for 50,000 shares of Common Stock on April
29, 2008. One-fifth of such options shall vest on each of the first five
anniversaries of April 29, 2008. The stock options were granted pursuant to the
Companys 2006 Stock Incentive Plan.
Plan-Based Awards
1999
Stock Plan
As of March 15, 1999, the Board of Directors of the Company adopted the
1999 Stock Plan (the 1999 Plan), and on June 4, 1999 the Companys
stockholders approved the adoption of the 1999 Plan. Since its adoption, the
1999 Plan has been amended, with stockholder approval, to (i) increase the
number of shares subject to the plan, (ii) provide that the exercise price of
an option granted under the 1999 Plan shall be no less than the fair market
value of the Common Stock on the date of grant (except to the extent otherwise
provided in agreements with the Company dated prior to the effective date of
the amendment), and (iii) prohibit the Board from amending the
-28-
terms of any option granted pursuant to the 1999 Plan to reduce the
option price. The purpose of the 1999 Plan is to provide a means whereby
directors and selected employees, officers, agents, consultants, and
independent contractors of the Company may be granted incentive stock options
and/or nonqualified stock options to purchase shares of Common Stock, in order
to attract and retain the services or advice of such directors, employees,
officers, agents, consultants, and independent contractors and to provide
additional incentive for such persons to exert maximum efforts for the success
of the Company by encouraging stock ownership in the Company. As of March 31,
2009, options to purchase 366,050 shares of Common Stock were outstanding. No
additional options will be granted under the 1999 Plan.
2006 Stock
Incentive Plan
As of March
10, 2006, the Board of Directors of the Company adopted the 2006 Plan, and on
May 26, 2006 the Companys stockholders approved the adoption of the 2006 Plan.
Amendment number one to the 2006 Plan was adopted by the Board of Directors on
April 25, 2007, subject to stockholder approval at the 2007 annual meeting of
the Companys stockholders. On May 25, 2007, the Companys stockholders
approved amendment number one to the 2006 Plan. Amendment number two to the
2006 Plan was adopted by the Board of Directors on April 29, 2008. The amended
and restated Steven Madden, Ltd. 2006 Stock Incentive Plan was adopted by the
Board of Directors on April 6, 2009, subject to stockholder approval at the
Annual Meeting. See Proposal Two. The purpose of the 2006 Plan, as amended
and restated, 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
strengthen the mutuality of interests between such individuals and the
Companys stockholders.
The maximum
number of shares of Common Stock available for issuance under the 2006 Plan, as
amended by amendment number one to the 2006 Plan, is 1,550,000 shares. As of
March 31, 2009, there were outstanding 295,833 unvested shares of restricted
stock and options to purchase 422,000 shares of Common Stock; options have been
exercised, or restricted stock has vested, with respect to 377,030 shares of
Common Stock; and 455,138 shares of Common Stock remained available for grant
under the 2006 plan.
-29-
OUTSTANDING EQUITY AWARDS AT END OF THE 2008 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 2008 Fiscal Year.
(1)
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|
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Option Awards
|
|
Stock Awards
|
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Name
|
|
Number of Securities Underlying Unexcercised
Options - Excercisable
|
|
Number of Securities Underlying Unexcercised
Options - Unexcercisable
|
|
Equity Incentive Plan Awards: Number of
Securities Underlying Unexcercised 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
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|
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|
|
|
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|
|
Jamieson
A. Karson (1)
|
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|
Ed Rosenfeld
|
|
7,500
|
|
|
|
|
|
|
|
|
12.3133
|
|
|
7/6/2015
|
|
|
23,500
|
(3)
|
|
501,020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
40,000
|
(2)
|
|
|
|
|
18.1700
|
|
|
3/24/2015
|
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|
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|
Arvind
Dharia
|
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60,000
|
|
|
|
|
|
|
|
|
13.9000
|
|
|
9/9/2010
|
|
|
22,000
|
(4)
|
|
469,040
|
|
|
|
|
|
|
|
|
|
|
60,001
|
|
|
|
|
|
|
|
|
13.0533
|
|
|
7/6/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,445
|
|
|
|
|
|
|
|
|
11.8400
|
|
|
5/27/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awadhesh
Sinha
|
|
|
|
|
50,000
|
(5)
|
|
|
|
|
23.4600
|
|
|
10/3/2015
|
|
|
15,000
|
(6)
|
|
319,800
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert
Schmertz
|
|
50,000
|
|
|
|
|
|
|
|
|
12.6533
|
|
|
5/17/2012
|
|
|
95,000
|
(7)
|
|
2,025,400
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amelia
Newton Varela
|
|
|
|
|
50,000
|
(8)
|
|
|
|
|
19.3200
|
|
|
4/29/2015
|
|
|
15,000
|
(9)
|
|
319,800
|
|
|
|
|
|
|
|
|
(1) Effective March 24, 2008, Mr. Karson
resigned from his position as Chief Executive Officer, director and Chairman of
the Board of Directors of the Company, and entered into a Mutual Release with
the Company (the Mutual Release). Pursuant to the Mutual Release, Mr.
Karsons unvested restricted stock awards granted under the Restricted Stock
Agreements dated as of March 24, 2006 and March 27, 2007, vested, such that all
restrictions on the remaining 42,500 shares granted under such Restricted Stock
Agreements lapsed. As of December 31, 2008, there were no awards outstanding.
(2) Mr. Rosenfeld was awarded stock options
for 40,000 shares of Common Stock pursuant to the Companys 2006 Stock
Incentive Plan on March 24, 2008. One-fifth of such options shall vest on each
of the first five anniversaries of March 24, 2008.
(3) Mr. Rosenfeld was awarded 15,000 shares
of restricted stock on March 20, 2006. One-fourth of such shares of restricted
stock shall vest and cease to be restricted stock on each of the first four
anniversaries of March 20, 2006. Mr. Rosenfeld was awarded 20,000 shares of
restricted stock on March 6, 2007. One-fifth of such shares of restricted stock
shall vest and cease to be restricted stock on each of the first five anniversaries
of March 6, 2007.
(4) Mr. Dharia was awarded 12,000 shares of
restricted stock on March 24, 2006. One-fourth of such shares of restricted
stock shall vest and cease to be restricted stock on each of the first four
anniversaries of March 24, 2006. Mr. Dharia was awarded 20,000 shares of
restricted stock on March 6, 2007. One-fifth of such shares of restricted stock
shall vest and cease to be restricted stock on each of the first five
anniversaries of March 6, 2007.
(5) Mr. Sinha was awarded stock options for
50,000 shares of Common Stock pursuant to the Companys 2006 Stock Incentive
Plan on October 3, 2008. One-third of such options shall vest on each of the
first three anniversaries of October 3, 2008.
(6) Mr. Sinha was awarded 30,000 shares of
restricted stock on April 25, 2007. One-fourth of such shares of restricted
stock shall vest and cease to be restricted stock on each of September 19, 2007
and the next three anniversaries of September 19, 2007.
(7) Mr. Schmertz was awarded 30,000 shares
of restricted stock on March 20, 2006. One-fourth of such shares of restricted
stock shall vest and cease to be restricted stock on each of the first four
anniversaries of March 20, 2006. Mr. Schmertz was awarded 100,000 shares of
restricted stock on March 9, 2007. One-fifth of such shares of restricted stock
shall vest and cease to be restricted stock on each of the first five
anniversaries of March 9, 2007.
(8) Ms. Varela was awarded stock options for
50,000 shares of Common Stock pursuant to the Companys 2006 Stock Incentive
Plan on April 29, 2008. One-fifth of such options shall vest on each of the
first five anniversaries of April 29, 2008.
(9) Ms. Varela was awarded 30,000 shares of
restricted stock on March 20, 2006. One-fourth of such shares of restricted
stock shall vest and cease to be restricted stock on each of the first four
anniversaries of March 20, 2006.
OPTION EXERCISES AND STOCK VESTED IN THE 2008 FISCAL YEAR
The following table sets forth information concerning stock options
exercised and restricted stock vested during the 2008 Fiscal Year by 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 underlying
the option. The value realized from vested restricted stock is deemed to be the
market value of the Common Stock on the date of vesting multiplied by the
number of shares.
-30-
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|
|
|
|
|
|
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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jamie
Karson (1)
|
|
0
|
|
|
0
|
|
|
42,500
|
|
|
772,225
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ed
Rosenfeld
|
|
0
|
|
|
0
|
|
|
7,750
|
|
|
132,685
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Arvind
Dharia
|
|
64,797
|
|
|
983,136
|
|
|
7,000
|
|
|
121,270
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awadhesh
Sinha
|
|
0
|
|
|
0
|
|
|
7,500
|
|
|
207,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert
Schmertz
|
|
0
|
|
|
0
|
|
|
27,500
|
|
|
467,650
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amelia
Newton Varela
|
|
0
|
|
|
0
|
|
|
7,500
|
|
|
131,850
|
|
|
|
|
(1)
Effective March 24, 2008, Mr. Karson resigned from his position as Chief
Executive Officer, director and Chairman of the Board of Directors of the
Company, and entered into a Mutual Release with the Company (the Mutual
Release). Pursuant to the Mutual Release, the Company vested Mr. Karsons
restricted stock awards granted under the Restricted Stock Agreements dated
as of March 24, 2006 and March 27, 2007 such that all restrictions on such
shares lapsed.
|
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE-IN-CONTROL
The
Companys employment agreements with the Named Executive Officers provide for
payments to such persons upon termination or a change in control of the
Company. See Employment Arrangements.
The amounts
set forth in the table below shall be paid to the respective Named Executive
Officer if such Named Executive Officers employment is terminated by the
Company under the various scenarios set forth below.
-31-
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|
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|
|
NAME AND PRINCIPAL POSITION
|
|
CASH
PAYMENT
($)
|
|
CONTINUATION
OF MEDICAL /
WELFARE
BENEFITS
(PRESENT
VALUE)
($)
|
|
ACCELERATION
AND
CONTINUATION
OF EQUITY
AWARD
($)
|
|
SETTLEMENT
OF
DEFERRED
COMPENSATION
ARRANGEMENTS
($)
|
|
OTHER
COMPENSATION
($)
|
|
CUTBACK
OF
BENEFITS
UPON A
CHANGE OF
CONTROL
($)
|
|
TOTAL
TERMINATION
BENEFITS
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TERMINATION DUE TO DEATH
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Edward Rosenfeld
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Arvind Dharia
|
|
457,406
|
(1)
|
|
10,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
467,406
|
|
|
Awadhesh Sinha
|
|
540,000
|
(2)
|
|
10,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
550,000
|
|
|
Robert Schmertz
|
|
300,000
|
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
300,000
|
|
|
Amelia Newton Verela
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TERMINATION DUE TO TOTAL DISABILITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Edward Rosenfeld
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Arvind Dharia
|
|
457,406
|
(1)
|
|
90,000
|
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
547,406
|
|
|
Awadhesh Sinha
|
|
540,000
|
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
540,000
|
|
|
Robert Schmertz
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amelia Newton Verela
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TERMINATION FOR CAUSE; RESIGNATION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jamieson A. Karson (5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Edward Rosenfeld
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Arvind Dharia
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awadhesh Sinha
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert Schmertz
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amelia Newton Verela
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TERMINATION OTHER THAN FOR CAUSE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Edward Rosenfeld
|
|
400,000
|
(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
400,000
|
|
|
Arvind Dharia
|
|
457,406
|
(1)
|
|
90,000
|
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
547,406
|
|
|
Awadhesh Sinha
|
|
1,080,000
|
(7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,080,000
|
|
|
Robert Schmertz
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amelia Newton Verela
|
|
1,050,000
|
(8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,050,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TERMINATION UPON A CHANGE OF CONTROL
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Edward Rosenfeld
|
|
306,560
|
(9)
|
|
|
|
|
627,020
|
(10)
|
|
|
|
|
|
|
|
(599,981
|
)
|
|
933,580
|
|
|
Arvind Dharia
|
|
1,372,218
|
(12)
|
|
270,000
|
(13)
|
|
469,040
|
(10)
|
|
|
|
|
|
|
|
|
|
|
2,111,258
|
|
|
Awadhesh Sinha
|
|
1,630,500
|
(14)
|
|
40,500
|
(15)
|
|
319,800
|
(10)
|
|
|
|
|
|
|
|
|
|
|
1,990,800
|
|
|
Robert Schmertz
|
|
2,113,859
|
(16)
|
|
|
|
|
2,025,400
|
(10)
|
|
|
|
|
|
|
|
(1,307,131
|
)
|
|
4,139,259
|
|
|
Amelia Newton Verela
|
|
2,238,978
|
(17)
|
|
|
|
|
419,800
|
(10)
|
|
|
|
|
|
|
|
(1,104,011
|
)
|
|
2,658,778
|
|
|
|
|
(1)
|
Consists of Mr. Dharias
2008 base salary of $457,406.
|
(2)
|
Consists of Mr. Sinhas 2008
base salary at December 31, 2008 ($540,000).
|
(3)
|
Consists of 6 months of Mr.
Schmertzs base salary at December 31, 2008 ($600,000).
|
(4)
|
Consists of one times the
sum of Mr. Dharias life insurance payment ($80,000 per year) plus medical
benefits ($10,000 per year).
|
(5)
|
Effective March 24, 2008,
Mr. Karson resigned from his position as Chief Executive Officer, director
and Chairman of the Board of Directors of the Company, and entered into a
Mutual Release with the Company (the Mutual Release). Pursuant to the
Mutual Release, the Company shall consider Mr. Karsons resignation to be a
termination without cause (as defined under Mr. Karsons amended and
restated employment agreement) by the Company and agreed to pay Mr. Karson
the sum of $4,000,000 on April 1, 2008. Also pursuant to the Mutual Release,
the Company vested Mr. Karsons restricted stock awards granted under the
Restricted Stock Agreements dated as of March 24, 2006 and March 27, 2007
such that all restrictions on such shares lapsed.
|
(6)
|
Consists of Mr. Rosenfelds
2008 base salary of $400,000.
|
(7)
|
Consists of two times Mr.
Sinhas 2008 base salary at December 31, 2008 ($540,000).
|
(8)
|
Consists of Ms. Varelas
base salary for the years ended December 31, 2009 ($400,000) and December 31,
2010 ($400,000). In addition, Ms. Varela had a bonus payable of $250,000, and
this bonus would have been paid irrespective of a hypothetical Change of
Control.
|
(9)
|
Consists of three times the
average amount of total compensation Mr. Rosenfeld actually received for the
preceding three calendar years. Upon a hypothetical December 31, 2008 change
of control, this amount would have been reduced by $599,981 (i.e. cutback) to
reflect the maximum amount which would be tax deductible by the Company. (10)
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, 2008. (11) The total amount
does not include the cutback amount.
|
(10)
|
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, 2008. (11) The total amount
does not include the cutback amount.
|
(11)
|
The total amount
does not include the cutback amount.
|
(12)
|
Consists of three times the
total compensation Mr. Dharia actually received for the preceding twelve
calendar months. On December 31, 2008 there was no bonus amount payable. Upon
a change in control, Mr. Dharia is subject to a cutback for any payment that
is not tax deductible by the Company. Upon a hypothetical December 31, 2008
change of control no payments to Mr. Dharia would have been subject to the
cutback.
|
(13)
|
Consists of three times the
sum of Mr. Dharias life insurance payment ($80,000 per year) plus medical
benefits ($10,000 per year).
|
(14)
|
Consists of three times the
total compensation Mr. Sinha actually received for the preceding twelve
calendar months. On December 31, 2008 there was no bonus amount payable. Upon
a change in control, Mr. Sinha is subject to a cutback for any payment that
is not tax deductible by the Company. Upon a hypothetical December 31, 2008
change of control, no payments to Mr. Sinha would have been cutback.
|
(15)
|
Consists of three times the
sum of Mr. Sinhas life insurance payment ($3,500 per year) plus medical
benefits ($10,000 per year).
|
(16)
|
Consists of three times the
average amount of total compensation Mr. Schmertz actually received for the
preceding three calendar years. Upon a hypothetical December 31, 2008 change
of control, this amount would have been reduced by $1,307,131 (i.e. cutback)
to reflect the maximum amount which would be tax deductible by the Company.
|
(17)
|
Consists of three times the
average amount of total compensation Ms. Varela actually received for the
preceding three calendar years. Upon a hypothetical December 31, 2008 change
of control, this amount would have be reduced by $1,104,011 (i.e. cutback) to
reflect the maximum amount which would be tax deductible by the Company.
|
-32-
COMPENSATION OF DIRECTORS IN THE 2008 FISCAL YEAR
The
following table sets forth information concerning the compensation of the
Companys non-employee directors in the 2008 Fiscal Year.
Following
the table is a discussion of material factors related to the information
disclosed in the table.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees earned or paid in cash
|
|
Stock Awards $
|
|
Option Awards $
|
|
Non-Equity Incentive Plan Compensation
|
|
Change in Pension Value and Non-Qualified
Deferred Compensation Earnings
|
|
All Other Compensation
|
|
Total $
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
0
|
|
|
Marc S. Cooper (1)
|
|
10,000
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
10,000
|
|
|
John L. Madden
|
|
66,250
|
|
|
21,749
|
(2)
|
|
|
|
|
|
|
|
|
|
|
821,789
|
(3)
|
|
909,786
|
|
|
Peter Migliorini
|
|
118,750
|
|
|
43,498
|
(4)
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
162,244
|
|
|
Richard P. Randall
|
|
111,250
|
|
|
43,498
|
(5)
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
154,743
|
|
|
Ravi Sachdev
|
|
21,250
|
|
|
28,998
|
(6)
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
50,242
|
|
|
Thomas H. Schwartz
|
|
76,250
|
|
|
43,498
|
(7)
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
119,741
|
|
|
Walter Yetnikoff (8)
|
|
230,000
|
|
|
0
|
|
|
116,664
|
(9)
|
|
|
|
|
|
|
|
0
|
|
|
346,664
|
|
|
(1)
On February 25, 2008, Mr. Cooper resigned from his position as a director of
the Company.
(2)
The grant date fair value of such stock award computed in accordance with FAS
123R was $14,070. At December 31, 2008, the aggregate number of shares of
restricted stock outstanding was 750, and the aggregate number of stock options
outstanding was 40,000.
(3)
Includes: (a) the use of a corporate apartment valued at $61,519; (b) $760,270
in fees, travel and insurance allowance paid to JLM Consultants, Inc., a
company wholly owned by Mr. Madden, in connection with consulting services for
the development of the Companys international business.
(4)
The grant date fair value of such stock award computed in accordance with FAS
123R was $28,140. At December 31, 2008, the aggregate number of shares of
restricted stock outstanding was 1,500, and the aggregate number of stock
options outstanding was 15,000.
(5)
The grant date fair value of such stock award computed in accordance with FAS
123R was $28,140. At December 31, 2008, the aggregate number of shares of
restricted stock outstanding was 1,500, and Mr. Randall had no stock options
outstanding.
(6)
The grant date fair value of such stock award computed in accordance with FAS
123R was $26,790. At December 31, 2008, the aggregate number of shares of
restricted stock outstanding was 1,000, and Mr. Sachdev had no stock options
outstanding.
(7)
The grant date fair value of such stock award computed in accordance with FAS
123R was $28,140. At December 31, 2008, the aggregate number of shares of
restricted stock outstanding was 1,500, and Mr. Schwartz had no stock options
outstanding.
(8)
Effective August 8, 2008, Walter Yetnikoff retired as a director and
non-executive Chairman of the Board of the Company.
(9)
The grant date fair value of such option award computed in accordance with FAS
123R was $116,664. At December 31, 2008, Mr. Yetnikoff had no stock options
outstanding.
Directors who are also employees of the Company are not paid any fees
or other remuneration for service on the Board or any of its committees. In
2008, each non-employee director received the following compensation: (i) (A)
for independent directors, a grant of 1,500 shares of restricted stock, vesting
on the first anniversary of the grant date, and (B) for non-independent
directors, a grant of 750 shares of restricted stock, vesting on the first
anniversary of the grant date; and (ii) $66,250. In 2008, members of the Audit
Committee, Nominating/Corporate Governance Committee and Compensation Committee
each received an additional $10,000 for services on such committees, except
that the audit committee financial expert received $25,000 and the chairperson
of the Compensation Committee received $15,000. The Company reimburses
directors for any out-of-pocket expenses incurred by them in connection with
services provided in such capacity.
-33-
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In July
2001, the Company entered into a consulting agreement with Peter J. Solomon
& Company, a financial advisory firm of which Marc S. Cooper, a director of
the Company until his resignation on February 25, 2008, was a managing
director. Under this agreement, the firm provided financial advisory and
investment banking services to the Company. This agreement was amended in March
2004. The amended agreement expired on March 31, 2005, but pursuant to its
terms was automatically renewed until the Company terminated it on July 11,
2006. In June 2007, the Company entered into a new consulting agreement with
Peter J. Solomon & Company, pursuant to which the firm is to provide
financial advisory and investment banking services to the Company. This
agreement was amended in February 2008, and, as amended, expired on December
31, 2008. The relationship with Peter J. Solomon & Company currently
continues on a month-to-month basis. During 2008, the Company paid Peter J.
Solomon & Company $46,402 in consulting fees.
