Add files using upload-large-folder tool

raw/proxies/0000077877/0000077877-01-500004/proxy.txt

@@ -0,0 +1,815 @@
+DEF 14A
+1
+pdcproxy.txt
+2001 DEF 14A
+PETROLEUM DEVELOPMENT CORPORATION
+103 East Main Street
+Bridgeport, West Virginia 26330
+NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
+June 29, 2001
+To the Stockholders of
+PETROLEUM DEVELOPMENT CORPORATION:
+Notice is hereby given that the Annual Meeting of Stockholders of
+Petroleum Development Corporation (the "Company") will be held at the
+office of the Company at 103 East Main Street, Bridgeport, West
+Virginia 26330, on June 29, 2001 at 10:00 A.M., West Virginia time, for
+the following purposes, all as more fully described in the accompanying
+Proxy Statement:
+(1) To elect three directors to serve a term of three years or until
+their successors shall be elected and shall qualify;
+(2) To ratify and approve the selection of independent public
+accountants for the Company for the fiscal year ending December 31, 2001.
+The Board of Directors has fixed the close of business on May 11, 2001
+as the record date for the determination of stockholders entitled to
+notice of and to vote at the Annual Meeting. The presence in person or by
+proxy of the holders of a majority of the outstanding shares of the
+Company's Common Stock is required to constitute a quorum.
+EACH STOCKHOLDER IS CORDIALLY INVITED TO BE PRESENT AND TO VOTE AT
+THIS MEETING IN PERSON. STOCKHOLDERS WHO DO NOT EXPECT TO ATTEND ARE
+REQUESTED TO SIGN AND DATE THE ACCOMPANYING PROXY CARD AND RETURN IT
+PROMPTLY IN THE ENCLOSED POSTPAID ENVELOPE.
+By Order of the
+Board of Directors,
+James N. Ryan
+Chairman
+Bridgeport, West Virginia
+May 15, 2001
+PETROLEUM DEVELOPMENT CORPORATION
+PROXY STATEMENT
+ANNUAL MEETING OF STOCKHOLDERS
+June 29, 2001
+INTRODUCTORY STATEMENT
+This Proxy Statement is furnished in connection with the solicitation by
+the Board of Directors of proxies for use at the Annual Meeting of
+Stockholders of Petroleum Development Corporation (the "Company") to
+be held on June 29, 2001, notice of which is attached, and at any
+adjournment thereof.
+Any stockholder giving the accompanying proxy has the power to revoke it
+prior to its exercise by filing with the Secretary of the Company a
+written notice of revocation or a duly executed proxy bearing a later
+date. Giving the accompanying proxy will not affect your right to vote in
+person should you find it convenient to attend the Annual Meeting. Shares
+represented by proxy will be voted by the proxy holders in accordance with
+your instructions unless you revoke your proxy or attend the meeting and
+elect to vote in person. This Proxy Statement and the proxy were first
+mailed to stockholders on May 15, 2001. The mailing address of the
+principal executive offices of the Company is Petroleum Development
+Corporation, P.O. Box 26, Bridgeport, West Virginia 26330.
+The Annual Report to Stockholders for 2000, containing certified
+financial and other information about the Company, accompanies this Proxy
+Statement.
+VOTING SECURITIES
+The outstanding voting securities of the Company as of March 31, 2001,
+consisted of 16,244,044 shares of $0.01 par value common stock ("Common
+Stock"). Stockholders of record as of the close of business on May 11,
+2001 are entitled to vote. Each stockholder is entitled to one vote for
+each share of Common Stock held of record on this date. Stockholders are
+not permitted to cumulate their votes for the election of directors.
+Abstentions and broker non-votes will be counted in the number of shares
+present in person or represented by proxy for purposes of determining
+whether a quorum is present.
+PROPOSAL #1
+ELECTION OF DIRECTORS
+The Company's By-Laws provide that the directors of the Company shall be
+divided into three classes and that, at each annual meeting of
+stockholders of the Company, successors to the class of directors whose
+term expires at the annual meeting will be elected for a three-year term.
+The classes are staggered so that the term of one class expires each year.
+Mr. D'Annunzio and Mr. Ryan are members of the class whose term expires in
+2001; and Mr. Rettinger and Mr. Swoveland are members of the class whose
+term expires in 2002; and Mr. Morgan, Mr. Nestor and Mr. Williams are
+members of the class whose term expires in 2003. There is no family
+relationship between any director or executive officer and any other
+director or executive officer of the Company. There are no arrangements
+or understandings between any director or officer and any other person
+pursuant to which such person was selected as an officer. Votes pursuant
+to the enclosed proxy will be cast, unless authority is withheld, for the
+election of the two persons named under "Nominees for Terms Expiring 2004"
+below, each of whom are members of the present Board and each of whom are
+expected to be able to serve on the Board to be elected at this meeting.
+If any of such persons is unwilling or unable to act in such capacity, an
+event which is not now anticipated, the enclosed proxy will be voted for
+such person or persons as the Board of Directors may designate. During
+2000, the Board of Directors held seven meetings. No director attended
+fewer than 75% of the aggregate of all meetings of the Board and the
+committees, if any, upon which such director served.
+Vote Required
+A plurality of the votes cast at the Annual Meeting in person or by
+proxy, is required for the election of directors. Abstentions and broker
+non-votes will not be considered as votes cast with respect to the
+election of directors, and therefore any abstentions or broker non-votes
+will not affect the election of the candidates receiving a majority of the
+votes cast.