In January
2004, the Company entered into an agreement with John Madden and JLM
Consultants, a company wholly-owned by John Madden, one of the Companys
directors, which was amended in 2005. Under this agreement, Mr. Madden provided
consulting services with respect to the development of international sales of
the Company. This agreement expired on December 31, 2005 but Mr. Madden continued
to provide consulting services and the Company continued to make payments
consistent with those that would have been required under the expired
consulting agreement through December 31, 2007. For the 2008 fiscal year, Mr.
Madden has continued to provide consulting services and the Company has
continued to make payments for such services. In accordance with the foregoing,
JLM Consultants received a commission equal to 2.5% on international sales. JLM
Consultants received a monthly draw in the amount of $25,000 with recourse
against such commissions, as well as a $1,000 per month travel allowance and
$2,812 per month toward health insurance premiums. Pursuant to this
arrangement, JLM Consultants received a total of $760,270 in 2008.
Effective
as of July 1, 2005, the Company amended its employment agreement with Steven
Madden, pursuant to which Mr. Madden agreed to serve as the Companys Creative
and Design Chief. The term of Mr. Maddens employment under his amended
employment agreement commenced July 1, 2005 and ends on June 30, 2015. The
agreement provides 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 also provides for an annual bonus in an amount
determined by the Board of Directors, which will be at least 2% of the
Companys EBITDA (the Annual Bonus). Additionally, the Company shall pay Mr.
Madden an annual cash bonus in relation to new business (as defined in the
agreement) in an amount to be determined by the Board of Directors, which will
be at least (i) 2.5% of new business gross direct revenues, and (ii) 10% of all
license or other fee income above $2,000,000 (the New Business Bonus). In
addition, Mr. Madden is eligible to receive annually an option grant to
purchase shares of Common Stock in an amount equal to not less than 100% of the
largest aggregate amount of options granted to any other continuing full-time
employee of the Company during the annual period; provided, however, that a
grant in excess of 150% of the options grant to such other continuing full-time
employee shall require shareholder approval. The agreement provides, in the
event of Mr. Maddens death, for the payment to Mr. Maddens estate of his base
salary for the 12-month period immediately subsequent to the date of Mr.
Maddens death. In the
-34-
event that Mr. Maddens employment agreement is terminated due to Mr.
Maddens total disability (as defined in the agreement), for cause (as
defined in the agreement) or due to Mr. Maddens 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. Maddens employment
agreement is terminated for any reason (other than for cause or due to his
death or total disability or due to Mr. Maddens 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. In the event that there is a change of control (as defined
in the agreement) transaction, all unvested options to purchase shares of
Common Stock held by Mr. Madden will vest on the date of termination and Mr.
Madden will be entitled to receive a lump sum cash payment equal to (1) the
amount of compensation that is accrued and unpaid through the date of
termination, (2) an amount equal to the product of (A) the number of years
remaining in the term of the agreement (but not less than 5), and (B) the sum
of (w) the base salary for the 12-month period ended on the preceding December
31 (or for the 12-month period ending on December 31, 2002, if greater), (x)
the amount of the Annual Bonus earned (paid or accrued or which should have
been paid or accrued) for the 12-month period ended on the preceding December
31 (or for the 12-month period ended on December 31, 2002, if greater), (y) the
non-accountable expense allowance provided for under the agreement for the
12-month period ended on the preceding December 31, and (z) the amount of the
New Business Bonus earned (paid or accrued or which should have been paid or
accrued) for the 12-month period ended on the preceding December 31 (or for the
12-month period ending on December 31 during the agreement in which Mr. Madden
received the greatest New Business Bonus, if greater). Mr. Maddens employment
agreement contains other customary provisions, including provisions regarding
expense reimbursement, confidentiality, solicitation and competition. For the
fiscal year ending December 31, 2008, Mr. Madden earned (i) $642,000 in base
salary, (ii) $200,000 in non-accountable expense allowance, (iii) a bonus of
$1,139,020 representing 2% of the Companys earnings before interest, tax,
depreciation and amortization, (iv) a bonus of $3,340,525 earned based on 2.5%
of the Companys new business, and (v) a bonus of $72,744 based on 10% of
Royalty/Licensing income over $2,000,000.
On June 25,
2007, the Company made a loan to Steve Madden, its Creative and Design Chief
and a principal shareholder of the Company, in the amount of $3,000,000, in
order for Mr. Madden to exercise options that were due to expire and hold the
underlying Company stock. Mr. Madden executed a secured promissory note in
favor of the Company that bears interest at an annual rate of 8% and originally
was due on the earlier of the date Mr. Madden ceases to be employed by the
Company or December 31, 2008. An amendment to the note dated December 19, 2007
extended the due date to March 31, 2009. As of December 31, 2008 $370,000 of
interest has accrued on the note. Pursuant to a pledge agreement between the
Company and Mr. Madden, the note is secured by 510,000 shares of the Companys
common stock. On April 6, 2009, the Note was further amended and restated to
(i) extend the due date to the earlier of the date that Mr. Madden ceases to be
employed by the Company and June 30, 2015 (the Maturity Date), and (ii) amend
the rate of interest to accrue at a rate of 8% per annum from June 25, 2007
until April 6, 2009, and 6% per annum from April 7, 2009 until the Maturity
Date. Mr. Madden is the brother of John Madden, who has been a director of the
Company since the Companys inception.
-35-
On May 16,
2007, the Company entered into a Membership Interest Purchase Agreement (the
Purchase Agreement) whereby it purchased all of the outstanding membership
interests of Compo Enhancements, LLC, a provider of e-commerce services to the
Company (Compo), from its owners Jeffrey Silverman, James Randel, Ron Offir,
Godfrey Baker, Alyse Nathan and Andrew Rosca (collectively, the Owners).
Jeffrey Silverman became President of the Company on May 16, 2007.
In
connection with the Purchase Agreement, on May 16, 2007, the Company also
entered into an Earn-Out Agreement with the Owners (the Earn-Out Agreement).
Pursuant to the Earn-Out Agreement, as additional consideration for their
membership interests in Compo, the Owners collectively have the right to two
contingent purchase price payments of 168,000 shares of the Companys common
stock, which shall be paid (if at all) if and when the Company achieves (or
exceeds), in two consecutive years, beginning with fiscal year 2008 and ending with
fiscal year 2012, certain EBIT Goals (as defined in the Earn-Out Agreement) and
certain Diluted EPS Goals (as defined in the Earn-Out Agreement), all as
specified in the Earn-Out Agreement. Promptly following the execution of the
Earn-Out Agreement, the Company purchased, for $200,000, 20.875% of any future
earn-out payment from Mr. Randel.
On December
21, 2007, the Company and Mr. Silverman, and the Company and Mr. Randel, each
entered into a Settlement and Release Agreement, dated as of December 18, 2007
(each, a Settlement Agreement, and together, the Settlement Agreements).
Each of the Settlement Agreements provides for: the settlement of all disputes
between the parties relating to the pre-May 16, 2007 arrangement between Compo
and the Company (the Pre-Transaction Arrangement); the forgiveness by the
Company of all amounts in respect of the Working Capital Refund (as such term
is defined in the Purchase Agreement) that Messrs. Silverman and Randel may be
obligated to pay under the Purchase Agreement; and the payment by the Company
of certain amounts owed by Compo to the U.S. Customs Service and several
vendors to Compo. In addition, the Company and Mr. Silverman agreed that the
Company would have no further obligation to Mr. Silverman under the Earn-Out
Agreement, and the Company would pay $600,000 to Mr. Silverman on June 30,
2008. Mr. Randel released the Company and others from any claims arising from
or related to the Pre-Transaction Arrangement. Mr. Silverman and Mr. Randel
released the Company and others (and the Company released Mr. Silverman, Mr.
Randel and others) from any claims arising from or related to the Earn-Out
Agreement, the Purchase Agreement, the Pre-Transaction Arrangement and all
other matters and events arising prior to the date of the Settlement Agreement.
Pursuant to
the terms and conditions of a Termination Agreement, dated April 11, 2008,
between Mr. Silverman and the Company, Mr. Silverman resigned from his position
as President of the Company effective as of April 4, 2008. Pursuant to such
Termination Agreement, (i) the Company agreed to accelerate to April 19, 2008
the $600,000 payment due to Mr. Silverman on June 30, 2008 pursuant to the
terms and conditions of the Settlement Agreement between the Company and Mr.
Silverman, and (ii) the Company and Mr. Silverman agreed to release each
other from claims which may arise from events occurring prior to the date of
the Termination Agreement. In addition, the Company retained Mr. Silverman
to act as a consultant to the Company in connection with the Companys on-line
and internet business operations for the period beginning April 19, 2008 and
ending June 30, 2008. In consideration of such services, Mr. Silverman
received $140,769.23.
-36-
Effective
March 24, 2008, Jamieson A. Karson resigned from his position as Chief
Executive Officer, director and Chairman of the Board of Directors of the
Company, and entered into the Mutual Release with the Company. See --
Employment Arrangements.
REVIEW, APPROVAL
OR RATIFICATION OF TRANSACTIONS WITH RELATED PERSONS
The
Companys 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 Companys 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 Companys 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 quarterly distributes a
questionnaire to the Companys executive officers and management personnel and
annually distributes a questionnaire to the members of the Board of Directors
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 Audit
Committee, Disclosure Committee and Board of Directors discuss the related
party transactions and they are reviewed as part of the Forms 10-K and 10-Q
review process, including related party transaction disclosures.
If a
director is involved in the transaction, he 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.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The
following table sets forth information as of the Record Date (unless otherwise
indicated) with respect to the beneficial ownership of Common Stock by (i) each
person known by the Company to beneficially own five percent or more of the
outstanding shares; (ii) the directors and the Named Executive Officers; and
(iii) the Companys executive officers and directors as a group. A person is
deemed to be a beneficial owner of any securities which that
-37-
person has the right to
acquire within 60 days. See Compensation of Directors and Executive Officers.
|
|
|
|
|
|
|
|
|
Name and Address of Beneficial Owner (1)
|
|
Amount and Nature of Beneficial Ownership (2)
|
|
Percentage of Class
|
|
|
|
|
|
|
|
Jamieson Karson
|
|
0
|
|
|
*
|
|
(3)
|
|
Edward R. Rosenfeld
|
|
55,833
|
|
|
*
|
|
(4)
|
|
Arvind Dharia
|
|
160,446
|
|
|
*
|
|
(5)
|
|
Awadhesh Sinha
|
|
30,000
|
|
|
*
|
|
(6)
|
|
Robert Schmertz
|
|
180,000
|
|
|
1.00
|
%
|
(7)
|
|
Amelia Varela
|
|
40,000
|
|
|
*
|
|
(8)
|
|
John Madden
|
|
40,750
|
|
|
*
|
|
(9)
|
|
Peter Migliorini
|
|
16,500
|
|
|
*
|
|
(10)
|
|
Richard Randall
|
|
3,000
|
|
|
*
|
|
(11)
|
|
Thomas Schwartz
|
|
30,400
|
|
|
*
|
|
(12)
|
|
Ravi Sachdev
|
|
1,000
|
|
|
*
|
|
(13)
|
|
Steve Madden
|
|
2,022,580
|
|
|
11.26
|
%
|
(14)
|
|
BOCAP Corp
|
|
1,214,000
|
|
|
6.77
|
%
|
(15)
|
|
Barclays Global Investors, N.A.
|
|
1,054,976
|
|
|
5.90
|
%
|
(16)
|
|
Directors and Executive Officers as a
Group (Ten persons) (17)
|
|
557,929
|
|
|
3.07
|
%
|
(18)
|
|
*
indicates
beneficial ownership of less than 1%.
(1) Unless otherwise indicated, the address
of each beneficial owner is c/o Steven Madden, Ltd., 52-16 Barnett Avenue, Long
Island City, New York 11104.
(2) Beneficial ownership as reported in the
table above has been determined in accordance with Item 403 of Regulation S-K
of the Securities Act of 1933 and Rule 13d-3 of the Securities Exchange Act, and
based upon 17,938,562 shares of Common Stock outstanding (excluding treasury
shares) as of the Record Date.
(3) Effective March 24, 2008, Mr. Karson
resigned from his position as Chief Executive Officer, director and Chairman of
the Board of Directors of the Company.
(4) Mr. Rosenfelds beneficial ownership
includes (i) 20,833 shares that may be acquired through options that are
exercisable as of, or will become exercisable within 60 days of, the Record
Date; (ii) 15,750 shares of restricted stock; and (iii) 19,250 shares held by
Mr. Rosenfeld.
(5) Includes (i) 128,446 shares of Common
Stock issuable upon the exercise of options held by Mr. Dharia; (ii) 18,000
shares of restricted stock; and (iii) 14,000 shares held by Mr. Dharia.
-38-
(6) Mr. Sinhas beneficial ownership
includes: (i) 15,000 shares of restricted stock; and (ii) 15,000 shares held by
Mr. Sinha.
(7) Includes (i) 50,000 shares of Common
Stock issuable upon the exercise of options held by Mr. Schmertz; (ii) 67,500
shares of restricted stock; and (iii) 62,500 shares held by Mr. Schmertz.
(8) Ms. Varelas beneficial ownership
includes (i) 10,000 shares that may be acquired through options that are
exercisable as of, or will become exercisable within 60 days of, the Record
Date; (ii) 7,500 shares of restricted stock; and (iii) 22,500 shares held by
Ms. Varela.
(9) Mr. Maddens beneficial ownership
includes (i) 40,000 shares that may be acquired through options that are
exercisable as of, or will become exercisable within 60 days of, the Record
Date; and (ii) 750 shares of restricted stock.
(10) Mr. Migliorinis beneficial ownership
includes (i) 15,000 shares that may be acquired through options that are
exercisable as of, or will become exercisable within 60 days of, the Record
Date; and (ii) 1,500 shares of restricted stock.
(11) Mr. Randalls beneficial ownership
includes 1,500 shares of restricted stock. Mr. Randalls beneficial ownership
also includes 1,500 shares held by Mr. Randall which are pledged as collateral
to Merrill Lynch.
(12) Mr. Schwartzs beneficial ownership
includes: (i) 1,500 shares of restricted stock; and (ii) 28,900 shares held by
Mr. Schwartz.
(13) Mr. Sachdevs beneficial ownership
includes 1,000 shares of restricted stock.
(14) Mr. Maddens beneficial ownership
includes (i) 1,214,000 shares of Common Stock held by BOCAP Corp, a corporation
wholly owned by Mr. Madden; (ii) 20,000 shares that may be acquired through
options that are exercisable as of, or will become exercisable within 60 days
of, the Record Date; (iii) 96,000 shares of restricted stock; and (iv) 692,580
shares held by Mr. Madden.
(15) BOCAP Corp is a corporation wholly
owned by Steve Madden.
(16) Represents beneficial ownership as of
April 3, 2009. The address of Barclays Global Investors, N.A. is 400 Howard
Street, San Francisco, California 94105.
(17) Does not include Jamieson A. Karson,
who resigned from his position as Chief Executive Officer, director and
Chairman of the Board of Directors of the Company, effective March 24, 2008.
(18) Includes 264,279 shares that may be acquired
through options that are exercisable as of, or will become exercisable within
60 days of, the Record Date and 130,000 shares of restricted stock.
-39-
SECURITIES AUTHORIZED FOR ISSUANCE UNDER
EQUITY COMPENSATION PLANS
The
following table sets forth information as of December 31, 2008 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
(a)
|
|
Weighted average exercise price of outstanding options, warrants and
rights
(b)
|
|
Number of securities remaining available for future issuance under
equity compensation plans (excluding securities reflected in column (a))
(c)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
compensation plans approved by security holders
|
|
772,000
|
|
|
$
|
16.18
|
|
486,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
compensation plans not approved by security holders
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
772,000
|
|
|
$
|
16.18
|
|
486,000
|
|
|
PROPOSAL TWO
APPROVAL OF THE AMENDMENT AND RESTATEMENT OF OUR
2006 STOCK INCENTIVE PLAN
Our
stockholders are being asked to approve an amendment and restatement of our
2006 Stock Incentive Plan, as amended (which we refer to in this Proposal as
the
2006 Plan
), which was approved by the Board of Directors on April
6, 2009, subject to stockholder approval. The amendment and restatement of the
2006 Plan incorporates the provisions of the 2006 Plan as currently in effect
and includes the following key modifications, effective on the date of our 2009
stockholders meeting:
|
|
·
|
Adopts an additional 2,514,000 shares of Common Stock to the current
share reserve of 1,550,000shares of Common Stock, which
reflects the 3-for-2 stock split that became effective May 25, 2006, for a
total share reserve under the 2006 Plan of 4,064,000 shares of Common Stock. As described below, we clarified the 2006
Plan in a manner that does not permit liberalized share counting.
|
-40-
|
|
·
|
Implements a fungible share pool, under which shares of Common
Stock subject to awards under the 2006 Plan that are not appreciation awards
(such as restricted stock awards, certain other stock-based awards and
performance-based awards) count against the 2006 Plans share reserve as 1.78
shares for every share of Common Stock granted.
|
|
|
·
|
Limits the aggregate grant of awards made under the 2006 Plan granted
on and after our 2009 stockholders meeting to non-employee directors of the
Company and its affiliates to no more than 10% of the total number of shares of
Common Stock reserved for awards under the 2006 Plan.
|
|
|
·
|
Imposes minimum restrictions or vesting conditions, as applicable, on
restricted stock awards, other stock-based awards and performance-based
awards so that the vesting schedule may not be less than (i) one year from
the grant date for performance-based awards and (ii) three years from the
grant date for time-vested awards (with restrictions as to no more than 1/3
rd
of shares of Common Stock subject thereto lapsing on each of the first three
anniversaries of the date of grant);
provided
that
, the
compensation committee of the Board is authorized to provide for earlier
lapsing of the restrictions or acceleration of vesting, as applicable, in the
event of a change in control of the Company or a participants retirement,
death or disability. The preceding limitation will not apply with respect to
up to 10% (when combined with the 10% limitation for non-employee director
award grants discussed above) of the total number of shares of Common Stock
reserved for awards under 2006 Plan.
|
|
|
·
|
Provides that the compensation committee of the Board will be the
Committee (as defined below) with respect to the application of the 2006 Plan
to non-employee directors (the Board of Directors currently serves as the Committee
with respect to the application of the 2006 Plan to non-employee directors).
|
|
|
·
|
Extends the term of the 2006 Plan through April 6, 2019 (currently
the 2006 Plan is scheduled to expire after March 10, 2016).
|
In addition
to the foregoing, our stockholders are being asked to approve the Section 162(m) performance goals under
the 2006 Plan so that certain incentive awards granted under the 2006 Plan to
executive officers of the Company may qualify as exempt performance-based
compensation under Section 162(m) of the Code, which otherwise generally
disallows the corporate tax deduction for certain compensation paid in excess
of $1,000,000 annually to each of the chief executive officer and certain other
named executive officers. Section 162(m) of the Code generally requires such
performance goals to be approved by stockholders every five years.
BACKGROUND OF THE PROPOSAL
TO APPROVE THE 2006 PLAN
Under the current terms of the 2006 Plan, the Company has granted, and
may continue to grant, options, restricted stock, stock appreciation rights,
performance shares, other stock-based awards, and performance-based cash awards
to employees, consultants and non-employee directors of the Company and its
affiliates. In addition, pursuant to the Companys 1997 Stock Plan and the
Companys 1999 Stock Plan, as amended, the Company previously granted stock
options to certain directors and employees of the Company and its affiliates.
On April 7, 2009,
-41-
the closing sale price for our shares of
Common Stock, as reported by NASAQ, was $19.11 per share.
The Board has approved the 2006 Plan in order to enhance the
profitability and value of the Company for the benefit of its stockholders by
enabling us to offer eligible employees, consultants and non-employee directors
of the Company and its affiliates cash and stock-based incentives in the
Company to attract, retain and reward such individuals and strengthen the
mutuality of interests between such individuals and the Companys stockholders.
The Boards adoption of the Plan is subject to the approval of the Companys
stockholders.
The Board recommends that stockholders approve the 2006 Plan. If the
requisite stockholder approval of the 2006 Plan is not obtained, the 2006 Plan
will not take effect. If such approval is not obtained, the Company may
continue to grant awards separately under the 2006 Plan in accordance with the
current terms and the current share reserve under the 2006 Plan.
The affirmative vote of the holders of at least a majority of the
outstanding shares of the Common Stock present or represented by proxy and
entitled to vote at the Annual Meeting is required to approve the 2006 Plan.
The following description of the 2006 Plan, which takes into account
the effect of the amendment and restatement, is a summary of its principal
provisions and is qualified in its entirety by reference to the 2006 Plan (a
copy of which is appended hereto as Exhibit A).
-42-
DESCRIPTION OF
THE 2006 PLAN
Administration
. The 2006 Plan is administered
by a committee, which is intended to consist of two or more non-employee
directors, each of whom will be, to the extent required, a non-employee
director as defined in Rule 16b-3 of the Exchange Act, an outside director as
defined under Section 162(m) of the Code and an independent director as defined
under NASD Rule 4200(a)(15) (the Committee). Under the 2006 Plan, the
Committee administers the 2006 Plan for purposes of awards to employees and
consultants of the Company and its affiliates and awards to non-employee directors.
Currently, the compensation committee of the Board serves as the Committee
under the 2006 Plan.
The Committee has full authority pursuant and subject to the terms of
the 2006 Plan to administer and interpret the 2006 Plan, to grant discretionary
awards under the 2006 Plan, to determine the persons to whom awards will be
granted, to determine the types of awards to be granted, to determine the terms
and conditions of each award, to determine the number of shares of Common Stock
to be covered by each award and to make all other determinations in connection
with the 2006 Plan and the awards thereunder as the Committee, in its sole
discretion, deems necessary or desirable. The Committee has delegated to the
Chief Executive Officer of the Company the authority to grant awards under the
2006 Plan to eligible employees and consultants who are not subject to Section
16(b) of the Exchange Act or Section 162(m) of the Code; provided that in no
event will the number of shares of Common Stock that may be granted exceed
1,000 shares to any such individual during any fiscal year. The terms and
conditions of individual awards are set forth in written agreements that are
consistent with the terms of the 2006 Plan. Awards under the 2006 Plan may not
be made on or after April 6, 2019, except that awards (other than stock options
or stock appreciation rights) that are intended to be performance-based under
Section 162(m) of the Code will not be made on or after the first stockholders
meeting that occurs in the fifth year following the year of the 2006 Plans
approval by the Companys stockholders. If the 2006 Plan is approved by our
stockholders, the performance goals will be valid until the first stockholders
meeting in 2014.
Eligibility and Types of Awards
. Employees and
consultants of the Company or its affiliates and non-employee directors of the
Company are eligible to be granted nonqualified stock options, stock
appreciation rights, performance shares, restricted stock, other stock-based
awards and performance-based cash awards. In addition, the Companys employees
and employees of the Companys affiliates that qualify as subsidiaries or
parent corporations (as defined under Section 424 of the Code) are eligible to
be granted incentive stock options under the 2006 Plan.
-43-
Available Shares
. The number of shares of
Common Stock issuable under the 2006 Plan is 4,064,000
.
This
number includes our current share reserve of 1,550,000 shares of Common Stock,
which reflects the 3-for-2 stock split that became effective May 25, 2006 (the
Stock Split), and 2,514,000 as an additional
amount of new shares of Common Stock.
The maximum number of shares of Common Stock with respect to which any
stock option, stock appreciation right or shares of restricted stock that are
subject to the attainment of specified performance goals and intended to
satisfy Section 162(m) of the Code that may be granted under the Plan during
any fiscal year to any eligible employee or consultant will be 600,000 shares
per type of award, subject to a total limit on the number of shares of Common
Stock with respect to all awards of 750,000 shares during any fiscal year.
There are no annual limits on the number of shares of Common Stock with respect
to an award to eligible employees or consultants of restricted stock that is
not subject to the attainment of specified performance goals. The maximum
number of shares of Common Stock with respect to any award of performance
shares to an eligible employee or consultant during any fiscal year is 300,000
shares. The maximum number of shares of Common Stock with respect to which any
stock option (other than incentive stock options), stock appreciation right,
performance share or other stock-based award that may be granted under the Plan
during any fiscal year to any non-employee director will be 150,000 shares,
which reflects the Stock Split, per type of award. We have not requested an
increase to these limits but they reflect the Stock Split. The maximum payment
that may be made to an eligible employee or consultant under any
performance-based cash award during any fiscal year and subject to the
attainment of specified performance goals will be $10,000,000. Awards granted
under the 2006 Plan after the our stockholders 2009 annual meeting to
non-employee directors cannot exceed more than 10% of the total number of
shares of Common Stock reserved for awards under the 2006 Plan.
The 2006 Plan requires that the Committee appropriately adjust the
above individual maximum share limitations, the aggregate number of shares of
Common Stock available for the grant of awards and the exercise price of an
award to reflect any change in the Companys capital structure or business by
reason of certain corporate transactions or events.
Under the 2006 Plan, the number of shares of Common Stock available for
the purpose of awards under the 2006 Plan are reduced by (i) the total number
of options or stock appreciation rights exercised, regardless of whether any of
the shares of Common Stock underlying such awards are not actually issued to
the participant as the result of a net settlement, (ii) any shares of Common
Stock used to pay any exercise price or tax withholding obligation with respect
to any award and (iii) any shares of Common Stock repurchased by the Company on
the open market with the proceeds of a stock option exercise price.
The Companys Board commits that for fiscal years 2009, 2010 and 2011,
the Company will not grant during such three fiscal years a number of shares of
Common Stock subject to options or other awards settled in Common Stock to
employees or consultants (whether under the 2006 Plan or any other plan not
approved by stockholders, other than a tax qualified plan) such that the
average number of shares of Common Stock granted during such three fiscal years
will not be greater than the higher of (i) two percent of the Companys Common
Stock outstanding or (ii) the mean plus one standard deviation of its GICS peer
group (2520 Consumer Durables and
-44-
Apparel). For purposes of calculating the number of shares granted in a
year, stock and restricted stock will count as equivalent to (i) 1.5 option
shares if the Companys annual stock price volatility is 54.6% or higher, (ii)
2.0 option shares if the Companys annual stock price volatility is between
36.1% and 54.6%, (iii) 2.5 option shares if the Companys annual stock price
volatility is between 24.9% and 36.1%, (iv) 3.0 options shares if the Companys
annual stock price volatility is between 16.5% and 24.9%, (v) 3.5 option shares
if the Companys annual stock price volatility is between 7.9% and 16.5%, and
(vi) 4.0 option shares if the Companys annual stock price volatility is less
than 7.9%.
Fungible Share Limit
. The 2006 Plan provides a
fungible share limit to manage authorized shares in order to improve the
flexibility of awards going forward. Under the 2006 Plans fungible share
design:
|
|
·
|
shares of
Common Stock subject to awards under the 2006 Plan that are not appreciation
awards count against the 2006 Plans share reserve as 1.78 shares for every
share of common stock granted;
|
|
|
·
|
each share
of Common Stock underlying an appreciation award granted under the 2006 Plan
that expires, terminates, is cancelled or is forfeited for any reason, is
added back to the 2006 Plans aggregate maximum share limit and is available
for grant under the 2006 Plan; and
|
|
|
·
|
each share
of Common Stock underlying an award that is
not
an appreciation award
that expires, terminates, is cancelled or is forfeited for any reason, is
added back to the 2006 Plans share reserve as 1.78 shares of Common Stock
and is available for grant under the 2006 Plan.
|
The 2006 Plans fungible share limit has the effect of reducing the
number of awards under the 2006 Plan that are not appreciation awards because
awards under the 2006 Plan that are not appreciation awards count against the
2006 Plans share reserve as 1.78 shares for every share of Common Stock
granted. Because we have added this fungible share limit, if our stockholders
approve the 2006 Plan, the existing share sublimit for awards that are not
appreciation awards will be eliminated due to the addition of the fungible
share limit.
Awards Under the 2006 Plan
. The following
types of awards are available under the 2006 Plan:
Stock Options
. The Committee may grant
nonqualified stock options and incentive stock options (only to eligible
employees) to purchase shares of Common Stock. The Committee will determine the
number of shares of Common Stock subject to each option, the term of each
option, which may not exceed seven years (or five years in the case of an
incentive stock option granted to a 10% stockholder), the exercise price, the
vesting schedule (if any), and the other material terms of each option. No
incentive stock option or nonqualified stock option may have an exercise price
less than the fair market value of the Common Stock at the time of grant (or,
in the case of an incentive stock option granted to a 10% stockholder, 110% of
fair market value).
Options will be exercisable at such time or times and subject to such
terms and conditions as determined by the Committee at grant and the
exercisability of such options may be accelerated by the Committee in its sole
discretion, provided that no option is exercisable more than seven
-45-
years after the date the option
is granted and, in the case of a ten percent Stockholder, five years from the
date an incentive stock option is granted.
Upon the exercise of an option, the participant must make payment of
the full exercise price, either (i) in cash, check, bank draft or money order;
(ii) solely to the extent permitted by law, through the delivery of irrevocable
instructions to a broker reasonably acceptable to the Company to deliver
promptly to the Company an amount equal to the purchase price; or (iii) on such
other terms and condition as a may be acceptable to the Committee.
Stock Appreciation Rights
. The Committee may grant stock appreciation
rights (SARs) either with a stock option which may be exercised only at such
times and to the extent the related option is exercisable (Tandem SAR) or
independent of a stock option (Non-Tandem SARs). A SAR is a right to receive a payment in Common Stock or cash (as
determined by the Committee) equal in value to the excess of the fair market
value of one share of Common Stock on the date of exercise over the exercise
price per share established in connection with the grant of the SAR. The term of each SAR may not exceed seven
years. The exercise price per share
covered by a SAR will be the exercise price per share of the related option in
the case of a Tandem SAR and will be the fair market value of the Common Stock
on the date of grant in the case of a Non-Tandem SAR. The Committee may also grant limited SARs, either as Tandem
SARs or Non-Tandem SARs, which may become exercisable only upon the occurrence
of a change in control (as defined in the 2006 Plan) or such other event as the
Committee may, in its sole discretion, designate at the time of grant or
thereafter.
Restricted Stock
. The Committee may award shares of restricted stock. Except as otherwise
provided by the
Committee upon the award of restricted stock, the recipient generally has the
rights of a stockholder with respect to the shares, including the right to
receive dividends, the right to vote the shares of restricted stock and,
conditioned upon full vesting of shares of restricted stock, the right to
tender such shares, subject to the conditions and restrictions generally
applicable to restricted stock or specifically set forth in the recipients
restricted stock agreement. The
Committee may determine at the time of award, that the payment of dividends, if
any, will be deferred until the expiration of the applicable restriction
period.
Recipients of restricted stock are required to enter into a restricted
stock agreement with the Company which states the restrictions to which the
shares are subject, which may include
satisfaction of pre-established performance goals, and the criteria or date or
dates on which such restrictions will lapse.
If the grant of restricted stock or the lapse of the relevant
restrictions is based on the attainment of performance goals, the Committee
will establish for each recipient the applicable performance goals, formulae or
standards and the applicable vesting percentages with reference to the
attainment of such goals or satisfaction of such formulas or standards while
the outcome of the performance goals are substantially uncertain. Such performance goals may incorporate
provisions for disregarding (or adjusting for) changes in accounting methods,
corporate transactions (including, without limitation, dispositions and
acquisitions) and other similar events or circumstances. Section 162(m) of the Code requires that
performance awards be based upon objective performance measures. The performance goals for performance-based
restricted stock
-46-
will be based on one or more of the objective criteria set forth on
Exhibit A to the 2006 Plan and discussed in general below.
Performance Shares
. The Committee may award
performance shares. A performance share is the equivalent of one share of
Common Stock. The performance goals for performance shares will be based on one
or more of the objective criteria set forth on Exhibit A to the 2006 Plan and
discussed in general below. A minimum level of acceptable achievement will also
be established by the Committee. If, by the end of the performance period, the
recipient has achieved the specified performance goals, he or she will be
deemed to have fully earned the performance shares. To the extent earned, the
performance shares will be paid to the recipient at the time and in the manner
determined by the Committee in cash, shares of Common Stock or any combination
thereof.
Other Stock-Based Awards
. The Committee may,
subject to limitations under applicable law, make a grant of such other
stock-based awards (including, without limitation, performance units, dividend
equivalent units, stock equivalent units, restricted stock units and deferred
stock units) under the 2006 Plan that are payable in cash or denominated or
payable in or valued by shares of Common Stock or factors that influence the
value of such shares. The Committee will determine the terms and conditions of
any such other awards, which may include the achievement of certain minimum
performance goals for purposes of compliance with Section 162(m) of the Code
and/or a minimum vesting period. The performance goals for performance-based
other stock-based awards will be based on one or more of the objective criteria
set forth on Exhibit A to the 2006 Plan and discussed in general below.
Performance-Based Cash Awards
. The Committee
may, subject to limitations under applicable law, make a grant of individual
target awards either alone or in tandem with stock options, SARs or restricted
stock under the 2006 Plan that are contingent upon the satisfaction of certain
pre-established performance goals that are reached within a specified
performance period, each of which, together with any other terms and
conditions, shall be determined by the Committee in its sole discretion at the
time of grant. At the time the performance goals are established, the Committee
will prescribe a formula to determine the percentages (which may be greater
than 100%) of the individual target award which may be payable based upon the
degree of attainment of the performance goals during the calendar year. The
Committee may, in its sole discretion, elect to pay a participant an amount
that is less than the participants individual target award regardless of the
degree of attainment of the performance goals; provided that no such discretion
to reduce a performance-based cash award earned based on achievement of the
applicable performance goals will be permitted for a calendar year in which a
change in control occurs. The performance goals for performance-based cash
awards will be based on one or more of the objective criteria set forth on
Exhibit A to the 2006 Plan and discussed in general below.
Limitation
. Notwithstanding any other
provisions in the 2006 Plan or employment agreement, effective on the date of
our 2009 stockholders meeting, the restrictions or vesting conditions, as
applicable, to restricted stock awards, other stock-based awards and
performance-based awards granted on and after such date can be no less than (i)
one year, if the lapsing of restrictions or vesting schedule, as applicable, is
based (in whole or in part) on the attainment of one or more performance goals,
and (ii) three years, if the lapsing of restrictions or the vesting schedule,
as
-47-
applicable, is
based solely on the continued performance of services by the 2006 Plan
participant (with restrictions as to no more than 1/3
rd
of shares of
common stock subject thereto lapsing on each of the first three anniversaries
of the date of grant); provided that, the Committee is authorized to provide
for earlier lapsing of the restrictions or acceleration of vesting, as
applicable, in the event of a change in control of the Company or a
participants retirement, death or disability. The preceding limitation does
not apply with respect to up to 10% (when combined with the 10% limitation for
non-employee director award grants) of the total number of shares of common
stock reserved for awards under Plan.
Performance Goals
. The Committee may grant
awards of restricted stock, performance shares, performance-based cash awards
and other stock-based awards that are intended to qualify as performance-based
compensation for purposes of Section 162(m) of the Code. These awards may be
granted, vest and be paid based on attainment of specified performance goals
established by the Committee. These performance goals will be based on the
attainment of a certain target level of, or a specified increase or decrease
in, one or more of the following criteria selected by the Committee:
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·
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earnings per
share, earnings before interest and taxes or earnings before interest, tax,
depreciation and amortization;
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·
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gross profit
or gross profit return on investment;
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·
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gross margin
or gross margin return on investment;
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operating
income, net income, cash flow or economic value added;
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revenue
growth;
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working
capital;
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·
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specified
objectives with regard to limiting the level of increase in all or a portion
of, the Companys bank debt or other long-term or short-term public or
private debt or other similar financial obligations of the Company, which may
be calculated net of cash balances and/or other offsets and adjustments as
may be established by the Committee;
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·
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return on
equity, assets or capital;
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total
shareholder return;
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fair market
value of the shares of the Common Stock;
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market share
and/or market segment share;
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the growth
in the value of an investment in the Common Stock assuming the reinvestment of
dividends;
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customer
satisfaction, customer loyalty, brand recognition and/or brand acceptance;
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style
indexes;
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employee
retention;
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number of
new patents, new product innovation and/or introduction;
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product
release schedules and/or ship targets; or
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reduction in
expenses and/or product cost reduction through advanced technology.
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To the extent
permitted by law, the Committee may also exclude the impact of an event or
occurrence which the Committee determines should be appropriately excluded,
including:
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restructurings,
discontinued operations, extraordinary items and other unusual or
non-recurring charges;
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an event
either not directly related to the operations of the Company or not within the
reasonable control of the Companys management; or
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a change in
accounting standards required by generally accepted accounting principles.
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Performance
goals may also be based on individual participant performance goals, as
determined by the Committee, in its sole discretion.
In addition,
all performance goals may be based upon the attainment of specified levels of
Company (or subsidiary, division or other operational unit of the Company)
performance under one or more of the measures described above relative to the
performance of other corporations. The Committee may designate additional
business criteria on which the performance goals may be based or adjust, modify
or amend those criteria.
Change in Control
. Unless otherwise determined
by the Committee at the time of grant or in a written employment agreement that
is in effect on the date of the applicable grant and is applicable to a
specific award, awards subject to vesting and/or restrictions will not
accelerate and vest or cause the lapse of restrictions upon a change in control
(as defined in the 2006 Plan) of the Company. Instead, such awards will be, in
the discretion of the Committee, (i) assumed and continued or substituted in
accordance with applicable law, (ii) purchased by the Company for an amount
equal to the excess of the price of the Common Stock paid in a change in
control over the exercise price of the award(s), or (iii) cancelled if the
price of the Common Stock paid in a change in control is less than the exercise
price of the award. The Committee may also, in its sole discretion, provide for
accelerated vesting or lapse of restrictions of an award at any time.
Amendment and Termination
. Notwithstanding any
other provision of the 2006 Plan, the Board may at any time amend any or all of
the provisions of the 2006 Plan, or suspend or terminate it entirely,
retroactively or otherwise; provided, however, that, unless otherwise required
by law or specifically provided in the 2006 Plan, the rights of a participant
with respect to awards granted prior to such amendment, suspension or
termination may not be adversely affected without the consent of such
participant and, provided further that the approval of the Companys
stockholders will be obtained to the extend required by Delaware law, Sections
162(m) and 422 of the Code, The Nasdaq Global Market or the rules of such other
applicable stock exchange, as specified in the 2006 Plan.
Repricing Options and Stock Appreciation Rights
.
Although the current terms of the 2006 Plan do not permit the repricing of
stock options and stock appreciation rights, the 2006 Plan includes an
additional express prohibition against repricing stock options and stock
appreciation rights. The Company may not, without stockholder approval, either
(i) reduce the exercise price of an outstanding stock option or stock
appreciation right, or (ii) simultaneously cancel stock options or stock
appreciation rights for which the exercise price exceeds the then current fair
market value of the underlying Common Stock and grant a new stock option or
stock appreciation right with an exercise price equal to the then current fair
market value of the underlying Common Stock.
-49-
Miscellaneous
. Awards granted under the 2006
Plan are generally nontransferable (other than by will or the laws of descent
and distribution), except that the Committee may provide for the
transferability of nonqualified stock options at the time of grant or
thereafter to certain family members.
Certain U.S. Federal Income Tax Consequences
.
The rules concerning the federal income tax consequences with respect to
options granted and to be granted pursuant to the 2006 Plan are quite
technical. Moreover, the applicable statutory provisions are subject to change,
as are their interpretations and applications which may vary in individual
circumstances. Therefore, the following is designed to provide a general
understanding of the federal income tax consequences. In addition, the
following discussion does not set forth any gift, estate, social security or
state or local tax consequences that may be applicable and is limited to the
U.S. federal income tax consequences to individuals who are citizens or
residents of the U.S., other than those individuals who are taxed on a
residence basis in a foreign country.
Incentive Stock Options
. In general, an
employee will not realize taxable income upon either the grant or the exercise
of an incentive stock option and the Company will not realize an income tax
deduction at either such time. In general, however, for purposes of the
alternative minimum tax, the excess of the fair market value of the shares of
Common Stock acquired upon exercise of an incentive stock option (determined at
the time of exercise) over the exercise price of the incentive stock option
will be considered income. If the recipient was continuously employed on the
date of grant until the date three months prior to the date of exercise and
such recipient does not sell Common Stock received pursuant to the exercise of
the incentive stock option within either (i) two years after the date of the
grant of the incentive stock option or (ii) one year after the date of
exercise, a subsequent sale of Common Stock will result in long-term capital
gain or loss to the recipient and will not result in a tax deduction to the
Company.
If the
recipient is not continuously employed on the date of grant until the date
three months prior to the date of exercise or such recipient disposes of Common
Stock acquired upon exercise of the incentive stock option within either of the
above mentioned time periods, the recipient will generally realize as ordinary
income an amount equal to the lesser of (i) the fair market value of Common
Stock on the date of exercise over the exercise price, or (ii) the amount
realized upon disposition over the exercise price. In such event, subject to
the limitations under Sections 162(m) and 280G of the Code (as described
below), the Company generally will be entitled to an income tax deduction equal
to the amount recognized as ordinary income. Any gain in excess of such amount
realized by the recipient as ordinary income would be taxed at the rates
applicable to short-term or long-term capital gains (depending on the holding
period).
To the extent
that the aggregate fair market value (determined as of the time of grant) of
the Common Stock with respect to which incentive stock options are exercisable
for the first time by a participant during any calendar year under the 2006
Plan and/or any other stock option plan of the Company or affiliate exceeds
$100,000, such options are treated as non-qualified stock options.
-50-
Nonqualified Stock Options
. A recipient will
not realize any taxable income upon the grant of a nonqualified stock option
and the Company will not receive a deduction at the time of such grant unless
such option has a readily ascertainable fair market value (as determined under
applicable tax law) at the time of grant. Upon exercise of a nonqualified stock
option, the recipient generally will realize ordinary income in an amount equal
to the excess of the fair market value of Common Stock on the date of exercise
over the exercise price. Upon a subsequent sale of Common Stock by the
recipient, the recipient will recognize short-term or long-term capital gain or
loss depending upon his or her holding period for Common Stock. Subject to the
limitations under Sections 162(m) and 280G of the Code (as described below),
the Company will generally be allowed a deduction equal to the amount
recognized by the recipient as ordinary income.