+THE BOARD OF DIRECTORS RECOMMEND A VOTE "FOR" PROPOSAL #1
+DIRECTORS OF THE COMPANY
+NOMINEES FOR TERMS EXPIRING 2004
+The following persons, each of whom are currently serving as directors,
+have been nominated to serve as
+directors:
+Name and Principal Year First
+Occupation Past Five Years Elected
+and Other Directorships Age Director
+JAMES N. RYAN has served as President and Director of PDC from 1969
+to 1983 and was elected Chairman and Chief Executive Officer in
+March 1983 69 1969
+VINCENT F. D'ANNUNZIO has served as president of Beverage
+Distributors, Inc. located in Clarksburg, West Virginia since 1985. 48 1989
+CONTINUING DIRECTORS TERMS EXPIRING IN 2002
+DALE G. RETTINGER has served as Vice President and Treasurer of
+PDC since July 1980, and was appointed Chief Financial Officer in
+September 1997. Mr. Rettinger was elected Director in 1985.
+Previously Mr. Rettinger was a partner with Main Hurdman,
+Certified Public Accountants, having served in that capactiy
+since 1976. 56 1985
+JEFFREY C. SWOVELAND has served as Chief Financial Officer
+of Body Media since September, 2000. Prior thereto, Mr.
+Swoveland was Vice President-Finance and Treasurer of Equitable
+Resources Inc since 1994. 45 1991
+CONTINUING DIRECTORS TERMS EXPIRING IN 2003
+STEVEN R. WILLIAMS has served as President and Director of PDC
+since March 1983. Prior to joining PDC, Mr. Williams was employed
+by Exxon until 1979 and attended Stanford Graduate School of
+Business, graduating in 1981. He then worked with Texas Oil and
+Gas until July 1982, when he joined Exco Enterprises, an oil and
+gas investment company as manager of operations. 50 1983
+ROGER J. MORGAN has been a member of the law firm of Young,
+Morgan & Cann, Clarksburg, West Virginia since 1955. Mr. Morgan
+is not active in the day-to-day business of PDC, but his law
+firm provides legal services to PDC. 74 1969
+DONALD B. NESTOR elected as a director in March, 2000, is a Certified
+Public Accountant and a Partner in the CPA firm of Toothman
+Rice, P.L.L.C. and is in charge of the firm's Buckhannon,
+West Virginia office. Mr. Nestor has served in that capacity since 1975. 52 2000
+Committees of the Board of Directors
+The Company has three standing committees of the Board of Directors:
+the Executive Committee; the Audit Committee; and the Stock Option
+and Executive Compensation Committee. The Executive Committee is
+comprised of Messrs. Ryan, Williams, and Rettinger. The Audit
+Committee is comprised of Messrs. D'Annunzio, Nestor, and Swoveland.
+The Stock Option and Executive Compensation Committee is comprised
+of Messrs. D'Annunzio, Nestor and Swoveland. The Company does not
+have a formal Nominating Committee, the full Board of Directors
+handles these responsibilities. The functions performed by the
+Executive Committee include handling important Board of Directors
+matters that arise between Board of Directors meetings, serving as a
+liaison between the Board of Directors and senior management on
+important matters requiring Board of Directors attention and
+recommending to the Board of Directors nominations for election of
+new and existing members of the Board of Directors.
+The Audit Committee is comprised entirely of outside Directors
+of the Company. The functions performed by the Audit Committee
+include recommending the selection of independent accountants,
+reviewing with the Company's independent accountants the
+results of audits performed by them and overseeing and reviewing
+monthly and quarterly unaudited financial statements. These
+reviews include the adequacy of cash flow and the status of credit
+arrangements of the Company. The Board of Directors has adopted
+the Charter of the Audit Committee attached to this Proxy as
+Exhibit A.
+The Stock Option and Executive Compensation Committee is comprised
+entirely of outside Directors of the Company. The functions
+performed by this committee include recommending to the Board
+of Directors compensation levels of senior management and directing
+and recommending levels of corporate stock options and other benefit
+plans of the Company. In this regard, the committee monitors trends
+to ensure the Company's compensation levels are competitive in the
+oil and natural gas industry.
+Compensation Committee Interlocks and Insider Participation
+The members of the Stock Option and Executive Committee are Messrs.
+D'Annunzio, Nestor and Swoveland. There are no Stock Option and
+Executive Committee interlocks.
+Indemnification of Directors and Officers
+The Company's By-Laws provide that the Company shall indemnify any
+director, officer, employee, or other agent of the Company who is
+or was a party, or is threatened to be made a party, to any proceeding
+(other than an action by or in the right of the Company to procure a
+judgment in its favor) by reason of the fact that such person is or
+was an agent of the Company against expenses, judgments, fines,
+settlements, and other amounts actually and reasonably incurred in
+connection with such proceeding, if that person acted in good faith
+and in a manner that person reasonably believed to be in the best
+interest of the Company, and in the case of a criminal proceeding,
+had no reasonable cause to believe the conduct of that person
+was unlawful.
+The Company has entered into separate indemnification agreements
+with each of its directors and officers whereby the Company has
+agreed to indemnify the director or officer against all expenses,
+including attorneys' fees, and other amounts reasonably incurred by
+the officer or director in connection with any threatened, pending
+or completed civil, criminal, administrative or investigative action
+or proceeding to which such person is party by reason of the fact
+that he is or was a director or officer, as the case may be, of
+the Company, if the person acted in good faith and in a manner
+reasonably believed to be in or not opposed to the best interests
+of the Company, and, with respect to any criminal action or
+proceeding, the person had no reasonable cause to believe such
+conduct to be unlawful. The agreements provide for the advancement
+of expenses and that the Company has the right to purchase and
+maintain insurance on behalf of the director or officer against any
+liability or liabilities asserted against him, whether or not the
+Company would have the power to indemnify the person against such
+liability under any provision of the agreement. The Company has
+agreed to indemnify such person against expenses actually and
+reasonably incurred in connection with any action in which the
+person has been successful on the merits or otherwise.
+Indemnification must also be provided by the Company (unless
+ordered otherwise by a court) only as authorized in the specific
+case upon a determination that the indemnification of the person
+is appropriate because he has met the applicable standard of
+conduct described in the agreement made by (i) the Board of
+Directors, by a majority vote of a quorum consisting of directors
+who are not parties to such action or proceeding, (ii) by
+independent legal counsel in a written opinion or (iii) the
+shareholders of the Company.
+Director Compensation
+Each non-salaried employee director and outside director of the
+Company is paid an annual fee of $20,000. Each inside director
+is paid an annual fee of $10,000.
+EXECUTIVE COMPENSATION
+The following table sets forth in summary form the compensation
+received during each of the Company's last three fiscal years by
+the Chief Executive Officer and by each other executive officer
+of the Company whose salary and bonus exceeded $100,000 in
+2000 (the "Named Executives").
+Summary Compensation Table
+Annual Compensation Long Term Compensation
+Other Securities
+Annual underlying All Other
+Name and Compen- Options Compen-
+Principal Position Year Salary($) Bonus (1)($) sation($)(2) (#)(3) sation($)(3)
+James N. Ryan 2000 182,715 514,830 10,000 10,500
+Chairman and Chief 1999 178,200 470,436 10,000 12,157
+Executive Officer 1998 175,425 355,473 10,000 10,868
+Steven R. Williams 2000 144,315 514,830 10,000 10,500
+President 1999 139,800 470,436 10,000 12,157
+and Director 1998 137,025 355,473 10,000 10,838
+Dale G. Rettinger 2000 144,315 514,830 10,000 10,500
+Executive Vice President, 1999 139,800 470,436 10,000 12,157
+Treasurer, and Director 1998 137,025 355,473 10,000 10,838
+(1) In 1994, the Board of Directors approved a deferred compensation
+arrangement for the Named Executives. See "Employment and Other
+Agreements and Arrangements." Under the arrangements, each Named
+Executive may choose to defer any portion of his bonus
+compensation until retirement or separation from the Company.
+Included are deferred bonuses the Named Executives voluntarily
+deferred of $180,000 each in 2000, $130,000 each in 1999 and 1998.
+In 2000, 1999 and 1998, $30,000 of the deferred bonus compensation
+of Messrs. Williams and Rettinger was utilized to pay the premiums
+of split-dollar life insurance policies for Messrs. Williams and
+Rettinger.
+(2) The respective Named Executives receive fees as directors of the
+Company in the amount of $10,000 per year.
+(3) This amount includes contributions made by the Company under the
+Company's Employee Profit Sharing Plan and 401(k) plan. In 1999
+and 1998 the Company contributed $47,000 and $17,000,
+respectively, to the Employee Profit Sharing Plan. Of these
+contributions, each of the Named Executives was credited $2,157
+in 1999 and $911 in 1998. The Company provided a matching of
+401(k) contribution based upon varying rates of the Named
+Executives' respective contributions. Of the total Company
+matching contribution of $252,600, $217,400 and $202,600 in
+2000, 1999 and 1998 the Named Executives were credited with
+matching contributions of $10,500, $10,500 and $10,500
+respectively in 2000; $10,000, $10,000 and $10,000 respectively
+in 1999 and $9,957, $9,927 and $9,927, respectively in 1998.
+Compensation Committee Report
+The Compensation Committee is composed of three outside directors.
+The committee's responsibility is to develop the Company's compensation
+policy to enable the Company to hire, retain and motivate high performing
+employees. The committee also administers the Company's Savings and
+Protection Plan (the "401(k) Plan"), various Employee Stock Option Plans,
+and the Company's Profit Sharing Plan. The committee reviews the
+performance and compensation of the Chief Executive Officer, and the two
+executive officers of the Company. Final approval of all contracts
+with company executives is reserved to the full Board of Directors.
+During 2000, and over the past five years, the company has posted
+excellent operating reports. During 2000 the company posted records for
+revenue, net income, cash flow, production and reserves, among other
+accomplishments. Over the past five years, the company's stock has
+significantly out-performed the oil and gas industry as a whole. The
+compensation committee also believes that the management has positioned
+the company to continue its exemplary performance in the future with a
+strong balance sheet, strong cash flow, and diverse development
+opportunities. It is the opinion of this committee that the management
+team of the company merits compensation at the very top of its peer group.
+Compensation paid to the CEO, Mr. Ryan, and to the executive
+officers of the Company is based on several factors, including the terms
+of their employment contracts, the earnings of the Company, the evaluation
+of the Board of the performance of the employees, as well as compensation
+paid to similarly situated employees with other similar firms.
+As CEO, Mr. Ryan received a salary of $182,715 in 2000, which
+reflected cost of living increases from his salary in 1999. Also during
+2000 Mr. Ryan earned a cash bonus of $514,830 based on Company earnings,
+including $141,000 to partially offset the taxes associated with an
+exercise of stock options during 1999. Under the terms of his employment
+contract, Mr. Ryan's bonus is based on the company's cash flow (pre-tax
+earnings plus depreciation, depletion and amortization). The compensation
+committee believe that the long term valuation of the company is closely
+related to the company's cash flow.
+As a condition of the tax reimbursement Mr. Ryan agreed not to sell
+the shares received in the exercise for a period of two years. The
+company's income tax savings associated the stock exercise were
+greater than the reimbursement made to Mr. Ryan. In addition, the
+compensation committee believes limiting the need for the executive to
+sell stock to meet tax obligations to be in the interest of the
+shareholders.
+The Company also contributed $10,500 in 2000 to Mr. Ryan's 401(k)
+account in accordance with the plan's matching provisions to all
+participating employees.