All Options
. With regard to both incentive
stock options and nonqualified stock options, the following also apply: (i) any
of the Companys officers and directors subject to Section 16(b) of the
Exchange Act may be subject to special tax rules regarding the income tax consequences
concerning their stock options, (ii) any entitlement to a tax deduction on the
part of the Company is subject to the applicable tax rules (including, without
limitation, Section 162(m) of the Code regarding the $1,000,000 limitation on
deductible compensation), and (iii) in the event that the exercisability or
vesting of any award is accelerated because of a change in control, payments
relating to the awards (or a portion thereof), either alone or together with
certain other payments, may constitute parachute payments under Section 280G of
the Code, which excess amounts may be subject to excise taxes and may be
nondeductible by the Company.
In general,
Section 162(m) of the Code denies a publicly held corporation a deduction for
federal income tax purposes for compensation in excess of $1,000,000 per year
per person to its named executive officers, other than its chief financial
officer, as disclosed in its proxy statement. Options will generally qualify
under one of these exceptions if they are granted under a plan that states the
maximum number of shares with respect to which options may be granted to any
recipient during a specified period, and if the plan under which the options
are granted is approved by stockholders and is administered by a committee
comprised of outside directors. The 2006 Plan is intended to satisfy these
requirements with respect to options.
Section 409A
of the Code provides that all amounts deferred under a nonqualified deferred
compensation plan are includible in a participants gross income to the extent
such amounts are not subject to a substantial risk of forfeiture, unless
certain requirements are satisfied. If the requirements are not satisfied, in
addition to current income inclusion, interest at the underpayment rate plus 1%
will be imposed on the participants underpayments that would have occurred had
the deferred compensation been includible in gross income for the taxable year
in which first deferred or, if later, the first taxable year in which such
deferred compensation is not subject to a substantial risk of forfeiture. The
amount required to be included in income is also subject to an additional 20%
tax. While most awards under the 2006 Plan are anticipated to be exempt from
the requirements of Section 409A of the Code, awards not exempt from Section
409A of the Code are intended to comply with Section 409A of the Code.
The 2006 Plan
is not subject to any of the requirements of the Employee Retirement Income
Security Act of 1974, as amended. The 2006 Plan is not, nor is it intended to
be, qualified under Section 401(a) of the Code.
-51-
Future 2006 Plan Awards
. Except as stated
below under the section entitled New 2006 Plan Benefits with Respect to 2009,
no new equity-based awards have been approved at this time to any employee,
officer, non-employee director or consultant. The Company anticipates that
other equity-based awards may be granted to the named individuals as well as to
other employees, officers, non-employee directors and consultants under the 2006
Plan. However, the amount of shares of Common Stock that may be granted to the
named individuals will be based upon various prospective factors, including,
the nature of services to be rendered by the Companys employees, officers,
non-employee directors and consultants, and their potential contributions to
the Companys success. Accordingly, actual awards cannot be determined at this
time.
-52-
NEW 2006 PLAN
BENEFITS WITH RESPECT TO 2009.
The terms and
number of awards to be granted in the future under the 2006 Plan are to be
determined in the discretion of the Committee. Since no other determinations
regarding awards or grants have yet been made, the benefits or amounts that
will be received by or allocated to our eligible employees, consultants or non-employee
directors cannot be determined at this time.
The
affirmative vote of the holders of at least a majority of the outstanding
shares of the Common Stock present or represented by proxy and entitled to vote
at the Annual Meeting is required to approve the 2006 Plan. The Board
recommends that the stockholders vote for the approval of the 2006 Plan.
THE
AFFIRMATIVE VOTE OF THE HOLDERS OF A MAJORITY OF THE SHARES OF COMMON STOCK
PRESENT OR REPRESENTED BY PROXY AND ENTITLED TO VOTE AT THE ANNUAL MEETING IS
REQUIRED TO APPROVE THE PLAN. THE BOARD OF DIRECTORS RECOMMENDS THAT THE
STOCKHOLDERS VOTE FOR THE APPROVAL OF THE AMENDMENT AND RESTATEMENT OF THE
PLAN.
PROPOSAL THREE
RATIFICATION OF THE APPOINTMENT OF EISNER LLP
AS THE COMPANYS
INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS FOR THE FISCAL YEAR ENDING
DECEMBER 31, 2009
The
Audit Committee has appointed Eisner LLP as the Companys independent
registered public accounting firm to conduct the audit of the Companys books
and records for the fiscal year ending December 31, 2009. Eisner LLP also
served as the Companys independent registered public accountants for the
previous fiscal year.
Although
ratification by stockholders is not required by the Companys organizational
documents or other applicable law, the Audit Committee has determined that
requesting ratification by stockholders of its appointment of Eisner LLP as the
Companys 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 Eisner LLP, but may still
retain them. Even if the selection is ratified, the Audit Committee, in its
discretion, may change the appointment at any time during the year if it
determines that such a change would be in the best interest of the Company and
its stockholders.
Representatives
of Eisner 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 shares of Common Stock
present or represented by proxy and entitled to vote at the Annual Meeting is
required to ratify the Audit Committees selection of Eisner LLP.
-53-
RECOMMENDATION
OF THE BOARD OF DIRECTORS
The
Board of Directors unanimously recommends a vote FOR the ratification of the
appointment of Eisner LLP as the Companys independent registered public
accountants for the fiscal year ending December 31, 2009. Unless marked to the
contrary, proxies received from stockholders will be voted in favor of
ratifying the appointment of Eisner LLP as the Companys independent registered
public accountants for the fiscal year ending December 31, 2009.
AUDIT FEES
The
aggregate fees billed by Eisner LLP for professional services rendered for the
audit of the Companys annual financial statements for the 2008 Fiscal Year,
for the reviews of the financial statements included in the Companys Quarterly
Reports on Form 10-Q for the 2008 Fiscal Year, other statutory and regulatory
filings or engagements and the audit of the Companys internal controls over
financial reporting for the 2008 Fiscal Year were $557,983. The comparative
amount for the fiscal year ended December 31, 2007 (the 2007 Fiscal Year) was
$529,000.
AUDIT-RELATED
FEES
In
addition to Audit Fees, Eisner LLP has billed the Company $25,000, in the
aggregate, for Audit Related Fees related to assurance and related services for
the 2008 Fiscal Year. These services include, among others, the audit of the
Companys employee benefit plans and other accounting related consultations.
The comparative amount for the 2007 Fiscal Year was $105,000.
TAX FEES
During the
2008 Fiscal Year, Eisner LLP billed the Company $231,500, in the aggregate, for
services rendered to the Company for tax compliance, tax advice and tax
planning. Eisner LLP billed $239,000 for similar services in the 2007 Fiscal
Year. These professional services include assistance in the preparation of the
Companys various federal, state and local tax returns, tax consultation and
various amendments.
ALL OTHER FEES
There were no
fees billed by Eisner LLP for services rendered to the Company, other than the
services described above under Audit Fees, Audit Related Fees and Tax Fees, for
the 2008 Fiscal Year or the 2007 Fiscal Year.
AUDIT
COMMITTEES 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
-54-
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 years 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 Committees pre-approval policies and procedures are as follows: (a)
prior to each fiscal year, the Audit Committee pre-approves a schedule of
estimated fees for proposed non-prohibited audit and non-audit services, and
(b) actual amounts paid are monitored by financial management of the Company
and reported to the Audit Committee.
All
work performed by Eisner LLP as described above under the captions Audit Fees,
Audit Related Fees, Tax Fees and All Other Fees has been approved or
pre-approved by the Audit Committee pursuant to the provisions of the Audit
Committees charter. The Audit Committee has considered and concluded that the
provision of non-audit services is compatible with maintaining the independence
of Eisner LLP.
THE
AFFIRMATIVE VOTE OF THE HOLDERS OF A MAJORITY OF THE SHARES OF COMMON STOCK
PRESENT OR REPRESENTED BY PROXY AND ENTITLED TO VOTE AT THE ANNUAL MEETING IS
REQUIRED TO RATIFY THE APPOINTMENT OF EISNER LLP AS THE COMPANYS INDEPENDENT
REGISTERED PUBLIC ACCOUNTANTS. THE BOARD OF DIRECTORS RECOMMENDS THAT THE
STOCKHOLDERS VOTE FOR THE RATIFICATION OF THE APPOINTMENT OF EISNER LLP AS
THE COMPANYS INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS FOR THE FISCAL YEAR
ENDING DECEMBER 31, 2009.
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.
STOCKHOLDER
NOMINATIONS FOR BOARD MEMBERSHIP, PROPOSALS AND SUBMISSIONS FOR THE COMPANYS
2010 ANNUAL MEETING
In
accordance with Article II, Section 5 of the Companys By-Laws, director
nominations for the 2010 Annual Meeting can only be made by a stockholder of
the Company who (A) 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 such meeting, and (B)
complies with the notice requirements and procedures set forth in Article II,
Section 5 of the Companys By-Laws. A stockholders notice to the Corporate
Secretary with respect to any such nominations must be timely and in proper
written form pursuant to Article II, Section 5 of the Companys By-Laws,
including containing certain information concerning the nominating or proposing
stockholder and certain information concerning the nominee, and must be
delivered to, or mailed and received at, the Companys principal executive
offices not less than 120 days nor
-55-
more than 150
days prior to the first anniversary of the date of the Companys 2009 Annual
Meeting. Accordingly, any written notice given by or on behalf of a stockholder
pursuant to Article II, Section 5 of the Companys By-Laws in connection with
the 2010 Annual Meeting must be received no later than January 22, 2010 and no
earlier than December 23, 2009.
In
accordance with rules promulgated by the SEC, any stockholder who wishes to
submit a proposal for inclusion in the proxy material to be distributed by the
Company in connection with the 2010 Annual Meeting must do so no later than
December 10, 2009. In addition, in accordance with Article I, Section 7(f) of
the Companys By-Laws, in order to be properly brought before the 2010 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
Companys principal executive offices not less than 120 days nor more than 150
days prior to the first anniversary of the date of the Companys 2009 Annual
Meeting. Accordingly, any written notice given by or on behalf of a stockholder
pursuant to the foregoing clause (iii) in connection with the 2010 Annual
Meeting must be received no later than January 22, 2010 and no earlier than
December 23, 2009. In addition, for business to be properly brought before the
2010 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.
A
copy of the applicable provisions of the Companys 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 SIGN AND RETURN
THE ACCOMPANYING PROXY 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.
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STEVEN
MADDEN, LTD.
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April 9,
2009
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By:
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/s/ Arvind
Dharia
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Arvind
Dharia
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Secretary
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-56-
EXHIBIT A
TABLE
OF CONTENTS
i
EXHIBIT A
STEVEN MADDEN, LTD.
2006 STOCK INCENTIVE PLAN
(Amended
and Restated Effective May 22, 2009)
ARTICLE I
PURPOSE
The
purpose of this 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
strengthen the mutuality of interests between such individuals and the
Companys stockholders.
This
Plan, in the form set forth herein, is effective as of the Restatement Date (as
defined in Article XVII) and is an amendment and restatement of the Steve
Madden, Ltd. 2006 Stock Incentive Plan, as amended (the Initial Plan), which
was initially effective March 10, 2006.
ARTICLE II
DEFINITIONS
For
purposes of this Plan, the following terms shall have the following meanings:
2.1
Acquisition
Event
means a merger or consolidation in which
the Company is not the surviving entity, any transaction that results in the
acquisition of all or substantially all of the Companys outstanding Common
Stock by a single person or entity or by a group of persons and/or entities
acting in concert, or the sale or transfer of all or substantially all of the
Companys assets.
2.2
Affiliate
means each of the following: (a) any Subsidiary; (b) any Parent;
(c) any corporation, trade or business (including, without limitation, a
partnership or limited liability company) which is directly or indirectly
controlled 50% or more (whether by ownership of stock, assets or an equivalent
ownership interest or voting interest) by the Company; (d) any corporation,
trade or business (including, without limitation, a partnership or limited
liability company) which directly or indirectly controls 50% or more (whether
by ownership of stock, assets or an equivalent ownership interest or voting
interest) of the Company; and (e) any other entity in which the Company or
any of its Affiliates has a material equity interest and which is designated as
an Affiliate by resolution of the Committee; provided that the Common Stock
subject to any
Award constitutes service recipient stock for purposes of Section 409A of the
Code or otherwise does not subject the Award to Section 409A of the Code.
2.3
Appreciation
Award
means any Award under this Plan of any
Stock Option, Stock Appreciation Right or Other Stock-Based Award, provided
that such Other Stock-Based Award is based on the appreciation in value of a
share of Common Stock in excess of an amount equal to at least the Fair Market
Value of the Common Stock on the date such Other Stock-Based Award is granted.
2.4
Award
means any award under this Plan of any Stock Option, Stock Appreciation Right,
Restricted Stock, Performance Share, Other Stock-Based Award or
Performance-Based Cash Awards. All Awards shall be granted by, confirmed by,
and subject to the terms of, a written agreement executed by the Company and
the Participant.
2.5
Board
means the Board of Directors of the Company.
2.6
Cause
means with respect to a Participants Termination of Employment or Termination
of Consultancy from and after the date hereof, the following: (a) in the case
where there is no employment agreement, consulting agreement, change in control
agreement or similar agreement in effect between the Company or an Affiliate
and the Participant at the time of the grant of the Award (or where there is
such an agreement but it does not define cause (or words of like import)),
termination due to: (i) a Participants conviction of, or plea of guilty or
nolo contendere to, a felony; (ii) perpetration by a Participant of an illegal
act, or fraud which could cause significant economic injury to the Company;
(iii) continuing willful and deliberate failure by the Participant to perform
the Participants duties in any material respect, provided that the Participant
is given notice and an opportunity to effectuate a cure as determined by the
Committee; or (iv) a Participants willful misconduct with regard to the
Company that could have a material adverse effect on the Company; or (b) in the
case where there is an employment agreement, consulting agreement, change in
control agreement or similar agreement in effect between the Company or an
Affiliate and the Participant at the time of the grant of the Award that
defines cause (or words of like import), cause as defined under such
agreement; provided, however, that with regard to any agreement under which the
definition of cause only applies on occurrence of a change in control, such
definition of cause shall not apply until a change in control actually takes
place and then only with regard to a termination thereafter. With respect to a
Participants Termination of Directorship, cause means an act or failure to
act that constitutes cause for removal of a director under applicable Delaware
law.
2.7
Change
in Control
has the meaning set forth in Section
13.2.
2.8
Change
in Control Price
has the meaning set forth in
Section 13.1.
2.9
Code
means the Internal Revenue Code of 1986, as amended. Any reference to any
section of the Code shall also be a reference to any successor provision and
any Treasury Regulation promulgated thereunder.
2.10
Committee
means a committee or subcommittee of the Board appointed from time to time by
the Board, which committee or subcommittee shall consist of two or more
non-employee directors, each of whom shall be (i) a non-employee director as
defined in Rule 16b-
2
3; (ii) to the
extent required by Section 162(m) of the Code, an outside director as defined
under Section 162(m) of the Code; and (iii) an independent director as
defined under NASD Rule 4200(a)(15) or such other applicable stock exchange
rule. To the extent that no Committee exists that has the authority to
administer this Plan, the functions of the Committee shall be exercised by the
Board. If for any reason the appointed Committee does not meet the requirements
of Rule 16b-3 or Section 162(m) of the Code, such noncompliance shall not
affect the validity of Awards, grants, interpretations or other actions of the
Committee.
2.11
Common
Stock
means the Common Stock, $0.0001 par value
per share, of the Company.
2.12
Company
means Steven Madden, Ltd., a Delaware corporation, and its successors by
operation of law.
2.13
Consultant
means any natural person who provides bona fide consulting or advisory services
to the Company or its Affiliates pursuant to a written agreement, which are not
in connection with the offer and sale of securities in a capital-raising
transaction.
2.14
Disability
means with respect to a Participants Termination, a permanent and total
disability as defined in Section 22(e)(3) of the Code. A Disability shall only
be deemed to occur at the time of the determination by the Committee of the
Disability. Notwithstanding the foregoing, for Awards that are subject to
Section 409A of the Code, Disability shall mean that a Participant is disabled
under Section 409A(a)(2)(C)(i) or (ii) of the Code.
2.15
Effective
Date
means the effective date of this Plan as
defined in Article XVII.
2.16
Eligible
Employees
means each employee of the Company or
an Affiliate.
2.17
Exchange
Act
means
the Securities Exchange Act of 1934, as amended. Any references to any section
of the Exchange Act shall also be a reference to any successor provision.
2.18
Fair
Market Value
means, unless otherwise required by any applicable
provision of the Code or any regulations issued thereunder, as of any date and
except as provided below, the closing price reported for the Common Stock on
the applicable date: (a) as reported on the principal national securities
exchange in the United States on which it is then traded or The Nasdaq Stock
Market; or (b) if not traded on any such national securities exchange or The
Nasdaq Stock Market, as quoted on an automated quotation system sponsored by
the National Association of Securities Dealers, Inc. or if the Common Stock
shall not have been reported or quoted on such date, on the first day prior
thereto on which the Common Stock was reported or quoted. If the Common Stock
is not traded, listed or otherwise reported or quoted, then Fair Market Value
means the fair market value of the Common Stock as determined by the Committee
in good faith in whatever manner it considers appropriate taking into account
the requirements of Section 422 of the Code or Section 409A of the Code, as
applicable. For purposes of the grant of any Award, the applicable date shall
be the trading day immediately prior to the date on which the Award is granted.
For purposes of the exercise of any Award, the applicable date shall be the
date a notice of exercise is received by the Committee or, if not a day on
which the applicable market is open, the next day that it is open.
3
2.19
Family
Member
means family member as defined in
Section A.1.(5) of the general instructions of Form S-8, as may be amended from
time to time.
2.20
GAAP
has the meaning set forth in Section 11.2(c)(ii).
2.21
Incentive
Stock Option
means any Stock Option awarded to an
Eligible Employee of the Company, its Subsidiaries and its Parent (if any)
under this Plan intended to be and designated as an Incentive Stock Option
within the meaning of Section 422 of the Code.
2.22
Non-Employee
Director
means a director of the Company who is
not an active employee of the Company or an Affiliate.
2.23
Non-Qualified
Stock Option
means any Stock Option awarded under
this Plan that is not an Incentive Stock Option.
2.24
Other
Stock-Based Award
means an Award under Article X
of this Plan that is valued in whole or in part by reference to, or is payable
in or otherwise based on, Common Stock, including, without limitation, a
restricted stock unit or an Award valued by reference to an Affiliate.
2.25
Parent
means any parent corporation of the Company within the meaning of Section
424(e) of the Code.
2.26
Participant
means an Eligible Employee, Non-Employee Director or Consultant to whom an
Award has been granted pursuant to this Plan.
2.27
Performance-Based
Cash Award
means a cash Award under Article XI of
this Plan that is payable or otherwise based on the attainment of certain
pre-established performance goals during a Performance Period.
2.28
Performance
Period
means the duration of the period during
which receipt of an Award is subject to the satisfaction of performance
criteria, such period as determined by the Committee in its sole discretion.
2.29
Performance
Share
means an Award made pursuant to Article IX
of this Plan of the right to receive Common Stock or cash of an equivalent
value at the end of a specified Performance Period.
2.30
Person
means any individual, corporation, partnership, limited liability company,
firm, joint venture, association, joint-stock company, trust, incorporated
organization, governmental or regulatory or other entity.
2.31
Plan
means this Steven Madden, Ltd. 2006 Stock Incentive Plan, as amended from time
to time.
2.32
Reference
Stock Option
has the meaning set forth in Section
7.1.
4
2.33
Restricted Stock
means an Award of shares of
Common Stock under this Plan that is subject to restrictions under Article
VIII.
2.34
Restriction
Period
has the meaning set forth in Subsection
8.3(a).
2.35
Retirement
means a voluntary Termination of Employment at or after age 65 or such earlier
date after age 50 as may be approved by the Committee, in its sole discretion
at the time of grant or thereafter provided that the exercise of such discretion
does not make the applicable Award subject to Section 409A of the Code, except
that Retirement shall not include any Termination with or without Cause. With
respect to a Participants Termination of Directorship, Retirement means the
failure to stand for reelection or the failure to be reelected on or after a
Participant has attained age 65 or, with the consent of the Board, provided
that the exercise of such discretion does not make the applicable Award subject
to Section 409A of the Code, before age 65 but after age 50.
2.36
Rule
16b-3
means Rule 16b-3 under Section 16(b) of the
Exchange Act as then in effect or any successor provision.
2.37
Section
162(m) of the Code
means the exception for
performance-based compensation under Section 162(m) of the Code and any
applicable Treasury regulations thereunder.
2.38
Section
409A of the Code
means the nonqualified deferred
compensation rules under Section 409A of the Code and any applicable Treasury
regulations thereunder.
2.39
Securities
Act
means the Securities Act of 1933, as amended
and all rules and regulations promulgated thereunder. Any reference to any
section of the Securities Act shall also be a reference to any successor
provision.