+The compensation of the two executive officers of the Company is
+also comprised of a salary, a performance based bonus, and a tax
+reimbursement associated with the exercise of stock options. Like Mr.
+Ryan, the executive's performance bonuses are based on the cash flow of
+the company. The executives also received a tax reimbursement estimated
+to partially offset the tax liability associated with the option
+exercise, and agreed to a two year sale restriction on stock obtained in
+the option exercise associated with the tax reimbursement. Salaries of
+both were increased by a cost of living adjustment and performance
+bonuses were paid based on the Company's earnings, both as provided in the
+executive's employment agreements. Both executives also received a share
+of Company matching contributions to the Company 401(k) plan.
+During 2000 the Company reviewed the employment contracts of the CEO
+and the executive officers of the Company, and determined that no changes
+were required. The Compensation Committee believes the Company has made
+substantial progress over the past several years through varying industry
+and economic conditions, and that the progress is attributable in large
+measure to the efforts of the CEO and the executive officers.
+Compensation Committee
+Vincent F. D'Annunzio, Chair
+Donald B. Nestor
+Jeffrey C. Swoveland
+Aggregated Option Exercises in Last Fiscal Year
+and Fiscal Year-End Option Values
+The following table provides certain information with respect to
+options exercised during 2000 by the persons named in the summary
+compensation under the Company's stock option plans. The table also
+represents information as to the number of options outstanding as of
+December 31, 2000 with respect to options granted pursuant to the
+Company's Employee Stock Option Plans. No options were granted in the
+last fiscal year.
+Number Value of Unexercised
+of Shares Value Number of Unexercised Options In-The-Money Options
+Exercised Realized ($) at Year-end at Year-End(1)($)
+Exercisable Unexercisable Exercisable Unexercisable
+James N. Ryan 83,203 442,623 178,000 - 535,964 -
+Steven R. Williams 80,689 429,249 178,000 - 535,964 -
+Dale G. Rettinger 80,689 429,249 178,000 - 535,964 -
+(1) On December 31, 2000, the closing sales price of the Common Stock was
+$6.563 per
+share.
+Employment and Other Agreements and Arrangements
+The Company has entered into employment agreements with each
+of the Named Executives, each of which has a term ending
+December 31, 2003. Pursuant to the respective terms of the
+employment agreements, each of the Named Executives is entitled
+to receive the basic annual salary set forth therein that is
+subject to increase, but not decrease (unless dire economic
+circumstances as declared by the Board of Directors requires
+a reduction for all senior executive employees of the
+Company), as the Board of Directors may determine to reflect
+changes in the cost of living, the financial success of the
+Company and the performance of such Named Executive. For
+2000, the basic salary has been set by the Board of
+Directors under the respective agreements as $182,715 for Mr.
+Ryan, $144,315 for Mr. Williams and $144,315 for Mr. Rettinger.
+Each Named Executive is also entitled to be paid an annual
+bonus equal to 2.5% of the Company's annual earnings in excess
+of $300,000 without deduction for Depreciation, depletion, and
+amortization and income taxes. The Compensation Committee also
+awarded a bonus of $141,000 to each named executive officer to
+defray the income tax effect of the exercise of stock options.
+In exchange, the exercised shares cannot be sold in the open
+market for a period of two years from date of exercise. The
+bonus is tax deductible for the company. The Company has been
+required to establish a deferred compensation plan, described
+below, for the Named Executives and to fund such plan with an
+annual contribution of $30,000 commencing in 1994, subject to
+adjustment for inflation. Commencing January 1, 2004, each
+of the three executive officers will vest and be entitled to
+receive an annual payment equal to $60,000 for Mr. Ryan and
+$40,000 for Mr. Rettinger and Mr. Williams per year upon
+retirement from the company and continuing for 10 years payable
+on July 1st of each year.
+In the event of a change in control of the Company, each Named
+Executive has the right within six months after such change of
+control to elect to terminate his employment under his employment
+agreement and receive severance compensation equal to the sum of
+his basic salary plus an amount equal to the average bonus paid
+to him over the preceding three years as provided in the agreement
+multiplied by the remaining years of the employment agreement,
+provided, however, that the minimum severance compensation must not be
+less than the amount equal to three years of basic compensation
+plus an amount equal to three times the average bonus paid to such person
+over the preceding three-year period.
+Each employment agreement also provides that if the Company
+obtains the right to sell working interests in any drilling program,
+the Named Executive is entitled to participate as an investor
+in such oil and gas drilling project subject to the prior approval
+by the Board of Directors of the terms of any such participation.
+Each employment agreement contains a standard non-disclosure
+covenant. Each employment agreement also provides that the Named
+Executive is prohibited during the term of his employment and for
+a period of one year following his termination from engaging in any
+business that is competitive with the Company's oil and gas
+drilling business, unless his termination results from a change of
+control of the Company. During any period for which the
+non-competition provision prohibits the officer from pursuing
+activities that would compete with the Company's business as
+provided in the agreement following termination of the agreement,
+the Company is required to pay the officer his basic salary and
+bonus as provided in the agreement.
+In the event of termination under the terms of the agreement,
+the Company will be required to loan to the officer funds equal
+to the exercise price of all options held by the Named Executive
+under the Company's stock option plans, which loan, if made, must
+be repaid within nine months and will bear interest at the prime
+rate then in effect.
+Each employment agreement may be terminated for cause for
+willful misfeasance or malfeasance, disregard of the Named
+Executive's duties or negligence related to the performance
+of his duties, if so determined by a court of competent
+jurisdiction. Also, the Company may terminate the employment
+agreement without cause, in which case the Company must either (i)
+reassign the Named Executive to a comparable executive position
+or designate him as a consultant for the remaining term of his
+agreement (ii) pay him liquidated damages in an amount equal
+to his then basic salary for the remaining term of the employment
+agreement, with a minimum payment equal to twelve months
+of basic salary.