2.40
Stock
Appreciation Right
means the right pursuant to an
Award granted under Article VII. A Tandem Stock Appreciation Right shall mean
the right to surrender to the Company all (or a portion) of a Stock Option in exchange
for cash or a number of shares of Common Stock (as determined by the Committee,
in its sole discretion, on the date of grant) equal to the difference between
(a) the Fair Market Value on the date such Stock Option (or such portion
thereof) is surrendered, of the Common Stock covered by such Stock Option (or
such portion thereof), and (b) the aggregate exercise price of such Stock
Option (or such portion thereof). A Non-Tandem Stock Appreciation Right shall
mean the right to receive cash or a number of shares of Common Stock (as
determined by the Committee, in its sole discretion, on the date of grant)
equal to the difference between (i) the Fair Market Value of a share of
Common Stock on the date such right is exercised, and (ii) the aggregate
exercise price of such right, otherwise than on surrender of a Stock Option.
2.41
Stock
Option
or
Option
means any option to
purchase shares of Common Stock granted to Eligible Employees, Non-Employee
Directors or Consultants granted pursuant to Article VI.
2.42
Subsidiary
means any subsidiary corporation of the Company within the meaning of Section
424(f) of the Code.
5
2.43
Ten
Percent Stockholder
means a person owning stock
possessing more than 10% of the total combined voting power of all classes of
stock of the Company, its Subsidiaries or its Parent.
2.44
Termination
means a Termination of Consultancy, Termination of Directorship or Termination
of Employment, as applicable.
2.45
Termination
of Consultancy
means: (a) that the Consultant is
no longer acting as a consultant to the Company or an Affiliate; or (b) when an
entity which is retaining a Participant as a Consultant ceases to be an
Affiliate unless the Participant otherwise is, or thereupon becomes, a
Consultant to the Company or another Affiliate at the time the entity ceases to
be an Affiliate. In the event that a Consultant becomes an Eligible Employee or
a Non-Employee Director upon the termination of his or her consultancy, unless
otherwise determined by the Committee, in its sole discretion, no Termination
of Consultancy shall be deemed to occur until such time as such Consultant is
no longer a Consultant, an Eligible Employee or a Non-Employee Director.
Notwithstanding the foregoing, the Committee may, in its sole discretion,
otherwise define Termination of Consultancy in the Award agreement or, if no
rights of a Participant are reduced, may otherwise define Termination of
Consultancy thereafter.
2.46
Termination
of Directorship
means that the Non-Employee
Director has ceased to be a director of the Company; except that if a
Non-Employee Director becomes an Eligible Employee or a Consultant upon the
termination of his or her directorship, his or her ceasing to be a director of
the Company shall not be treated as a Termination of Directorship unless and
until the Participant has a Termination of Employment or Termination of
Consultancy, as the case may be.
2.47
Termination
of Employment
means: (a) a termination of
employment (for reasons other than a military or personal leave of absence
granted by the Company) of a Participant from the Company and its Affiliates;
or (b) when an entity which is employing a Participant ceases to be an
Affiliate, unless the Participant otherwise is, or thereupon becomes, employed
by the Company or another Affiliate at the time the entity ceases to be an
Affiliate. In the event that an Eligible Employee becomes a Consultant or a Non-Employee
Director upon the termination of his or her employment, unless otherwise
determined by the Committee, in its sole discretion, no Termination of
Employment shall be deemed to occur until such time as such Eligible Employee
is no longer an Eligible Employee, a Consultant or a Non-Employee Director.
Notwithstanding the foregoing, the Committee may, in its sole discretion,
otherwise define Termination of Employment in the Award agreement or, if no
rights of a Participant are reduced, may otherwise define Termination of
Employment thereafter.
2.48
Transfer
means: (a) when used as a noun, any direct or indirect transfer, sale,
assignment, pledge, hypothecation, encumbrance or other disposition (including
the issuance of equity in a Person), whether for value or no value and whether
voluntary or involuntary (including by operation of law), and (b) when used as
a verb, to directly or indirectly transfer, sell, assign, pledge, encumber,
charge, hypothecate or otherwise dispose of (including the issuance of equity
in a Person) whether for value or for no value and whether voluntarily or
involuntarily (including by operation of law). Transferred and
Transferrable shall have a correlative meaning.
6
ARTICLE III
ADMINISTRATION
3.1
The
Committee
.
This Plan shall be administered and
interpreted by the Committee.
3.2
Grants
of Awards
. The Committee shall have full authority
to grant, pursuant to the terms of this Plan, to Eligible Employees,
Consultants and Non-Employee Directors: (i) Stock Options, (ii) Stock
Appreciation Rights, (iii) Restricted Stock, (iv) Performance Shares;
(v) Other Stock-Based Awards, and (vi) Performance-Based Cash Awards. In
particular, the Committee shall have the authority:
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(a)
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to select
the Eligible Employees, Consultants and Non-Employee Directors to whom Awards
may from time to time be granted hereunder;
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(b)
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to determine
whether and to what extent Awards, or any combination thereof, are to be
granted hereunder to one or more Eligible Employees, Consultants or
Non-Employee Directors;
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(c)
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to determine
the number of shares of Common Stock to be covered by each Award granted
hereunder;
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(d)
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to determine
the terms and conditions, not inconsistent with the terms of this Plan, of
any Award granted hereunder (including, but not limited to, the exercise or
purchase price (if any), any restriction or limitation, any vesting schedule
or acceleration thereof, or any forfeiture restrictions or waiver thereof,
regarding any Award and the shares of Common Stock relating thereto, based on
such factors, if any, as the Committee shall determine, in its sole
discretion);
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(e)
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to determine
whether, to what extent and under what circumstances grants of Options and
other Awards under this Plan are to operate on a tandem basis and/or in
conjunction with or apart from other awards made by the Company outside of
this Plan;
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(f)
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to determine
whether and under what circumstances a Stock Option may be settled in cash,
Common Stock and/or Restricted Stock under Section 6.3(d);
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(g)
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to determine
whether, to what extent and under what circumstances Common Stock and other
amounts payable with respect to an Award under this Plan shall be deferred
either automatically or at the election of the Participant in any case, in a
manner intended to comply with, Section 409A of the Code;
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(h)
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to determine
whether a Stock Option is an Incentive Stock Option or Non-Qualified Stock
Option;
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(i)
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to determine
whether to require a Participant, as a condition of the granting of any
Award, to not sell or otherwise dispose of shares acquired pursuant to the
exercise of an Award for a period of time as determined by the Committee, in
its sole discretion, following the date of the acquisition of such Award; and
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(j)
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to set the
performance criteria and the Performance Period with respect to any Award for
which the grant, vesting or payment of such Award is conditioned upon the
attainment of specified performance criteria and to certify the attainment of
any such performance criteria;
provided
, that with regard to any Award
that is intended to comply with Section 162(m) of the Code, the applicable
performance criteria shall be based on one or more of the performance goals
set forth in Exhibit A hereto (Performance Goals).
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3.3
Guidelines
.
Subject to Article XIV hereof, the Committee shall, in its sole discretion,
have the authority to adopt, alter and repeal such administrative rules,
guidelines and practices governing this Plan and perform all acts, including
the delegation of its responsibilities (to the extent permitted by applicable
law and applicable stock exchange rules), as it shall, from time to time, deem
advisable; to construe and interpret the terms and provisions of this Plan and
any Award issued under this Plan (and any agreements relating thereto); and to
otherwise supervise the administration of this Plan. The Committee may, in its
sole discretion, correct any defect, supply any omission or reconcile any
inconsistency in this Plan or in any agreement relating thereto in the manner
and to the extent it shall deem necessary to effectuate the purpose and intent
of this Plan;
provided
, that with regard to any provision of this Plan
or any agreement relating thereto that is intended to comply with Section
162(m) of the Code, any such action by the Committee shall be permitted only to
the extent such action would be permitted under Section 162(m) of the Code. The
Committee may, in its sole discretion, adopt special guidelines and provisions
for persons who are residing in or employed in, or subject to, the taxes of,
any domestic or foreign jurisdictions to comply with applicable tax and
securities laws of such domestic or foreign jurisdictions. This Plan is
intended to comply with the applicable requirements of Rule 16b-3 and with
respect to Awards intended to be performance-based, the applicable provisions
of Section 162(m) of the Code, and this Plan shall be limited, construed and
interpreted in a manner so as to comply therewith.
3.4
Decisions
Final
. Any decision, interpretation or other
action made or taken in good faith by or at the direction of the Company, the
Board or the Committee (or any of its members) arising out of or in connection
with this Plan shall be within the absolute discretion of all and each of them,
as the case may be, and shall be final, binding and conclusive on the Company
and all employees and Participants and their respective heirs, executors,
administrators, successors and assigns.
3.5
Procedures
.
If the Committee is appointed, the Board shall designate one of the members of
the Committee as chairman and the Committee shall hold meetings, subject to the
8
By-Laws of the
Company, at such times and places as it shall deem advisable, including,
without limitation, by telephone conference or by written consent to the extent
permitted by applicable law. A majority of the Committee members shall
constitute a quorum. All determinations of the Committee shall be made by a
majority of its members. Any decision or determination reduced to writing and
signed by all the Committee members in accordance with the By-Laws of the
Company shall be fully effective as if it had been made by a vote at a meeting duly
called and held. The Committee shall keep minutes of its meetings and shall
make such rules and regulations for the conduct of its business as it shall
deem advisable.
3.6
Designation
of Consultants/Liability
.
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(a)
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The Committee
may, in its sole discretion, designate employees of the Company and
professional advisors to assist the Committee in the administration of this
Plan and (to the extent permitted by applicable law and applicable exchange
rules) may grant authority to officers to grant Awards and/or execute
agreements or other documents on behalf of the Committee.
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(b)
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The
Committee may, in its sole discretion, employ such legal counsel, consultants
and agents as it may deem desirable for the administration of this Plan and
may rely upon any opinion received from any such counsel or consultant and
any computation received from any such consultant or agent. Expenses incurred
by the Committee or the Board in the engagement of any such counsel,
consultant or agent shall be paid by the Company. The Committee, its members
and any person designated pursuant to sub-section (a) above shall not be
liable for any action or determination made in good faith with respect to
this Plan. To the maximum extent permitted by applicable law, no officer of
the Company or member or former member of the Committee or of the Board shall
be liable for any action or determination made in good faith with respect to
this Plan or any Award granted under it.
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3.7
Indemnification
.
To the maximum extent permitted by applicable law and the Certificate of
Incorporation and By-Laws of the Company and to the extent not covered by
insurance directly insuring such person, each officer or employee of the
Company or any Affiliate and member or former member of the Committee or the
Board shall be indemnified and held harmless by the Company against any cost or
expense (including reasonable fees of counsel reasonably acceptable to the
Committee) or liability (including any sum paid in settlement of a claim with
the approval of the Committee), and advanced amounts necessary to pay the
foregoing at the earliest time and to the fullest extent permitted, arising out
of any act or omission to act in connection with the administration of this
Plan, except to the extent arising out of such officers, employees, members
or former members fraud. Such indemnification shall be in addition to any
rights of indemnification the officers, employees, directors or members or
former officers, directors or members may have under applicable law or under
the Certificate of Incorporation or By-Laws of the Company or any Affiliate.
Notwithstanding anything else herein, this indemnification will not apply to
the actions or determinations made by an individual with regard to Awards
granted to him or her under this Plan.
9
ARTICLE IV
SHARE LIMITATION
4.1
Shares
.
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(a)
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General
Limitations
. The aggregate number of shares of
Common Stock that may be issued or used for reference purposes or with
respect to which Awards may be granted under this Plan shall not exceed
4,064,000 shares (subject to any increase or decrease pursuant to Section
4.2), which may be either authorized and unissued Common Stock or Common
Stock held in or acquired for the treasury of the Company or both. Any shares
of Common Stock that are subject to Awards that are not Appreciation Awards
shall be counted against this limit as 1.78 shares for every share granted.
If any Appreciation Award granted under this Plan expires, terminates, is
cancelled or is forfeited for any reason, the number of shares of Common
Stock underlying any such Award shall again be available for the purpose of
Awards under this Plan and added back to the aggregate maximum limit. If any
Awards that are not Appreciation Awards granted under this Plan to a
Participant expire, terminate, are cancelled or are forfeited for any reason,
1.78 shares of Common Stock shall again be available for the purposes of
Awards under this Plan and added back to the aggregate maximum limit. If a
Tandem Stock Appreciation Right or a Limited Stock Appreciation Right is
granted in tandem with an Option, such grant shall only apply once against
the maximum number of shares of Common Stock which may be issued under this
Plan. The number of shares of Common Stock available for the purpose of
Awards under this Plan shall be reduced by (i) the total number of Stock
Options or Stock Appreciation Rights exercised, regardless of whether any of
the shares of Common Stock underlying such Awards are not actually issued to
the Participant as the result of a net settlement, (ii) any shares of Common
Stock used to pay any exercise price or tax withholding obligation with
respect to any Award and (iii) any shares of Common Stock repurchased by the
Company on the open market with the proceeds of an Stock Option exercise
price.
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(b)
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Individual
Participant Limitations
.
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(i) The
maximum number of shares of Common Stock subject to any Award of Stock
Options, Stock Appreciation Rights or shares of Restricted Stock for which
the grant of such Award or the lapse of the relevant Restriction Period is
subject to the attainment of Performance Goals in accordance with Section
8.3(a)(ii) herein which may be granted under this Plan during any fiscal year
of the Company to each Eligible Employee or Consultant shall be 600,000
shares per type of Award (which shall be subject to any further increase or
decrease pursuant to Section 4.2), provided that the maximum number of shares
of Common Stock for
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all types of
Awards does not exceed 750,000 (which shall be subject to any further
increase or decrease pursuant to Section 4.2) with respect to any fiscal year
of the Company. If a Tandem Stock Appreciation Right is granted or a Limited Stock
Appreciation Right is granted in tandem with a Stock Option, it shall apply
against the Eligible Employees or Consultants individual share limitations
for both Stock Appreciation Rights and Stock Options.
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(ii) The
maximum number of shares of Common Stock subject to any Award of Stock
Options (other than Incentive Stock Options), Stock Appreciation Rights,
Performance Shares or Other Stock-Based Awards which may be granted under
this Plan during any fiscal year of the Company to each Non-Employee Director
shall be 150,000 shares per type of Award (which shall be subject to any
further increase or decrease pursuant to Section 4.2), provided that the
maximum number of shares of Common Stock for all types of Awards does not exceed
200,000 (which shall be subject to any further increase or decrease pursuant
to Section 4.2) with respect to any fiscal year of the Company, provided
further, that, effective on the date of the Companys 2009 annual
stockholders meeting, in no event shall the aggregate grant of Awards to
Non-Employee Directors granted on and after such date exceed 10% (when
combined with the 10% limitation set forth in Sections 8.3(a)(iii), 9.2(f),
and 10.2(d) of this Plan) of the total number of shares of Common Stock reserved
for Awards under this Plan. If a Tandem Stock Appreciation Right is granted
or a Limited Stock Appreciation Right is granted in tandem with a Stock
Option, it shall apply against the Non-Employee Directors individual share
limitations for both Stock Appreciation Rights and Stock Options.
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(iii) There
are no annual individual Eligible Employee or Consultant share limitations on
Restricted Stock for which the grant of such Award or the lapse of the
relevant Restriction Period is not subject to attainment of Performance Goals
in accordance with Section 8.3(a)(ii) hereof.
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(iv) The
maximum number of shares of Common Stock subject to any Award of Performance
Shares which may be granted under this Plan during any fiscal year of the
Company to each Eligible Employee or Consultant shall be 300,000 (which shall
be subject to any further increase or decrease pursuant to Section 4.2) with
respect to any fiscal year of the Company. Each Performance Share shall be referenced
to one share of Common Stock and shall be charged against the available
shares under this Plan at the time the unit value measurement is converted to
a referenced number of shares of Common Stock in accordance with Section 9.1.
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(v) The
maximum payment under any Performance-Based Cash Award payable with respect
to any fiscal year of the Company and for which the grant of such Award is
subject to the attainment of Performance Goals in accordance with Section
11.2(c) herein which may be granted under this Plan with respect to any
fiscal year of the Company to each Eligible Employee or Consultant shall be
$10,000,000.
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(vi) The
individual Participant limitations set forth in this Section 4.1(b) shall be
cumulative; that is, to the extent that shares of Common Stock for which
Awards are permitted to be granted to an Eligible Employee or a Consultant
during a fiscal year are not covered by an Award to such Eligible Employee or
Consultant in a fiscal year, the number of shares of Common Stock available
for Awards to such Eligible Employee or Consultant shall automatically
increase in the subsequent fiscal years during the term of the Plan until
used.
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4.2
Changes
.
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(a)
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The existence
of this Plan and the Awards granted hereunder shall not affect in any way the
right or power of the Board or the stockholders of the Company to make or
authorize (i) any adjustment, recapitalization, reorganization or other
change in the Companys capital structure or its business, (ii) any merger or
consolidation of the Company or any Affiliate, (iii) any issuance of bonds,
debentures, preferred or prior preference stock ahead of or affecting the
Common Stock, (iv) the dissolution or liquidation of the Company or any
Affiliate, (v) any sale or transfer of all or part of the assets or business
of the Company or any Affiliate or (vi) any other corporate act or
proceeding.
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(b)
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Subject to
the provisions of Section 4.2(d), if there shall occur any such change in the
capital structure of the Company by reason of any stock split, reverse stock
split, stock dividend, subdivision, combination or reclassification of shares
that may be issued under the Plan, any recapitalization, any merger, any
consolidation, any spin off, any reorganization or any partial or complete
liquidation, or any other corporate transaction or event having an effect
similar to any of the foregoing (a
Section 4.2 Event
), then (i) the
aggregate number and/or kind of shares that thereafter may be issued under
the Plan, (ii) the number and/or kind of shares or other property (including
cash) to be issued upon exercise of an outstanding Award or under other
Awards granted under the Plan, (iii) the purchase price thereof, and/or (iv)
the individual Participant limitations set forth in Section 4.1(b) (other
than those based on cash limitations) shall be appropriately adjusted. In
addition, subject to Section 4.2(d), if there shall occur any change in the
capital structure or the business of the Company that is not a Section 4.2
Event (an
Other Extraordinary Event
), including by reason of
any extraordinary dividend (whether cash or stock), any conversion, any
adjustment, any issuance of
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any class of
securities convertible or exercisable into, or exercisable for, any class of
stock, or any sale or transfer of all or substantially all the Companys
assets or business, then the Committee, in its sole discretion, may adjust
any Award and make such other adjustments to the Plan. Any adjustment
pursuant to this Section 4.2 shall be consistent with the applicable Section
4.2 Event or the applicable Other Extraordinary Event, as the case may be,
and in such manner as the Committee may, in its sole discretion, deem
appropriate and equitable to prevent substantial dilution or enlargement of
the rights granted to, or available for, Participants under the Plan. Any
such adjustment determined by the Committee shall be final, binding and
conclusive on the Company and all Participants and their respective heirs,
executors, administrators, successors and permitted assigns. Except as
expressly provided in this Section 4.2 or in the applicable Award agreement,
a Participant shall have no rights by reason of any Section 4.2 Event or any
Other Extraordinary Event.
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(c)
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Fractional
shares of Common Stock resulting from any adjustment in Awards pursuant to
Section 4.2(a) or (b) shall be aggregated until, and eliminated at, the time
of exercise by rounding-down for fractions less than one-half and rounding-up
for fractions equal to or greater than one-half. No cash settlements shall be
made with respect to fractional shares eliminated by rounding. Notice of any
adjustment shall be given by the Committee to each Participant whose Award
has been adjusted and such adjustment (whether or not such notice is given)
shall be effective and binding for all purposes of this Plan.
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(d)
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In the event
of an Acquisition Event, the Committee may, in its sole discretion, terminate
all outstanding and unexercised Stock Options or Stock Appreciation Rights or
any Other Stock Based Award that provides for a Participant elected exercise
effective as of the date of the Acquisition Event, by delivering notice of
termination to each Participant at least 20 days prior to the date of
consummation of the Acquisition Event, in which case during the period from
the date on which such notice of termination is delivered to the consummation
of the Acquisition Event, each such Participant shall have the right to
exercise in full all of his or her Stock Options or Stock Appreciation Rights
that are then outstanding (without regard to any limitations on
exercisability otherwise contained in the Award agreements), but any such
exercise shall be contingent on the occurrence of the Acquisition Event, and,
provided that, if the Acquisition Event does not take place within a
specified period after giving such notice for any reason whatsoever, the
notice and exercise pursuant thereto shall be null and void.
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If an
Acquisition Event occurs but the Committee does not terminate the outstanding
Awards pursuant to this Section 4.2(d), then the provisions of Section 4.2(b)
and Article XIII shall apply.
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4.3
Minimum
Purchase Price
. Notwithstanding any provision of
this Plan to the contrary, if authorized but previously unissued shares of
Common Stock are issued under this Plan, such shares shall not be issued for a
consideration that is less than as permitted under applicable law.
ARTICLE V
ELIGIBILITY GENERAL REQUIREMENTS FOR AWARDS
5.1
General
Eligibility
. All Eligible Employees, Consultants,
Non-Employee Directors and prospective employees and consultants are eligible
to be granted Awards, subject to the terms and conditions of this Plan. Eligibility
for the grant of Awards and actual participation in this Plan shall be
determined by the Committee in its sole discretion.
5.2
Incentive
Stock Options
. Notwithstanding anything herein to
the contrary, only Eligible Employees of the Company, its Subsidiaries and its
Parent (if any) are eligible to be granted Incentive Stock Options under this
Plan. Eligibility for the grant of an Incentive Stock Option and actual
participation in this Plan shall be determined by the Committee in its sole
discretion.
5.3
General
Requirement
. The vesting and exercise of Awards
granted to a prospective employee or consultant are conditioned upon such
individual actually becoming an Eligible Employee or Consultant.
ARTICLE VI
STOCK OPTIONS
6.1
Options
.
Stock Options may be granted alone or in addition to other Awards granted under
this Plan. Each Stock Option granted under this Plan shall be of one of two
types: (a) an Incentive Stock Option or (b) a Non-Qualified Stock
Option.
6.2
Grants
.
The Committee shall, in its sole discretion, have the authority to grant to any
Eligible Employee (subject to Section 5.2) Incentive Stock Options,
Non-Qualified Stock Options, or both types of Stock Options. The Committee
shall, in its sole discretion, have the authority to grant Non-Qualified Stock
Options to any Consultant or Non-Employee Director. To the extent that any
Stock Option does not qualify as an Incentive Stock Option (whether because of
its provisions or the time or manner of its exercise or otherwise), such Stock
Option or the portion thereof which does not qualify shall constitute a
separate Non-Qualified Stock Option.
6.3
Terms
of Options
. Options granted under this Plan shall
be subject to the following terms and conditions and shall be in such form and
contain such additional terms and conditions, not inconsistent with the terms
of this Plan, as the Committee, in its sole discretion, shall deem desirable:
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(a)
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Exercise
Price
. The exercise price per share of Common Stock
subject to a Stock Option shall be determined by the Committee at the time of
grant,
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provided
that the per share exercise price of a Stock Option shall not be less than
100% (or, in the case of an Incentive Stock Option granted to a Ten Percent
Stockholder, 110%) of the Fair Market Value of the Common Stock at the time
of grant.
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(b)
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Stock Option
Term
. The term of each Stock Option shall be fixed
by the Committee, provided that no Stock Option shall be exercisable more
than seven (7) years after the date the Option is granted; and provided
further that the term of an Incentive Stock Option granted to a Ten Percent
Stockholder shall not exceed five (5) years.
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(c)
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Exercisability
.
Stock Options shall be exercisable at such time or times and subject to such
terms and conditions or as shall be determined by the Committee at grant. If
the Committee provides, in its discretion, that any Stock Option is
exercisable subject to certain limitations (including, without limitation,
that such Stock Option is exercisable only in installments or within certain
time periods), the Committee may waive such limitations on the exercisability
at any time at or after grant in whole or in part (including, without limitation,
waiver of the installment exercise provisions or acceleration of the time at
which such Stock Option may be exercised), based on such factors, if any, as
the Committee shall determine, in its sole discretion. In the event that a
written employment agreement between the Company and a Participant provides
for a vesting schedule that is more favorable than the vesting schedule
provided in the form of Award Agreement, the vesting schedule in such
employment agreement shall govern, provided that such agreement is in effect
on the date of grant and applicable to the specific Award.
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(d)
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Method of
Exercise
. Subject to whatever installment exercise
and waiting period provisions apply under subsection (c) above, to the extent
vested, Stock Options may be exercised in whole or in part at any time during
the Option term, by giving written notice of exercise to the Company
specifying the number of shares of Common Stock to be purchased. Such notice
shall be in a form acceptable to the Company and shall be accompanied by
payment in full of the purchase price as follows: (i) in cash or by check,
bank draft or money order payable to the order of the Company; (ii) solely to
the extent permitted by applicable law, if the Common Stock is traded on a
national securities exchange, the Nasdaq Stock Market or quoted on a national
quotation system sponsored by the National Association of Securities Dealers,
and the Committee authorizes, through a procedure whereby the Participant
delivers irrevocable instructions to a broker reasonably acceptable to the
Committee to deliver promptly to the Company an amount equal to the purchase
price; or (iii) on such other terms and conditions as may be acceptable to
the Committee (including, without limitation, the relinquishment of Stock
Options or by payment in full or in part in the form of Common Stock owned by
the Participant based on the Fair Market Value of the Common Stock on the
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payment date
as determined by the Committee, in its sole discretion). No shares of Common
Stock shall be issued until payment therefor, as provided herein, has been
made or provided for.
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(e)
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Non-Transferability
of Options
. No Stock Option shall be Transferable by
the Participant otherwise than by will or by the laws of descent and distribution,
and all Stock Options shall be exercisable, during the Participants
lifetime, only by the Participant. Notwithstanding the foregoing, the
Committee may determine, in its sole discretion, at the time of grant or
thereafter that a Non-Qualified Stock Option that is otherwise not
Transferable pursuant to this Section is Transferable to a Family Member in
whole or in part and in such circumstances, and under such conditions, as
determined by the Committee, in its sole discretion. A Non-Qualified Stock
Option that is Transferred to a Family Member pursuant to the preceding
sentence (i) may not be subsequently Transferred otherwise than by will or by
the laws of descent and distribution and (ii) remains subject to the terms of
this Plan and the applicable Award agreement. Any shares of Common Stock
acquired upon the exercise of a Non-Qualified Stock Option by a permissible
transferee of a Non-Qualified Stock Option or a permissible transferee
pursuant to a Transfer after the exercise of the Non-Qualified Stock Option
shall be subject to the terms of this Plan and the applicable Award
agreement.
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(f)
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Incentive
Stock Option Limitations
. To the extent that the
aggregate Fair Market Value (determined as of the time of grant) of the
Common Stock with respect to which Incentive Stock Options are exercisable
for the first time by an Eligible Employee during any calendar year under
this Plan and/or any other stock option plan of the Company, any Subsidiary
or any Parent exceeds $100,000, such Options shall be treated as
Non-Qualified Stock Options. Should any provision of this Plan not be
necessary in order for the Stock Options to qualify as Incentive Stock
Options, or should any additional provisions be required, the Committee may,
in its sole discretion, amend this Plan accordingly, without the necessity of
obtaining the approval of the stockholders of the Company.
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(g)
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Form,
Modification, Extension and Renewal of Stock Options
.
Subject to the terms and conditions and within the limitations of this Plan,
Stock Options shall be evidenced by such form of agreement or grant as is
approved by the Committee, and the Committee may, in its sole discretion (i)
modify, extend or renew outstanding Stock Options granted under this Plan
(provided that the rights of a Participant are not reduced without his or her
consent and provided further that such action does not subject the Stock
Options to Section 409A of the Code), and (ii) accept the surrender of
outstanding Stock Options (up to the extent not theretofore exercised) and
authorize the granting of new Stock Options in substitution therefor (to the
extent not theretofore exercised). Notwithstanding the foregoing, an
outstanding Option may not be modified to reduce the exercise price
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thereof nor
may a new Option at a lower price be substituted for a surrendered Option
(other than adjustments or substitutions in accordance with Section 4.2),
unless such action is approved by the stockholders of the Company.
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(h)
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Early
Exercise
. The Committee may provide that a Stock
Option include a provision whereby the Participant may elect at any time
before the Participants Termination to exercise the Stock Option as to any
part or all of the shares of Common Stock subject to the Stock Option prior
to the full vesting of the Stock Option and such shares shall be subject to
the provisions of Article VIII and treated as Restricted Stock. Any unvested
shares of Common Stock so purchased may be subject to a repurchase option in
favor of the Company or to any other restriction the Committee determines to
be appropriate.
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(i)
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Other Terms
and Conditions
. Stock Options may contain such other
provisions, which shall not be inconsistent with any of the terms of this
Plan, as the Committee shall, in its sole discretion, deem appropriate.
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ARTICLE VII
STOCK APPRECIATION RIGHTS
7.1
Tandem
Stock Appreciation Rights
. Stock Appreciation
Rights may be granted in conjunction with all or part of any Stock Option (a
Reference Stock Option) granted under this Plan (Tandem Stock Appreciation
Rights). In the case of a Non-Qualified Stock Option, such rights may be
granted either at or after the time of the grant of such Reference Stock
Option. In the case of an Incentive Stock Option, such rights may be granted
only at the time of the grant of such Reference Stock Option.
7.2
Terms
and Conditions of Tandem Stock Appreciation Rights
.
Tandem Stock Appreciation Rights granted hereunder shall be subject to such
terms and conditions, not inconsistent with the provisions of this Plan, as
shall be determined from time to time by the Committee in its sole discretion,
and the following:
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(a)
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Exercise
Price
. The exercise price per share of Common Stock
subject to a Tandem Stock Appreciation Right shall be determined by the
Committee at the time of grant, provided that the per share exercise price of
a Tandem Stock Appreciation Right shall not be less than 100% of the Fair
Market Value of the Common Stock at the time of grant.
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(b)
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Term
.
A Tandem Stock Appreciation Right or applicable portion thereof granted with
respect to a Reference Stock Option shall terminate and no longer be
exercisable upon the termination or exercise of the Reference Stock Option,
except that, unless otherwise determined by the Committee, in its sole
discretion, at the time of grant, a Tandem Stock Appreciation Right granted
with respect to less than the full number of shares covered
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by the
Reference Stock Option shall not be reduced until and then only to the extent
the exercise or termination of the Reference Stock Option causes the number
of shares covered by the Tandem Stock Appreciation Right to exceed the number
of shares remaining available and unexercised under the Reference Stock
Option.
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(c)
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Exercisability
.
Tandem Stock Appreciation Rights shall be exercisable only at such time or
times and to the extent that the Reference Stock Options to which they relate
shall be exercisable in accordance with the provisions of Article VI, and
shall be subject to the provisions of Section 6.3(c).
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(d)
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Method of
Exercise
. A Tandem Stock Appreciation Right may be
exercised by the Participant by surrendering the applicable portion of the
Reference Stock Option. Upon such exercise and surrender, the Participant
shall be entitled to receive an amount determined in the manner prescribed in
this Section 7.2. Stock Options which have been so surrendered, in whole or
in part, shall no longer be exercisable to the extent the related Tandem
Stock Appreciation Rights have been exercised.
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(e)
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Payment
.
Upon the exercise of a Tandem Stock Appreciation Right, a Participant shall
be entitled to receive up to, but no more than, an amount in cash or
a number of shares of Common Stock (as determined by the Committee, in its
sole discretion, on the date of grant) equal in value to the excess of the
Fair Market Value of one share of Common Stock over the Option exercise price
per share specified in the Reference Stock Option agreement, multiplied by
the number of shares in respect of which the Tandem Stock Appreciation Right
shall have been exercised.
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(f)
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Deemed
Exercise of Reference Stock Option
. Upon the
exercise of a Tandem Stock Appreciation Right, the Reference Stock Option or
part thereof to which such Stock Appreciation Right is related shall be
deemed to have been exercised for the purpose of the limitation set forth in
Article IV of the Plan on the number of shares of Common Stock to be issued
under the Plan.
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(g)
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Non-Transferability
.
Tandem Stock Appreciation Rights shall be Transferable only when and to the
extent that the underlying Stock Option would be Transferable under Section
6.3(e) of the Plan.
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7.3
Non-Tandem
Stock Appreciation Rights
. Non-Tandem Stock
Appreciation Rights may also be granted without reference to any Stock Options
granted under this Plan.
7.4
Terms
and Conditions of Non-Tandem Stock Appreciation Rights
.
Non-Tandem Stock Appreciation Rights granted hereunder shall be subject to such
terms and conditions, not inconsistent with the provisions of this Plan, as
shall be determined from time to time by the Committee in its sole discretion,
and the following:
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(a)
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Exercise
Price
. The exercise price per share of Common Stock
subject to a Non-Tandem Stock Appreciation Right shall be determined by the
Committee at the time of grant, provided that the per share exercise price of
a Non-Tandem Stock Appreciation Right shall not be less than 100% of the Fair
Market Value of the Common Stock at the time of grant.
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(b)
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Term
.
The term of each Non-Tandem Stock Appreciation Right shall be fixed by the
Committee, but shall not be greater than 7 years after the date the right is
granted.
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(c)
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Exercisability
.
Non-Tandem Stock Appreciation Rights shall be exercisable at such time or
times and subject to such terms and conditions as shall be determined by the
Committee at grant. If the Committee provides, in its discretion, that any
such right is exercisable subject to certain limitations (including, without
limitation, that it is exercisable only in installments or within certain
time periods), the Committee may waive such limitations on the exercisability
at any time at or after grant in whole or in part (including, without
limitation, waiver of the installment exercise provisions or acceleration of
the time at which such right may be exercised), based on such factors, if
any, as the Committee shall determine, in its sole discretion. In the event
that a written employment agreement between the Company and a Participant
provides for a vesting schedule that is more favorable than the vesting
schedule provided in the form of Award Agreement, the vesting schedule in
such employment agreement shall govern, provided that such agreement is in
effect on the date of grant and applicable to the specific Award.
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(d)
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Method of
Exercise
. Subject to whatever installment exercise
and waiting period provisions apply under subsection (c) above, Non-Tandem
Stock Appreciation Rights may be exercised in whole or in part at any time in
accordance with the applicable Award agreement, by giving written notice of
exercise to the Company specifying the number of Non-Tandem Stock
Appreciation Rights to be exercised.
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(e)
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Payment
.
Upon the exercise of a Non-Tandem Stock Appreciation Right a Participant
shall be entitled to receive, for each right exercised, up to, but no more
than, an amount in cash or a number of shares of Common Stock (as determined
by the Committee, in its sole discretion, on the date of grant) equal in value
to the excess of the Fair Market Value of one share of Common Stock on the
date the right is exercised over the Fair Market Value of one share of Common
Stock on the date the right was awarded to the Participant.
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(f)
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Non-Transferability
.
No Non-Tandem Stock Appreciation Rights shall be Transferable by the
Participant otherwise than by will or by the laws of descent and
distribution, and all such rights shall be exercisable, during the
Participants lifetime, only by the Participant.
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7.5
Limited Stock Appreciation Rights
. The Committee may, in its
sole discretion, grant Tandem and Non-Tandem Stock Appreciation Rights either
as a general Stock Appreciation Right or as a Limited Stock Appreciation Right.
Limited Stock Appreciation Rights may be exercised only upon the occurrence of
a Change in Control or such other event as the Committee may, in its sole
discretion, designate at the time of grant or thereafter. Upon the exercise of
Limited Stock Appreciation Rights, except as otherwise provided in an Award
agreement, the Participant shall receive in cash or Common Stock, as determined
by the Committee, an amount equal to the amount (a) set forth in Section
7.2(e) with respect to Tandem Stock Appreciation Rights, or (b) set forth
in Section 7.4(e) with respect to Non-Tandem Stock Appreciation Rights, as
applicable.
ARTICLE VIII
RESTRICTED STOCK
8.1
Awards
of Restricted Stock
. Shares of Restricted Stock
may be issued either alone or in addition to other Awards granted under the
Plan. The Committee shall, in its sole discretion, determine the Eligible
Employees, Consultants and Non-Employee Directors, to whom, and the time or
times at which, grants of Restricted Stock shall be made, the number of shares
to be awarded, the price (if any) to be paid by the Participant (subject to
Section 8.2), the time or times within which such Awards may be subject to
forfeiture, the vesting schedule and rights to acceleration thereof, and all
other terms and conditions of the Awards. The Committee may condition the grant
or vesting of Restricted Stock upon the attainment of specified performance
targets (including, the Performance Goals specified in Exhibit A attached
hereto) or such other factors as the Committee may determine, in its sole
discretion, including to comply with the requirements of Section 162(m) of the
Code.
8.2
Awards
and Certificates
. Eligible Employees, Consultants
and Non-Employee Directors selected to receive Restricted Stock shall not have
any rights with respect to such Award, unless and until such Participant has
delivered a fully executed copy of the agreement evidencing the Award to the
Company and has otherwise complied with the applicable terms and conditions of
such Award. Further, such Award shall be subject to the following conditions:
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(a)
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Purchase
Price
. The purchase price of Restricted Stock shall
be fixed by the Committee. Subject to Section 4.3, the purchase price for
shares of Restricted Stock may be zero to the extent permitted by applicable
law, and, to the extent not so permitted, such purchase price may not be less
than par value.
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(b)
|
Acceptance
.
Awards of Restricted Stock must be accepted within a period of 60 days (or
such other period as the Committee may specify) after the grant date, by
executing a Restricted Stock agreement and by paying whatever price (if any)
the Committee has designated thereunder.
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(c)
|
Legend
.
Each Participant receiving Restricted Stock shall be issued a stock
certificate in respect of such shares of Restricted Stock, unless the
Committee elects to use another system, such as book entries by the
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transfer
agent, as evidencing ownership of shares of Restricted Stock. Such
certificate shall be registered in the name of such Participant, and shall,
in addition to such legends required by applicable securities laws, bear an
appropriate legend referring to the terms, conditions, and restrictions
applicable to such Award, substantially in the following form:
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The
anticipation, alienation, attachment, sale, transfer, assignment, pledge,
encumbrance or charge of the shares of stock represented hereby are subject
to the terms and conditions (including forfeiture) of the Steven Madden, Ltd.
(the Company) 2009 Stock Incentive Plan (the Plan) and an agreement
entered into between the registered owner and the Company dated __________.
Copies of such Plan and agreement are on file at the principal office of the
Company.
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(d)
|
Custody
.
If stock certificates are issued in respect of shares of Restricted Stock,
the Committee may require that any stock certificates evidencing such shares
be held in custody by the Company until the restrictions thereon shall have
lapsed, and that, as a condition of any grant of Restricted Stock, the
Participant shall have delivered a duly signed stock power, endorsed in
blank, relating to the Common Stock covered by such Award.
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8.3
Restrictions
and Conditions
. The shares of Restricted Stock
awarded pursuant to this Plan shall be subject to the following restrictions
and conditions:
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(a)
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Restriction
Period
. (i) The Participant shall not be permitted
to Transfer shares of Restricted Stock awarded under this Plan during the
period or periods set by the Committee (the Restriction Period) commencing
on the date of such Award, as set forth in a Restricted Stock Award agreement
and such agreement shall set forth a vesting schedule and any events which
would accelerate vesting of the shares of Restricted Stock. Within these limits,
based on service, attainment of Performance Goals pursuant to Section
8.3(a)(ii) below and/or such other factors or criteria as the Committee may
determine in its sole discretion, the Committee may condition the grant or
provide for the lapse of such restrictions in installments in whole or in
part, or may accelerate the vesting of all or any part of any Restricted
Stock Award and/or waive the deferral limitations for all or any part of any
Restricted Stock Award. Subject to Section 8.3(a)(iii) of this Plan, in the
event that a written employment agreement between the Company and a
Participant provides for a vesting schedule that is more favorable than the
vesting schedule provided in the form of Award Agreement, the vesting
schedule in such employment agreement shall govern, provided that such
agreement is in effect on the date of grant and applicable to the specific
Award.
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(ii)
Objective
Performance Goals, Formulae or Standards
.
If the grant of shares of Restricted Stock or the lapse of restrictions is
based
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on the
attainment of Performance Goals, the Committee shall establish the
Performance Goals and the applicable vesting percentage of the Restricted
Stock Award applicable to each Participant or class of Participants in
writing prior to the beginning of the applicable Performance Period or at
such later date as otherwise determined by the Committee and while the
outcome of the Performance Goals are substantially uncertain. Such
Performance Goals may incorporate provisions for disregarding (or adjusting
for) changes in accounting methods, corporate transactions (including,
without limitation, dispositions and acquisitions) and other similar type
events or circumstances. With regard to a Restricted Stock Award that is intended
to comply with Section 162(m) of the Code, to the extent any such provision
would create impermissible discretion under Section 162(m) of the Code or
otherwise violate Section 162(m) of the Code, such provision shall be of no
force or effect. The applicable Performance Goals shall be based on one or
more of the performance criteria set forth in Exhibit A hereto.
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(iii)
Limitations
.
Notwithstanding any other provision of this Plan to the contrary, effective
on the date of the Companys 2009 annual stockholders meeting, the
Restriction Period with respect to any Restricted Stock Award granted on or
after such date shall be no less than (A) one year, if the lapsing of
restrictions is based (in whole or in part) on the attainment of one or more
Performance Goals, and (B) three years, if the lapsing of restrictions is
based solely on the continued performance of services by the Participant
(with restrictions as to no more than 1/3
rd
of the shares of
Common Stock subject thereto lapsing on each of the first three anniversaries
of the date of grant);
provided
, that, subject to the terms of this
Plan, the Committee shall be authorized (at the time of grant or thereafter)
to provide for the earlier lapsing of restrictions in the event of a Change
in Control or a Participants retirement, death or Disability; and
provided
further
, that, subject to the limitations set forth in Section 4.1(b),
Restricted Stock Awards may be granted on or after the date of the Companys
2009 annual stockholders meeting without the foregoing limitations with
respect to up to 10% (when combined with the 10% limitation set forth in
Sections 4.1(b)(ii), 9.2(f) and 10.2(d) of this Plan) of the total number of
shares of Common Stock reserved for Awards under this Plan.