+The Company has entered into stock redemption agreements with
+each of the Named Executives. The agreements require the Company
+to maintain life insurance policies on each of them in the amount
+of $1 million. At the election of the Named Executive's estate
+or heirs made within one year of such person's death, the Company
+must utilize the proceeds from such insurance policies to purchase
+from his estate or heirs all or a portion of his shares of the
+Company's Common Stock owned by him, including shares subject
+to outstanding stock options or warrants owned by such Named
+Executive at the time of his death, up to an aggregate sale price
+of $1 million. The purchase price for such shares of Common Stock
+will be based upon the average closing asked price for the
+Company's Common Stock as quoted by Nasdaq during a specified period.
+The Company is not required to purchase any shares in excess of
+the amount provided by such insurance policies. If the Named
+Executive's estate or heirs elect not to sell any or all of the shares
+to the Company, the estate or heirs will be precluded from selling
+the shares to anyone for a period of two years after the
+date of the person's death, except that the shares may be transferred
+into the names of the decedent's heirs and beneficiaries and the
+stock sold pursuant to Rule 144 under the Securities Act.
+If the Named Executive terminates his employment with the Company or
+disposes of all or substantially all of his shares of Common Stock
+in the Company, the Named Executive has the right to purchase his
+respective insurance policy for a price equal to the cash surrender
+value of the policy as of the date of such event. If the Named
+Executive fails to purchase the policy within ninety days after
+such event, the Company may cancel all policies covering the life
+of the Name Executive. The stock redemption agreements will
+terminate upon bankruptcy or cessation of business by the Company.
+Mr. Ryan, Mr. Williams and Mr. Rettinger are also the
+participants in the Company's deferred bonus compensation plan. Under
+this plan, the Company's Board of Directors must declare a year-end
+bonus for each participant, the receipt of which is automatically
+deferred pursuant to the plan, unless prior to the beginning of a
+particular year, the participant enters into a voluntary bonus
+compensation agreement under which he irrevocably elects to receive
+his year-end bonus as cash compensation, payable as soon as
+practicable following the end of the year. The amount of the
+participant's year-end bonus is a minimum of $30,000 or such greater
+amount as may be declared by the Board of Directors. The
+participant also has the right to elect to defer receipt of his
+other bonus compensation under this plan. Any bonus compensation
+deferred under this plan will not be paid until such participant's
+retirement, or upon termination of employment, disability or death
+or upon hardship, as provided in the plan. A trustee selected by the
+Board of Directors maintains accounts for each participant under
+the plan. The Company has reserved the right to terminate the
+deferred bonus compensation plan, in whole or in part, at any time
+and without liability for such termination or discontinuance.
+Stock Option Plans
+Under the Company's incentive stock option plans, options
+to purchase shares of Common Stock of the Company may be granted
+to certain officers and key employees of the Company, which options
+are intended to qualify as incentive stock options under the
+provisions of the Internal Revenue Code. Under the plan adopted
+in 1999, the Company granted options during 2000 for an aggregate
+of 180,000 shares of Common Stock at an exercise price of 100% of
+the fair market value per share of the Company's Common Stock on
+the date of grant. None of the 180,000 options were granted to
+the three executive officers of the Company. The options may be
+exercised six months after the date of grant. Options will expire
+ten years from the date of grant if not exercised. A dissolution
+or liquidation of the Company or a merger or consolidation in which
+the Company is not the surviving corporation will cause each
+outstanding option to terminate, provided that each optionee, in
+such event, will have the right immediately prior to said
+dissolution or liquidation or merger or consolidation to exercise
+his option in whole or in part without regard to any
+installment vesting provisions with respect to such options.
+Key-Man Life Insurance
+The Company maintains key-man life insurance policies on the
+lives of Messrs. Ryan, Williams and Rettinger in the amounts of
+$5.0 million, $1.0 million, and $1.0 million, respectively. The
+Company is the beneficiary of each policy.
+Employee 401k and Profit Sharing Plan
+In 1987, the Company established a retirement plan qualified
+under Section 401(k) of the Internal Revenue Code. The plan is
+funded by employee contributions and a company matching
+contribution. Administrative costs of the plan are borne by
+the Company. The employees choose from eight investment programs
+and, therefore, the amount of an individual's plan assets depends
+on the amount of their contributions and the performance by their
+chosen investments.
+In 1992, the Company began a Profit Sharing Retirement plan
+to supplement the 401(k) Plan. Contributions are dependent on
+corporate profitability and are at the discretion of the Board of
+Directors of the Company. The Company filed and qualified the plan
+with the Internal Revenue Service.
+Stockholder Performance Graph
+The following graph illustrates the performance of Petroleum
+Development Corporation common stock over a five year period
+compared to the performance of the S&P 500 Index and a peer group
+index. The peer group index consists of 194 Crude Petroleum and
+Natural Gas Companies. The table includes the cumulative
+shareholder return assuming the reinvestment of dividends.
+Petroleum Development Corporation
+Stock Performance Graph
+500.0
+400.0
+300.0
+200.0
+100.0
+0.0
+12/31/95 12/31/96 12/31/97
+12/31/98
+12/31/9912/31/00
+1995 1996 1997
+1998
+19992000
+Petroleum
+Development
+Corporation 100.0 257.69 323.08 188.46
+234.62 403.88
+Industry Index 100.0 132.97 134.78
+107.96
+131.87167.53
+Broad Market
+Index 100.0 122.96 163.98 210.84
+255.22 231.98
+SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
+MANAGEMENT
+The following table sets forth certain information regarding ownership
+of the Company's Common Stock as of March 31, 2001 by (a) each person
+known by the Company to own beneficially more than 5% of the
+outstanding shares of Common Stock; (b) each director of the Company;
+(c) each Named Executive; (d) all directors and executive officers as
+a group.
+Beneficial Ownership (1)
+Name and Address Number Percent
+Fidelity Management. . . . . . . . . . . . . . . . . . . . . . 1,623,800 10.0
+82 Devonshire Street
+Boston, MA 02109
+James N. Ryan(2)(3). . . . . . . . . . . . . . . . . . . . . . . 845,568 5.1
+103 East Main Street
+Bridgeport, WV 26330
+Dimensional Fund Advisors Inc. . . . . . . . . . . . . . . . . 1,099,100 6.8
+1299 Ocean Avenue
+Santa Monica, CA 90401
+Steven R. Williams(3). . . . . . . . . . . . . . . . . . . . . . 559,326 3.4
+103 East Main Street
+Bridgeport, WV 26330
+Dale G. Rettinger(3) . . . . . . . . . . . . . . . . . . . . . . 472,016 2.9
+103 East Main Street
+Bridgeport, WV 26330
+Roger J. Morgan. . . . . . . . . . . . . . . . . . . . . . . . . .69,140 *
+Vincent F. D'Annunzio. . . . . . . . . . . . . . . . . . . . . . .37,899 *
+Jeffrey C. Swoveland . . . . . . . . . . . . . . . . . . . . . . .16,728 *
+Donald B. Nestor . . . . . . . . . . . . . . . . . . . . . . . . . 1,000 *
+All directors and executive officers as a
+group (7 persons)(4). . . . . . . . . . . . . . . . . . . . . 2,001,677 11.9
+* Less than 1%
+(1) Includes shares over which the person currently holds or shares
+voting or investment power. Unless otherwise indicated in the
+footnotes to this table, the persons named in this table have
+sole voting and investment power with respect to the shares
+beneficially owned.
+(2) Includes 401,389 shares owned by Mr. Ryan's wife. The balance
+of the shares are owned solely by Mr. Ryan.
+(3) Includes options to purchase 178,000 shares that such person can
+currently exercise within 60 days.
+(4) Includes options to purchase 534,000 shares that such persons
+can currently exercise within 60 days.
+Section 16(a) Beneficial Ownership Reporting Compliance
+Section 16(a) of the Exchange Act requires the Company's officers and
+directors, and persons who own more than 10% of a Company's equity
+securities, to file reports of ownership and changes in ownership
+with the Securities and Exchange Commission. Officers, directors and
+holders of more than 10% of the Common Stock are required by regulations
+promulgated by the Commission pursuant to the Exchange Act to furnish the
+Company with copies of all Section 16(a) forms they file. The Company
+assists officers and directors, and will assist beneficial owners, if any,
+of more than 10% of the Common Stock, in complying with the reporting
+requirements of Section 16(a) of the Exchange Act.
+Based solely on its review of the copies of such forms received by it,
+the Company believes that since January 1, 2000, all Section 16(a) filing
+requirements applicable to its directors, officers and greater than
+10% beneficial owners were met.
+Audit Committee Report
+Audit Committee Report to Shareholders
+The Audit Committee of the Board is responsible for providing independent,
+objective oversight of the Company's accounting functions and internal
+controls. The Audit Committee is composed of three directors, each of
+whom is independent as defined by the National Association of Securities
+Dealers' listing standards. The Audit Committee operates under a written
+charter approved by the Board of Directors. A copy of the charter is
+attached to this Proxy Statement as Exhibit A.
+Management is responsible for the Company's internal controls and
+financial reporting process. The independent accountants are responsible
+for performing an independent audit of the Company's consolidated
+financial statements in accordance with generally accepted auditing
+standards and to issue a report thereon. The Audit Committee's
+responsibility is to monitor and oversee these processes.
+In connection with these responsibilities, the Audit Committee met with
+management to review and discuss the December 31, 2000 financial
+statements. The Audit Committee also discussed with the independent
+accountants the matters required by Statement on Auditing Standards No.
+61, Communication with Audit Committees. The Audit Committee also
+received written disclosures from the independent accountants
+required by Independence Standards Board Standard No. 1, Independence
+Discussions with Audit Committees, and the Audit Committee discussed with
+the independent accountants that firm's independence.
+Based upon the Audit Committee's discussions with management and the
+independent accountants, and the Audit Committee's review of the
+representations of management and the independent accountants, the Audit
+Committee recommended that the Board of Directors include the audited
+consolidated financial statements in the Company's Annual Report on Form
+10-K for the year ended December 31, 2000, to be filed with
+the Securities and Exchange Commission.
+Respectfully,
+THE AUDIT COMMITTEE
+Vincent F. D'Annunzio, Chair
+Donald B. Nestor
+Jeffrey C. Swoveland
+Audit Fees
+The aggregate fees billed for professional services rendered by KPMG LLP
+for the audit of our annual financial statements for the year ended
+December 31, 2000, and reviews of the condensed financial statements
+included in our quarterly reports on Form 10-Q for the year ended December
+31, 2000, were $104,970.
+Additionally, KPMG LLP performs annual audits on the financial statements
+of 46 limited partnerships for which the Company acts as managing general
+partner. The aggregate billing for those professional services
+was $189,200 for the year ended December 31, 2000.
+PROPOSAL #2
+RATIFICATION OF SELECTION OF INDEPENDENT ACCOUNTANTS
+At the Meeting, the Stockholders of the Company will be asked to ratify
+the Board of Directors' selection of KPMG LLP as the Company's certified
+public accountants for the fiscal year ended December 31, 2001. KPMG LLP
+conducted the audit for the fiscal year ended December 31, 2000. A
+representative of KPMG LLP will be present at the Meeting, will have an
+opportunity to make statements if he so desires, and will be available to
+respond to appropriate questions.