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(b)
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Rights as a
Stockholder
. Except as provided in this subsection
(b) and subsection (a) above and as otherwise determined by the Committee,
the Participant shall have, with respect to the shares of Restricted Stock,
all of the rights of a holder of shares of Common Stock of the Company
including, without limitation, the right to receive any dividends, the right
to vote such shares and, subject to and conditioned upon the full vesting of
shares of Restricted Stock, the right to tender such shares. The Committee
may, in its sole discretion, determine at the time of grant that the payment
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of dividends
shall be deferred until, and conditioned upon, the expiration of the
applicable Restriction Period.
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(c)
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Lapse of
Restrictions
. If and when the Restriction Period
expires without a prior forfeiture of the Restricted Stock, the certificates
for such shares shall be delivered to the Participant. All legends shall be
removed from said certificates at the time of delivery to the Participant,
except as otherwise required by applicable law or other limitations imposed
by the Committee.
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ARTICLE IX
PERFORMANCE SHARES
9.1
Award
of Performance Shares
. Performance Shares may be
awarded either alone or in addition to other Awards granted under this Plan.
The Committee shall, in its sole discretion, determine the Eligible Employees,
Consultants and Non-Employee Directors, to whom, and the time or times at
which, Performance Shares shall be awarded, the number of Performance Shares to
be awarded to any person, the Performance Period during which, and the
conditions under which, receipt of the Shares will be deferred, and the other
terms and conditions of the Award in addition to those set forth in Section
9.2.
Except
as otherwise provided herein, the Committee shall condition the right to
payment of any Performance Share upon the attainment of specified objective
performance goals (including, the Performance Goals specified in Exhibit A
attached hereto) established pursuant to Section 9.2(c) below and such
other factors as the Committee may determine, in its sole discretion, including
to comply with the requirements of Section 162(m) of the Code.
9.2
Terms
and Conditions
. Performance Shares awarded pursuant
to this Article IX shall be subject to the following terms and conditions:
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(a)
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Earning of
Performance Share Award
. At the expiration of the
applicable Performance Period, the Committee shall determine the extent to
which the Performance Goals established pursuant to Section 9.2(c) are
achieved and the percentage of each Performance Share Award that has been
earned.
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(b)
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Non-Transferability
.
Subject to the applicable provisions of the Award agreement and this Plan,
Performance Shares may not be Transferred during the Performance Period.
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(c)
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Objective
Performance Goals, Formulae or Standards
. The
Committee shall establish the objective Performance Goals for the earning of
Performance Shares based on a Performance Period applicable to each
Participant or class of Participants in writing prior to the beginning of the
applicable Performance Period or at such later date as permitted under
Section 162(m) of the Code and while the outcome of the Performance Goals are
substantially uncertain. Such Performance Goals may
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incorporate,
if and only to the extent permitted under Section 162(m) of the Code,
provisions for disregarding (or adjusting for) changes in accounting methods,
corporate transactions (including, without limitation, dispositions and
acquisitions) and other similar type events or circumstances. To the extent
any such provision would create impermissible discretion under Section 162(m)
of the Code or otherwise violate Section 162(m) of the Code, such provision
shall be of no force or effect. The applicable Performance Goals shall be
based on one or more of the performance criteria set forth in Exhibit A
hereto.
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(d)
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Dividends
.
Unless otherwise determined by the Committee at the time of grant, amounts
equal to any dividends declared during the Performance Period with respect to
the number of shares of Common Stock covered by a Performance Share will not
be paid to the Participant.
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(e)
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Payment
.
Following the Committees determination in accordance with subsection (a)
above, shares of Common Stock or, as determined by the Committee in its sole
discretion, the cash equivalent of such shares shall be delivered to the
Eligible Employee, Consultant or Non-Employee Director, or his legal
representative, in an amount equal to such individuals earned Performance
Share. Notwithstanding the foregoing, the Committee may, in its sole
discretion, award an amount less than the earned Performance Share and/or
subject the payment of all or part of any Performance Share to additional
vesting, forfeiture and deferral conditions as it deems appropriate.
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(f)
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Accelerated
Vesting
. Based on service, performance and/or such
other factors or criteria, if any, as the Committee may determine, the
Committee may, in its sole discretion, at or after grant, accelerate the
vesting of all or any part of any Performance Share Award and/or waive the
preceding sentence and any other provision of this Plan to the contrary.
Notwithstanding the preceding sentence or any other provision of this Plan, effective
on the date of the Companys 2009 annual stockholders meeting, the vesting
schedule with respect to any Performance Share Award on or after such date
shall be no less than (A) one year, if the vesting period is based (in whole
or in part) on the attainment of one or more Performance Goals, and (B) three
years, if the vesting period is based solely on the continued performance of
services by the Participant (with restrictions as to no more than 1/3
rd
of the shares of Common Stock subject thereto lapsing on each of the first
three anniversaries of the date of grant);
provided
, that, subject to
the terms of this Plan, the Committee shall be authorized (at the time of
grant or thereafter) to provide for the acceleration of vesting in the event
of a Change in Control or a Participants retirement, death or Disability;
and
provided
further
, that, subject to the limitations set
forth in Section 4.1(b), Performance Share Awards may be granted on or after
the date of the Companys 2009 annual stockholders meeting without the
foregoing limitations with respect to up
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to 10% (when
combined with the 10% limitation set forth in Sections 4.1(b)(ii),
8.3(a)(iii) and 10.2(d) of this Plan) of the total number of shares of Common
Stock reserved for Awards under this Plan.
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ARTICLE X
OTHER STOCK-BASED AWARDS
10.1
Other
Awards
. The
Committee, in its sole discretion, is authorized to grant to Eligible
Employees, Consultants and Non-Employee Directors Other Stock-Based Awards that
are payable in, valued in whole or in part by reference to, or otherwise based
on or related to shares of Common Stock, including, but not limited to, shares
of Common Stock awarded purely as a bonus and not subject to any restrictions
or conditions, shares of Common Stock in payment of the amounts due under an
incentive or performance plan sponsored or maintained by the Company or an
Affiliate, performance units, dividend equivalent units, stock equivalent
units, restricted stock units and deferred stock units. To the extent
permitted by law, the Committee may, in its sole discretion, permit Eligible
Employees and/or Non-Employee Directors to defer all or a portion of their cash
compensation in the form of Other Stock-Based Awards granted under this Plan,
subject to the terms and conditions of any deferred compensation arrangement
established by the Company, which shall be intended to comply with Section 409A
of the Code. Other Stock-Based Awards may be granted either alone or in
addition to or in tandem with other Awards granted under the Plan.
Subject
to the provisions of this Plan, the Committee shall, in its sole discretion,
have authority to determine the Eligible Employees, Consultants and
Non-Employee Directors, to whom, and the time or times at which, such Awards
shall be made, the number of shares of Common Stock to be awarded pursuant to
such Awards, and all other conditions of the Awards. The Committee may also
provide for the grant of Common Stock under such Awards upon the completion of
a specified Performance Period.
The
Committee may condition the grant or vesting of Other Stock-Based Awards upon
the attainment of specified Performance Goals set forth on Exhibit A as the
Committee may determine, in its sole discretion; provided that to the extent
that such Other Stock-Based Awards are intended to comply with Section 162(m)
of the Code, the Committee shall establish the objective Performance Goals for
the vesting of such Other Stock-Based Awards based on a performance period
applicable to each Participant or class of Participants in writing prior to the
beginning of the applicable performance period or at such later date as
permitted under Section 162(m) of the Code and while the outcome of the
Performance Goals are substantially uncertain. Such Performance Goals may
incorporate, if and only to the extent permitted under Section 162(m) of the
Code, provisions for disregarding (or adjusting for) changes in accounting
methods, corporate transactions (including, without limitation, dispositions
and acquisitions) and other similar type events or circumstances. To the extent
any such provision would create impermissible discretion under Section 162(m)
of the Code or otherwise violate Section 162(m) of the Code, such provision
shall be of no force or effect. The applicable Performance Goals shall be based
on one or more of the performance criteria set forth in Exhibit A hereto.
25
10.2
Terms
and Conditions
. Other Stock-Based Awards made
pursuant to this Article X shall be subject to the following terms and
conditions:
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(a)
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Non-Transferability
.
Subject to the applicable provisions of the Award agreement and this Plan,
shares of Common Stock subject to Awards made under this Article X may not be
Transferred prior to the date on which the shares are issued, or, if later,
the date on which any applicable restriction, performance or deferral period
lapses.
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(b)
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Dividends
.
Unless otherwise determined by the Committee at the time of Award, subject to
the provisions of the Award agreement and this Plan, the recipient of an
Award under this Article X shall not be entitled to receive, currently or on
a deferred basis, dividends or dividend equivalents with respect to the
number of shares of Common Stock covered by the Award.
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(c)
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Vesting
.
Any Award under this Article X and any Common Stock covered by any such Award
shall vest or be forfeited to the extent so provided in the Award agreement,
as determined by the Committee, in its sole discretion, in accordance with
the terms of this Plan. Subject to Section 10.2(d) of this Plan, in the event
that a written employment agreement between the Company and a Participant
provides for a vesting schedule that is more favorable than the vesting
schedule provided in the form of Award Agreement, the vesting schedule in
such employment agreement shall govern, provided that such agreement is in
effect on the date of grant and applicable to the specific Award.
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(d)
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Limitation
.
Notwithstanding Section 10.2(c) of this Plan and any other provision of this
Plan to the contrary, effective on the date of the Companys 2009 annual
stockholders meeting, the vesting schedule with respect to any Other
Stock-Based Award on or after such date shall be no less than (A) one year,
if the vesting period is based (in whole or in part) on the attainment of one
or more Performance Goals, and (B) three years, if the vesting period is
based solely on the continued performance of services by the Participant
(with restrictions as to no more than 1/3
rd
of the shares of
Common Stock subject thereto lapsing on each of the first three anniversaries
of the date of grant);
provided
, that, subject to the terms of this
Plan, the Committee shall be authorized (at the time of grant or thereafter)
to provide for the acceleration of vesting in the event of a Change in
Control or a Participants retirement, death or Disability; and
provided
further
, that, subject to the limitations set forth in Section 4.1(b),
Other Stock-Based Awards may be granted on or after the date of the Companys
2009 annual stockholders meeting without the foregoing limitations with
respect to up to 10% (when combined with the 10% limitation set forth in
Sections 4.1(b)(ii), 8.3(a)(iii) and 9.2(f) of this Plan) of the total number
of shares of Common Stock reserved for Awards under this Plan.
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(e)
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Price
.
Common Stock issued on a bonus basis under this Article X may be issued for
no cash consideration; Common Stock purchased pursuant to a purchase right
awarded under this Article X shall be priced, as determined by the Committee
in its sole discretion.
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(f)
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Payment
.
Form of payment for the Other Stock-Based Award shall be specified in the
Award agreement.
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ARTICLE XI
PERFORMANCE-BASED CASH AWARDS
11.1
Performance-Based
Cash Awards
. Performance-Based Cash Awards may be
granted either alone or in addition to or in tandem with Stock Options, Stock
Appreciation Rights, or Restricted Stock. Subject to the provisions of this
Plan, the Committee shall, in its sole discretion, have authority to determine
the Eligible Employees, Consultants and Non-Employee Directors to whom, and the
time or times at which, such Awards shall be made, the dollar amount to be
awarded pursuant to such Awards, and all other conditions of the Awards. The Committee
may also provide for the payment of dollar amount under such Awards upon the
completion of a specified Performance Period.
For
each Participant, the Committee may specify a targeted performance award. The
individual target award may be expressed, at the Committees discretion, as a
fixed dollar amount, a percentage of base pay or total pay (excluding payments
made under the Plan), or an amount determined pursuant to an objective formula
or standard. Establishment of an individual target award for a Participant for
a calendar year shall not imply or require that the same level individual
target award (if any such award is established by the Committee for the
relevant Participant) be set for any subsequent calendar year. At the time the
Performance Goals are established, the Committee shall prescribe a formula to
determine the percentages (which may be greater than 100%) of the individual
target award which may be payable based upon the degree of attainment of the
Performance Goals during the calendar year. Notwithstanding anything else
herein, the Committee may, in its sole discretion, elect to pay a Participant
an amount that is less than the Participants individual target award (or
attained percentage thereof) regardless of the degree of attainment of the
Performance Goals; provided that no such discretion to reduce an Award earned
based on achievement of the applicable Performance Goals shall be permitted for
the calendar year in which a Change in Control of the Company occurs, or during
such calendar year with regard to the prior calendar year if the Awards for the
prior calendar year have not been made by the time of the Change in Control of
the Company, with regard to individuals who were Participants at the time of
the Change in Control of the Company.
11.2
Terms
and Conditions
. Performance-Based Awards made
pursuant to this Article XI shall be subject to the following terms and
conditions:
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(a)
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Vesting of
Performance-Based Cash Award
. At the expiration of
the applicable Performance Period, the Committee shall determine and certify
in writing the extent to which the Performance Goals established pursuant
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to Section
11.2(c) are achieved and the percentage of the Participants individual
target award has been vested and earned.
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(b)
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Waiver of
Limitation
. In the event of the Participants
Retirement (other than with respect to Performance-Based Cash Awards that are
intended to comply with Section 162(m) of the Code), Disability or death, or
in cases of special circumstances (to the extent permitted under Section
162(m) of the Code with regard to a Performance-Based Cash Award that is
intended to comply with Section 162(m) of the Code), the Committee may, in
its sole discretion, waive in whole or in part any or all of the limitations
imposed hereunder (if any) with respect to any or all of an Award under this
Article XI.
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(c)
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Objective
Performance Goals, Formulae or Standards
.
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(i) The
Committee shall establish the objective Performance Goals and the individual
target award (if any) applicable to each Participant or class of Participants
in writing prior to the beginning of the applicable Performance Period or at
such later date as permitted under Section 162(m) of the Code and while the
outcome of the Performance Goals are substantially uncertain. Such
Performance Goals may incorporate, if and only to the extent permitted under
Section 162(m) of the Code, provisions for disregarding (or adjusting for)
changes in accounting methods, corporate transactions (including, without
limitation, dispositions and acquisitions) and other similar type events or
circumstances. To the extent any Performance-Based Award is intended to
comply with the provisions of Section 162(m) of the Code, if any provision
would create impermissible discretion under Section 162(m) of the Code or
otherwise violate Section 162(m) of the Code, such provision shall be of no
force or effect. The applicable Performance Goals shall be based on one or
more of the performance criteria set forth in Exhibit A hereto.
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(ii) The
measurements used in Performance Goals set under the Plan shall be determined
in accordance with Generally Accepted Accounting Principles (GAAP), except,
to the extent that any objective Performance Goals are used, if any
measurements require deviation from GAAP, such deviation shall be at the
discretion of the Committee at the time the Performance Goals are set or at
such later time to the extent permitted under Section 162(m) of the Code.
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(d)
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Payment
.
Following the Committees determination and certification in accordance with
subsection (a) above, the Performance-Based Cash Award amount shall be
delivered to the Eligible Employee, Consultant or Non-Employee Director, or
his legal representative, in accordance with the terms and conditions of the
Award agreement. If the Award Agreement does not provide when such amount
will be paid, except as
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provided in
the next sentence, such amount shall be paid by no later than the later of:
(i) March 15 of the year following the year in which the applicable
Performance Period ends; or (ii) two and one-half (2½) months after the
expiration of the fiscal year of the Company in which the applicable
Performance Period ends. Notwithstanding the foregoing, the Committee may
place such conditions on the payment of the payment of all or any portion of
any Performance-Based Cash Award as the Committee may determine and prior to
the beginning of a Performance Period the Committee may (x) provide that the
payment of all or any portion of any Performance-Based Cash Award shall be
deferred and (y) permit a Participant to elect to defer receipt of all or a
portion of any Performance-Based Cash Award. Any Performance-Based Cash Award
deferred by a Participant in accordance with the terms and conditions
established by the Committee shall not increase (between the date on which
the Performance-Based Cash Award is credited to any deferred compensation
program applicable to such Participant and the payment date) by an amount
that would result in such deferral being deemed as an increase in the amount
of compensation under Code Section 162(m). To the extent applicable, any
deferral under this Section 11.2(d) shall be made in a manner intended to
comply with the applicable requirements of Section 409A of the Code.
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ARTICLE XII
TERMINATION
12.1
Termination
.
The following rules apply with regard to the Termination of a Participant.
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(a)
|
Rules Applicable to Stock Option and Stock
Appreciation Rights.
Unless otherwise determined by
the Committee at grant (or, if no rights of the Participant are reduced,
thereafter):
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(i)
Termination
by Reason of Death, Disability or Retirement.
If a Participants
Termination is by reason of death, Disability or the Participants
Retirement, all Stock Options or Stock Appreciation Rights that are held by
such Participant that are vested and exercisable at the time of the
Participants Termination may be exercised by the Participant (or, in the
case of death, by the legal representative of the Participants estate) at
any time within a one-year period from the date of such Termination, but in
no event beyond the expiration of the stated term of such Stock Options or Stock
Appreciation Rights; provided, however, if the Participant dies within such
exercise period, all unexercised Stock Options or Stock Appreciation Rights
held by such Participant shall thereafter be exercisable, to the extent to
which they were exercisable at the time of death, for a period of one year
from the date of such death, but in no event
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beyond the
expiration of the stated term of such Stock Options or Stock Appreciation
Rights.
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(ii)
Involuntary
Termination Without Cause.
If a Participants Termination is by
involuntary termination without Cause, all Stock Options or Stock
Appreciation Rights that are held by such Participant that are vested and
exercisable at the time of the Participants Termination may be exercised by
the Participant at any time within a period of 90 days from the date of such
Termination, but in no event beyond the expiration of the stated term of such
Stock Options or Stock Appreciation Rights.
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(iii)
Voluntary
Termination.
If a Participants Termination is voluntary (other
than a voluntary termination described in Section 12.2(a)(iv)(2) below), all
Stock Options or Stock Appreciation Rights that are held by such Participant
that are vested and exercisable at the time of the Participants Termination
may be exercised by the Participant at any time within a period of 30 days
from the date of such Termination, but in no event beyond the expiration of
the stated terms of such Stock Options or Stock Appreciation Rights.
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(iv)
Termination
for Cause.
If a Participants Termination: (1) is for Cause or (2)
is a voluntary Termination (as provided in sub-section (iii) above) after the
occurrence of an event that would be grounds for a Termination for Cause, all
Stock Options or Stock Appreciation Rights, whether vested or not vested,
that are held by such Participant shall thereupon terminate and expire as of
the date of such Termination.
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(v)
Unvested
Stock Options and Stock Appreciation Rights.
Stock Options or
Stock Appreciation Rights that are not vested as of the date of a
Participants Termination for any reason shall terminate and expire as of the
date of such Termination.
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(b)
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Rules Applicable to Restricted Stock,
Performance Shares, Other Stock-Based Awards and Performance-Based Cash
Awards
. Unless otherwise determined by the Committee
at grant or thereafter, upon a Participants Termination for any reason:
(i) during the relevant Restriction Period, all Restricted Stock still
subject to restriction shall be forfeited; and (ii) any unvested
Performance Shares, Other Stock-Based Awards or Performance-Based Cash Awards
shall be forfeited
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ARTICLE XIII
CHANGE IN CONTROL PROVISIONS
13.1
Benefits
.
In the event of a Change in Control of the Company, and except as otherwise
provided by the Committee in an Award agreement or in a written employment
agreement between the Company and a Participant, a Participants unvested Award
shall not vest
30
and a
Participants Award shall be treated in accordance with one of the following
methods as determined by the Committee in its sole discretion:
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(a)
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Awards,
whether or not then vested, shall be continued, assumed, have new rights
substituted therefor or be treated in accordance with Section 4.2(d) hereof,
as determined by the Committee in its sole discretion, and restrictions to
which any shares of Restricted Stock or any other Award granted prior to the
Change in Control are subject shall not lapse upon a Change in Control and
the Restricted Stock or other Award shall, where appropriate in the sole
discretion of the Committee, receive the same distribution as other Common
Stock on such terms as determined by the Committee; provided that, the
Committee may, in its sole discretion, decide to award additional Restricted
Stock or other Award in lieu of any cash distribution. Notwithstanding
anything to the contrary herein, for purposes of Incentive Stock Options, any
assumed or substituted Stock Option shall comply with the requirements of
Treasury Regulation § 1.424-1 (and any amendments thereto) and for purposes
of any Non-Qualified Stock Options and Stock Appreciations Rights, any
assumed or substituted Non-Qualified Stock Option or Stock Appreciation Right
shall comply with the requirements of Section 409A of the Code and the
regulations and guidance issued thereunder.
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(b)
|
The
Committee, in its sole discretion, may provide for the purchase of any Awards
by the Company or an Affiliate for an amount of cash equal to the excess of
the Change in Control Price (as defined below) of the shares of Common Stock
covered by such Awards, over the aggregate exercise price of such Awards. For
purposes of this Section 13.1, Change in Control Price shall mean the
highest price per share of Common Stock paid in any transaction related to a
Change in Control of the Company.
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(c)
|
The
Committee may, in its sole discretion, provide for the cancellation of any
Awards without payment, if the Change in Control Price is less than the Fair
Market Value of such Award on the date of grant.
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(d)
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Notwithstanding
anything else herein, the Committee may, in its sole discretion, provide for
accelerated vesting or lapse of restrictions, of an Award at the time of
grant or at any time thereafter.