+Vote Required
+A majority of the votes cast at the Annual Meeting, in person or by
+proxy, is required for the ratification of the Board of Directors'
+selection of independent accountants. Abstentions and broker non-votes
+will not be considered as votes cast with respect to the ratification of
+the Board of Directors' selection of independent accountants.
+THE BOARD OF DIRECTORS RECOMMEND A VOTE "FOR" PROPOSAL #2
+OTHER BUSINESS
+As of the date of this Proxy Statement, management of the Company is
+not aware of any matters to be brought before the Annual Meeting other
+than the matters set forth in this Proxy Statement. However, if
+other matters properly come before the Meeting, it is the intention of the
+proxy holders named in the enclosed form of proxy to vote in accordance
+with their discretion on such matters pursuant to such proxy.
+General
+The enclosed Proxy is solicited by the Company's Board of Directors.
+The Company expects to solicit proxies primarily by mail, but solicitation
+may also be made personally, by telephone or by telegraph, by
+regularly employed officers and employees of the Company who will receive
+no extra compensation for doing so.
+The Company will request brokers and other custodians, nominees and
+fiduciaries to forward proxy soliciting material to, and obtain
+instructions from, the beneficial owners of shares held by record by such
+persons and will reimburse reasonable out-of-pocket expenses. The Company
+will bear all costs of proxy solicitation.
+Stockholder Proposals for 2002 Annual Meeting
+Stockholder proposals must be received by the Company at its principal
+executive office on or prior to March 1, 2002 in order to be included in
+the Company's proxy statement for the 2002 annual meeting of stockholders.
+By Order Of The Board of Directors
+James N. Ryan
+Chairman
+Dated: May 15, 2001
+THE COMPANY WILL PROVIDE WITHOUT CHARGE TO ANY PERSON WHO IS A RECORD OR
+BENEFICIAL HOLDER OF COMMON STOCK OF THE COMPANY, ON WRITTEN REQUEST OF
+SUCH PERSON, A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE
+FISCAL YEAR ENDED DECEMBER 31, 2000 INCLUDING FINANCIAL STATEMENTS AND
+SCHEDULES THERETO, WHICH THE COMPANY FILED WITH THE SECURITIES AND
+EXCHANGE COMMISSION. COPIES MAY BE OBTAINED BY WRITING TO CORPORATE
+COMMUNICATIONS DEPARTMENT, PETROLEUM DEVELOPMENT CORPORATION, P.O. BOX 26,
+BRIDGEPORT, WEST VIRGINIA 26330.
+Exhibit A
+PETROLEUM DEVELOPMENT CORPORATION
+Charter of the Audit Committee of the Board of Directors
+I. Audit Committee Purpose
+The Audit Committee is appointed by the Board of Directors to
+assist the Board in fulfilling its oversight responsibilities.
+The Audit Committee's primary duties and responsibilities are to:
+- Monitor the integrity of the Company's financial reporting
+process and systems of internal controls regarding finance,
+accounting, and legal compliance.
+- Monitor the independence and performance of the Company's
+independent auditors.
+- Provide an avenue of communication among the independent
+auditors, management and the Board of Directors.
+The Audit Committee has the authority to conduct any investigation
+appropriate to fulfilling its responsibilities, and it has direct
+access to the independent auditors as well as anyone in the
+organization. The Audit Committee has the ability to retain, at the
+Company's expense, special legal, accounting, or other consultants
+or experts it deems necessary in the performance of its duties.
+II. Audit Committee Composition and Meetings
+Audit Committee members shall meet the requirements of the NASDAQ
+Exchange. The Audit Committee shall be comprised of three or more
+directors as determined by the Board, each of whom shall be
+independent nonexecutive directors, free from any relationship that
+would interfere with the exercise of his or her independent
+judgment. All members of the Committee shall have a basic
+understanding of finance and accounting and be able to read and
+understand fundamental financial statements, and at least one member
+of the Committee shall have accounting or related financial
+management expertise.
+Audit Committee members shall be appointed by the Board on
+recommendation of the Board of Directors. If an audit committee
+Chair is not designated or present, the members of the Committee
+may designate a Chair by majority vote of the Committee membership.
+The Committee shall meet at least two times annually, or more
+frequently as circumstances dictate. The Audit Committee Chair shall
+prepare and/or approve an agenda in advance of each meeting. The
+Committee should meet privately in executive session at least
+annually with management, the independent auditors, and as a
+committee to discuss any matters that the Committee or each of these
+groups believe should be discussed.
+III. Audit Committee Responsibilities and Duties
+Review Procedures
+1. Review and reassess the adequacy of this Charter at least
+annually. Submit the charter to the Board of Directors for
+approval and have the document published at least every three
+years in accordance with SEC regulations.
+2. Review the Company's annual audited financial statements.
+Review should include discussion with management and
+independent auditors of significant issues regarding
+accounting principles, practices, and judgments.
+3. In consultation with the management and the independent
+auditors, consider the integrity of the Company's financial
+reporting processes and controls. Discuss significant
+financial risk exposures and the steps management has taken to
+monitor, control, and report such exposures. Review
+significant findings prepared by the independent auditors
+together with management's responses.
+4. Review with financial management the company's quarterly
+financial results. Discuss any significant changes to the
+Company's accounting principles and any items required to be
+communicated by the independent auditors in accordance with
+SAS 61 (see item 9). The Chair of the Committee may represent
+the entire Audit Committee for purposes of this review.
+Independent Auditors
+5. The independent auditors are ultimately accountable to the
+Audit Committee and the Board of Directors. The Audit
+Committee shall review the independence and performance of the
+auditors and annually recommend to the Board of Directors the
+appointment of the independent auditors or approve any
+discharge of auditors when circumstances warrant.