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13.2
Change
in Control
. Unless otherwise determined by the
Committee in the applicable Award agreement (or other written agreement
approved by the Committee including, without limitation, an employment
agreement), a Change in Control shall be deemed to occur following any
transaction if: (a) any person as such term is used in Sections 13(d) and
14(d) of the Exchange Act (other than the Company, any trustee or other
fiduciary holding securities under any employee benefit plan of the Company, or
any company owned, directly or indirectly, by the stockholders of the Company
in substantially the same proportions as their ownership of Common Stock of the
Company), becomes the beneficial owner (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of 50% or more of the combined voting power of
31
the then
outstanding securities of the Company (or its successor corporation); provided,
however, that a merger or consolidation effected solely to implement a recapitalization
of the Company shall not constitute a Change in Control of the Company; or (b)
the stockholders of the Company approve a plan of complete liquidation of the
Company;
provided
, that this subsection (b) shall not constitute a
Change in Control with respect to the amount of any payment pursuant to an
Award under this Plan, or any portion thereof, that is triggered upon a Change
in Control and that is intended to constitute non-qualified deferred
compensation pursuant to Section 409A of the Code; or (c) the consummation of
the sale or disposition by the Company of all or substantially all of the
Companys assets other than (i) the sale or disposition of all or substantially
all of the assets of the Company to a person or persons who beneficially own, directly
or indirectly, at least 50% or more of the combined voting power of the
outstanding voting securities of the Company at the time of the sale or (ii)
pursuant to a spinoff type transaction, directly or indirectly, of such assets
to the stockholders of the Company.
ARTICLE XIV
TERMINATION OR AMENDMENT OF PLAN
14.1
Termination
or Amendment
. Notwithstanding any other provision
of this Plan, the Board or the Committee may at any time, and from time to
time, amend, in whole or in part, any or all of the provisions of this Plan
(including any amendment deemed necessary to ensure that the Company may comply
with any regulatory requirement referred to in Article XVI), or suspend or
terminate it entirely, retroactively or otherwise; provided, however, that,
unless otherwise required by law or specifically provided herein, the rights of
a Participant with respect to Awards granted prior to such amendment,
suspension or termination, may not be impaired without the consent of such
Participant and, provided further, without the approval of the stockholders of
the Company in accordance with the laws of the State of Delaware, to the extent
required by the applicable provisions of Rule 16b-3 or Section 162(m) of the
Code, pursuant to the requirements of NASD Rule 4350(i)(1)(A) or such other
applicable stock exchange rule, or, to the extent applicable to Incentive Stock
Options, Section 422 of the Code, no amendment may be made which would:
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(a)
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increase the
aggregate number of shares of Common Stock that may be issued under this Plan
pursuant to Section 4.1 (except by operation of Section 4.2);
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(b)
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increase the
maximum individual Participant limitations for a fiscal year under Section
4.1(b) (except by operation of Section 4.2);
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(c)
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change the
classification of Eligible Employees or Consultants eligible to receive
Awards under this Plan;
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(d)
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decrease the
minimum option price of any Stock Option or Stock Appreciation Right;
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(e)
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extend the
maximum option period under Section 6.3;
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32
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(f)
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alter the
Performance Goals for the Award of Restricted Stock, Performance Shares or
Other Stock-Based Awards subject to satisfaction of Performance Goals as set
forth in Exhibit A;
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(g)
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other than
adjustments or substitutions in accordance with
Section 4.2
, amend the
terms of outstanding Awards to reduce the exercise price of outstanding Stock
Options or Stock Appreciation Rights or to cancel outstanding Stock Options
or Stock Appreciation Rights in exchange for cash, other Awards or Stock
Options or Stock Appreciation Rights with an exercise price that is less than
the exercise price of the original Stock Options or Stock Appreciation
Rights;
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(h)
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award any
Stock Option or Stock Appreciation Right in replacement of a canceled Stock
Option or Stock Appreciation Right with a higher exercise price, except in
accordance with Section 6.3(g); or
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(i)
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require
stockholder approval in order for this Plan to continue to comply with the
applicable provisions of Section 162(m) of the Code or, to the extent
applicable to Incentive Stock Options, Section 422 of the Code. In no event
may this Plan be amended without the approval of the stockholders of the
Company in accordance with the applicable laws of the State of Delaware to
increase the aggregate number of shares of Common Stock that may be issued
under this Plan, decrease the minimum exercise price of any Stock Option or
Stock Appreciation Right, or to make any other amendment that would require
stockholder approval under NASD Rule 4350(i)(1)(A) or other such rules of any
exchange or system on which the Companys securities are listed or traded at
the request of the Company.
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The
Committee may amend the terms of any Award theretofore granted, prospectively
or retroactively, but, subject to Article IV above or as otherwise specifically
provided herein, no such amendment or other action by the Committee shall
impair the rights of any holder without the holders consent.
ARTICLE XV
UNFUNDED PLAN
15.1
Unfunded
Status of Plan
. This Plan is an unfunded plan
for incentive and deferred compensation. With respect to any payments as to
which a Participant has a fixed and vested interest but that are not yet made
to a Participant by the Company, nothing contained herein shall give any such
Participant any rights that are greater than those of a general unsecured
creditor of the Company.
33
ARTICLE XVI
GENERAL PROVISIONS
16.1
Legend
.
The Committee may require each person receiving shares of Common Stock pursuant
to a Stock Option or other Award under the Plan to represent to and agree with
the Company in writing that the Participant is acquiring the shares without a
view to distribution thereof. In addition to any legend required by this Plan,
the certificates for such shares may include any legend that the Committee, in
its sole discretion, deems appropriate to reflect any restrictions on Transfer.
All
certificates for shares of Common Stock delivered under the Plan shall be
subject to such stop transfer orders and other restrictions as the Committee
may, in its sole discretion, deem advisable under the rules, regulations and
other requirements of the Securities and Exchange Commission, The Nasdaq Stock
Market or any national securities exchange system upon whose system the Common
Stock is then quoted, any applicable Federal or state securities law, and any
applicable corporate law, and the Committee may cause a legend or legends to be
put on any such certificates to make appropriate reference to such
restrictions.
16.2
Other
Plans
. Nothing contained in this Plan shall
prevent the Board from adopting other or additional compensation arrangements,
subject to stockholder approval if such approval is required; and such arrangements
may be either generally applicable or applicable only in specific cases.
16.3
No
Right to Employment/Directorship/Consultancy
.
Neither this Plan nor the grant of any Option or other Award hereunder shall
give any Participant or other employee, Consultant or Non-Employee Director any
right with respect to continuance of employment, consultancy or directorship by
the Company or any Affiliate, nor shall they be a limitation in any way on the
right of the Company or any Affiliate by which an employee is employed or a
Consultant or Non-Employee Director is retained to terminate his or her
employment, consultancy or directorship at any time.
16.4
Withholding
of Taxes
. The Company shall have the right to
deduct from any payment to be made pursuant to this Plan, or to otherwise
require, prior to the issuance or delivery of any shares of Common Stock or the
payment of any cash hereunder, payment by the Participant of, any Federal,
state or local taxes required by law to be withheld. Upon the vesting of
Restricted Stock (or other Award that is taxable upon vesting), or upon making
an election under Section 83(b) of the Code, a Participant shall pay all
required withholding to the Company. Any statutorily required withholding obligation
with regard to any Participant may be satisfied, subject to the advance consent
of the Committee, by reducing the number of shares of Common Stock otherwise
deliverable or by delivering shares of Common Stock already owned. Any fraction
of a share of Common Stock required to satisfy such tax obligations shall be
disregarded and the amount due shall be paid instead in cash by the
Participant.
16.5
No
Assignment of Benefits
. No Award or other benefit
payable under this Plan shall, except as otherwise specifically provided by law
or permitted by the Committee, be Transferable in any manner, and any attempt
to Transfer any such benefit shall be void, and any
34
such benefit shall not in any manner be liable for or
subject to the debts, contracts, liabilities, engagements or torts of any
person who shall be entitled to such benefit, nor shall it be subject to
attachment or legal process for or against such person.
16.6
Listing
and Other Conditions
.
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(a)
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Unless
otherwise determined by the Committee, as long as the Common Stock is listed
on a national securities exchange or system sponsored by a national
securities association, the issue of any shares of Common Stock pursuant to
an Award shall be conditioned upon such shares being listed on such exchange
or system. The Company shall have no obligation to issue such shares unless
and until such shares are so listed, and the right to exercise any Option or
other Award with respect to such shares shall be suspended until such listing
has been effected.
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(b)
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If at any
time counsel to the Company shall be of the opinion that any sale or delivery
of shares of Common Stock pursuant to an Option or other Award is or may in
the circumstances be unlawful or result in the imposition of excise taxes on
the Company under the statutes, rules or regulations of any applicable
jurisdiction, the Company shall have no obligation to make such sale or
delivery, or to make any application or to effect or to maintain any
qualification or registration under the Securities Act or otherwise, with
respect to shares of Common Stock or Awards, and the right to exercise any
Option or other Award shall be suspended until, in the opinion of said
counsel, such sale or delivery shall be lawful or will not result in the
imposition of excise taxes on the Company.
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(c)
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Upon
termination of any period of suspension under this Section 16.6, any Award
affected by such suspension which shall not then have expired or terminated
shall be reinstated as to all shares available before such suspension and as
to shares which would otherwise have become available during the period of
such suspension, but no such suspension shall extend the term of any Award.
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(d)
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A
Participant shall be required to supply the Company with any certificates,
representations and information that the Company requests and otherwise
cooperate with the Company in obtaining any listing, registration,
qualification, exemption, consent or approval the Company deems necessary or
appropriate.
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16.7
Governing
Law
. This Plan and actions taken in connection
herewith shall be governed and construed in accordance with the laws of the
State of Delaware (regardless of the law that might otherwise govern under
applicable Delaware principles of conflict of laws).
16.8
Construction
.
Wherever any words are used in this Plan in the masculine gender they shall be
construed as though they were also used in the feminine gender in all cases
where they would so apply, and wherever any words are used herein in the
singular form they shall be
35
construed as though they
were also used in the plural form in all cases where they would so apply.
16.9
Other
Benefits
. No Award granted or paid out under this
Plan shall be deemed compensation for purposes of computing benefits under any
retirement plan of the Company or its Affiliates nor affect any benefits under
any other benefit plan now or subsequently in effect under which the
availability or amount of benefits is related to the level of compensation.
16.10
Costs
.
The Company shall bear all expenses associated with administering this Plan,
including expenses of issuing Common Stock pursuant to any Awards hereunder.
16.11
No
Right to Same Benefits
. The provisions of Awards
need not be the same with respect to each Participant, and such Awards to
individual Participants need not be the same in subsequent years.
16.12
Death/Disability
.
The Committee may in its sole discretion require the transferee of a
Participant to supply it with written notice of the Participants death or
Disability and to supply it with a copy of the will (in the case of the
Participants death) or such other evidence as the Committee deems necessary to
establish the validity of the transfer of an Award. The Committee may, in its
discretion, also require the agreement of the transferee to be bound by all of
the terms and conditions of the Plan.
16.13
Section
16(b) of the Exchange Act
. All elections and
transactions under this Plan by persons subject to Section 16 of the Exchange
Act involving shares of Common Stock are intended to comply with any applicable
exemptive condition under Rule 16b-3. The Committee may, in its sole discretion,
establish and adopt written administrative guidelines, designed to facilitate
compliance with Section 16(b) of the Exchange Act, as it may deem necessary or
proper for the administration and operation of this Plan and the transaction of
business thereunder.
16.14
Section
409A of the Code
. Although the Company does not
guarantee the particular tax treatment of an Award granted under this Plan,
Awards made under this Plan are intended to comply with, or be exempt from, the
applicable requirements of Section 409A of the Code and this Plan and any Award
agreement hereunder shall be limited, construed and interpreted in accordance
with such intent. In no event whatsoever shall the Company or any of its
Affiliates be liable for any additional tax, interest or penalties that may be
imposed on a Participant by Section 409A of the Code or any damages for failing
to comply with Section 409A of the Code.
16.15
Successor
and Assigns
. The Plan shall be binding on all
successors and permitted assigns of a Participant, including, without
limitation, the estate of such Participant and the executor, administrator or
trustee of such estate.
16.16
Severability
of Provisions
. If any provision of the Plan shall
be held invalid or unenforceable, such invalidity or unenforceability shall not
affect any other provisions hereof, and the Plan shall be construed and
enforced as if such provisions had not been included.
36
16.17
Payments
to Minors, Etc
.
Any benefit payable to or for the
benefit of a minor, an incompetent person or other person incapable of receipt
thereof shall be deemed paid when paid to such persons guardian or to the
party providing or reasonably appearing to provide for the care of such person,
and such payment shall fully discharge the Committee, the Board, the Company,
its Affiliates and their employees, agents and representatives with respect
thereto.
16.18
Headings
and Captions
. The headings and captions herein are
provided for reference and convenience only, shall not be considered part of
the Plan, and shall not be employed in the construction of the Plan.
ARTICLE XVII
EFFECTIVE DATE OF PLAN
The
Initial Plan was originally adopted by the Board in its resolution adopting the
Initial Plan on March 10, 2006 and was thereafter approved by the stockholders
of the Company in 2006. The Board subsequently approved this amendment and
restatement of the Initial Plan in the form set forth herein (the Amended and
Restated Plan) subject to, and to be effective upon, the approval of the
stockholders of the Company in accordance with the requirements of the laws of
the State of Delaware at the Companys 2009 annual stockholders meeting to be
held on May 22, 2009 (the Restatement Date). If the Amended and Restated Plan
is not so approved by the stockholders, all provisions of the Initial Plan
shall remain effective.
ARTICLE XVIII
TERM OF PLAN
No
Award shall be granted pursuant to this Plan on or after the tenth anniversary
of the earlier of the date the Plan is adopted by the Board and the Effective
Date, but Awards granted prior to such tenth anniversary may extend beyond that
date; provided that no Award (other than a Stock Option or Stock Appreciation
Right) that is intended to be performance-based under Section 162(m) of
the Code shall be granted on or after the fifth anniversary of the stockholder
approval of the Plan unless the Performance Goals set forth on Exhibit A are
reapproved (or other designated performance goals are approved) by the
stockholders no later than the first stockholder meeting that occurs in the
fifth year following the year in which stockholders approve the Performance
Goals set forth on Exhibit A.
ARTICLE XIX
NAME OF PLAN
This
Plan shall be known as The Steven Madden, Ltd. 2006 Stock Incentive Plan.
37
EXHIBIT A
PERFORMANCE GOALS
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1.
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Performance
goals established for purposes of the grant or vesting of Awards of
Restricted Stock, Other Stock-Based Awards, Performance Shares and/or
Performance-Based Cash Awards, each intended to be performance-based under
Section 162(m) of the Code, shall be based on the attainment of certain
target levels of, or a specified increase or decrease (as applicable) in one
or more of the following performance goals (Performance Goals):
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(a)
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earnings per
share;
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(b)
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operating
income;
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(c)
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net income;
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(d)
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cash flow;
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(e)
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gross
profit;
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(f)
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gross profit
return on investment;
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(g)
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gross margin
return on investment;
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(h)
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gross
margin;
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(i)
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working
capital;
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(j)
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earnings
before interest and taxes;
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(k)
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earnings
before interest, tax, depreciation and amortization;
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(l)
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return on
equity;
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(m)
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return on
assets;
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(n)
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return on
capital;
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(o)
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revenue
growth;
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(p)
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total
shareholder return;
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(q)
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economic
value added;
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(r)
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specified
objectives with regard to limiting the level of increase in all or a portion
of the Companys bank debt or other long-term or short-term public or private
debt or other similar financial obligations of the
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A
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Company,
which may be calculated net of cash balances and/or other offsets and
adjustments as may be established by the Committee in its sole discretion;
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(s)
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the fair market
value of the shares of the Companys Common Stock;
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(t)
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the growth
in the value of an investment in the Companys Common Stock assuming the
reinvestment of dividends;
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(u)
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reduction in
expenses;
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(v)
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customer
satisfaction;
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(w)
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customer
loyalty;
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(x)
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style
indexes;
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(y)
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number of
new patents;
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(z)
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employee
retention;
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(aa)
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market
share;
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(bb)
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market
segment share;
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(cc)
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product
release schedules;
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(dd)
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new product
innovation;
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(ee)
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new product
introduction;
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(ff)
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product cost
reduction through advanced technology;
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(gg)
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brand
recognition and/or acceptance; or
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(hh)
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ship
targets.
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2.
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To the
extent permitted under Section 162(m) of the Code, the Committee may, in its
sole discretion, also exclude, or adjust to reflect, the impact of an event
or occurrence which the Committee determines should be appropriately excluded
or adjusted, including:
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(a)
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restructurings,
discontinued operations, extraordinary items or events, and other unusual or
non-recurring charges as described in Accounting Principles Board Opinion No.
30 and/or managements discussion and analysis of financial condition and
results of operations appearing or incorporated by reference in the Companys
Form 10-K for the applicable year;
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B
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(b)
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an event
either not directly related to the operations of the Company or not within
the reasonable control of the Companys management; or
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(c)
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a change in
tax law or accounting standards required by generally accepted accounting
principles.
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3.
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Performance
goals may also be based upon individual Participant performance goals, as
determined by the Committee, in its sole discretion.
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4.
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In addition,
such Performance Goals may be based upon the attainment of specified levels
of Company (or subsidiary, division, other operational unit or administrative
department of the Company) performance under one or more of the measures
described above relative to the performance of other corporations. To the extent
permitted under Section 162(m) of the Code, but only to the extent
permitted under Section 162(m) of the Code (including, without
limitation, compliance with any requirements for stockholder approval), the
Committee may:
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(a)
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designate
additional business criteria on which the performance goals may be based; or
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(b)
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adjust,
modify or amend the aforementioned business criteria.
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C
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VOTE BY
INTERNET - www.proxyvote.com
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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.
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STEVEN MADDEN, LTD.
ATTN: ARVIND DHARIA
52-16 BARNETT AVEUE
LONG ISLAND CITY, NY 11104
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VOTE BY
PHONE - 1-800-690-6903
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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.
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VOTE BY
MAIL
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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.
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TO VOTE, MARK BLOCKS BELOW
IN BLUE OR BLACK INK AS FOLLOWS:
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KEEP
THIS PORTION FOR YOUR RECORDS
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DETACH
AND RETURN THIS PORTION ONLY
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THIS
PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
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For
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Withhold
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For
All
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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.
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The
Board of Directors recommends that you vote FOR the following:
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All
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All
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Except
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1.
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Election of Directors
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o
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o
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o
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Nominees
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01
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Edward R Rosenfeld
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02
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John L Madden
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03
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Peter Migliorini
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04
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Richard P Randall
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05
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Ravi Sachdev
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06
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Thomas H Schwartz
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The Board of Directors
recommends you vote FOR the following proposal(s):
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For
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Against
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Abstain
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2
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APPROVAL
OF THE AMENDMENT AND RESTATEMENT OF THE 2006 STOCK INCENTIVE PLAN TO INCREASE
BY 2,514,000 THE NUMBER OF SHARES AVAILABLE UNDER THE PLAN, APPROVE THE
PLANS PERFORMANCE GOALS AND MAKE OTHER AMENDMENTS, AS DESCRIBED IN THE
COMPANYS PROXY STATEMENT.
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o
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o
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o
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3
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RATIFICATION
OF THE APPOINTMENT OF EISNER LLP AS THE COMPANYS INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING DECEMBER 31, 2009.
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o
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o
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o
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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.
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Yes
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No
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Please indicate if you plan
to attend this meeting
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o
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o
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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.
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Signature [PLEASE SIGN
WITHIN BOX]
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Date
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Signature (Joint Owners)
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Date
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ANNUAL MEETING OF STOCKHOLDERS OF
STEVEN MADDEN, LTD.
May 22, 2009
Please sign, date and mail your proxy card in the
envelope provided as soon as possible.
Please detach along perforated line and mail in the
envelope provided.
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Important Notice Regarding the Availability of Proxy
Materials for the Annual Meeting:
The Notice & Proxy Statement, Annual Report is/ are available at
www.proxyvote.com
.
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STEVEN MADDEN, LTD.
THIS PROXY IS BEING SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS
PLEASE CLEARLY INDICATE A RESPONSE BY CHECKING ONE OF
THE BOXES ([FOR]
[WITHHOLD
AUTHORITY] [AGAINST] OR [ABSTAIN]) NEXT TO EACH OF THE PROPOSALS
The
undersigned stockholder(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 Companys showroom located at 1370 Avenue of the Americas, 14th Floor, New
York, New York at 10:00 a.m., local time, on May 22, 2009 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 23, 2009,
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 SIX
(6) NOMINEES NAMED IN ITEM 1, (2) FOR THE APPROVAL OF THE AMENDMENT AND
RESTATEMENT OF THE 2006 STOCK INCENTIVE PLAN SET FORTH IN ITEM 2, (3) FOR THE
RATIFICATION OF THE APPOINTMENT OF EISNER LLP AS THE COMPANYS INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR
FISCAL YEAR 2009 SET FORTH IN ITEM 3, AND (4) 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
Steven Madden (NASDAQ:SHOO)
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