+6. Approve the fees and other significant compensation to be paid
+to the independent auditors.
+7. On an annual basis, the Committee should review and discuss
+with the independent auditors all significant relationships
+they have with the Company that could impair the auditors'
+independence.
+8. Review the independent auditors audit plan discuss scope,
+staffing, reliance upon management, and general audit
+approach.
+9. Discuss the results of the audit with the independent
+auditors. Discuss certain matters required to be communicated
+to audit committees in accordance with AICPA SAS 61.
+10. Consider the independent auditors' judgments about the quality
+and appropriateness of the Company's accounting principles as
+applied in its financial reporting.
+Legal Compliance
+11. On at least an annual basis, review with the Company's
+counsel, any legal matters that could have a significant
+impact on the organization's financial statements, the
+Company's compliance with applicable laws and regulations, and
+inquiries received from regulators or governmental agencies.
+Other Audit Committee Responsibilities
+12. Annually prepare a report to shareholders as required by the
+Securities and Exchange Commission.
+13. Perform any other activities consistent with this Charter, the
+Company's by-laws, and governing law, as the Committee or the
+Board deems necessary or appropriate.
+14. Maintain minutes of meetings and periodically report to the
+Board of Directors on significant results of the foregoing
+activities.
+ADOPTED MARCH 21, 2000

raw/proxies/0000077877/0000077877-07-000079/proxy_rpt.txt

@@ -0,0 +1,105 @@
+Transactions with Related Persons 
+The
+Board
+has adopted a policy for the review, approval and ratification of transactions
+that involve related parties and potential conflicts of interest. 
+The
+related party transaction policy applies to each director and executive officer
+of the Company, any nominee for election as a director, any security holder
+who
+is known to own more than five percent of the Company's voting securities,
+any
+immediate family member of any of the foregoing persons and any corporation,
+firm or association in which one or more of the Company's directors are
+directors or officers, or have a substantial financial interest. 
+Under
+the
+related party transaction policy a related person transaction is a transaction
+or arrangement involving a related person in which the Company is a participant
+or that would require disclosure in the Company's filings with the SEC as
+a
+transaction with a related person. 
+The
+related persons must disclose to the Audit Committee any potential related
+person transactions and must disclose all material facts with respect to
+such
+interest. All related person transactions will be reviewed by the
+Audit Committee. In determining whether to approve or ratify a
+transaction, the Audit Committee will consider the relevant facts and
+circumstances of the transaction which may include factors such as the
+relationship of the related person with the Company, the materiality or
+significance of the transaction to the Company and the business purpose and
+reasonableness of the transaction, whether the transaction is comparable
+to a
+transaction that could be available to the Company on an arms-length basis,
+and
+the impact of the transaction on the Company's business and
+operations. 
+19 
+TOC 
+During
+the year ended December 31, 2006, there was no transaction or series of
+transactions, or any currently proposed transaction, in which the amount
+involved exceeds $120,000 and in which any director, executive officer, holder
+of more than 5% of the Company's common stock or any member of the immediate
+family of any of the foregoing persons had or will have a direct or indirect
+material interest. 
+Indemnification
+of Directors and
+Officers 
+The
+Company's By-Laws provide that the Company shall indemnify any director,
+officer, employee, or other agent of the Company who is or was a party, or
+is
+threatened to be made a party, to any proceeding (other than an action by
+or in
+the right of the Company to procure a judgment in its favor) by reason of
+the
+fact that such person is or was an agent of the Company, against expenses,
+judgments, fines, settlements, and other amounts actually and reasonably
+incurred in connection with such proceeding, if that person acted in good
+faith
+and in a manner that person reasonably believed to be in the best interest
+of
+the Company, and in the case of a criminal proceeding, had no reasonable
+cause
+to believe the conduct of that person was unlawful. 
+The
+Company has entered into separate indemnification agreements with each of
+its
+directors and officers whereby the Company has agreed to indemnify the director
+or officer against all expenses, including attorneys' fees, and other amounts
+reasonably incurred by the officer or director in connection with any
+threatened, pending or completed civil, criminal, administrative or
+investigative action or proceeding to which such person is party by reason
+of
+the fact that he is or was a director or officer, as the case may be, of
+the
+Company, if the person acted in good faith and in a manner reasonably believed
+to be in or not opposed to the best interests of the Company, and, with respect
+to any criminal action or proceeding, the person had no reasonable cause
+to
+believe such conduct to be unlawful. The agreements provide for the
+advancement of expenses and that the Company has the right to purchase and
+maintain insurance on behalf of the director or officer against any liability
+or
+liabilities asserted against him, whether or not the Company would have the
+power to indemnify the person against such liability under any provision
+of the
+agreement. The Company has agreed to indemnify such person against
+expenses actually and reasonably incurred in connection with any action in
+which
+the person has been successful on the merits or
+otherwise. Indemnification must also be provided by the Company
+(unless ordered otherwise by a court) only as authorized in the specific
+case
+upon a determination that the indemnification of the person is appropriate
+because he has met the applicable standard of conduct described in the agreement
+made by (i) the Board of Directors, by a majority vote of a quorum consisting
+of
+directors who are not parties to such action or proceeding, (ii) independent
+legal counsel in a written opinion or (iii) the shareholders of the
+Company. 
+Additional
+Information 
+The

raw/proxies/0000077877/0000950123-10-042057/proxy_rpt.txt

@@ -0,0 +1,130 @@
+The related party transaction policy applies to each Director
+and executive officer of the Company, any nominee for election
+as a Director, any security holder who is known to own more than
+five percent of the Company’s voting securities, any
+immediate family member of any of the foregoing persons and any
+corporation, firm or association in which one or more of the
+Company’s Directors are directors or officers, or have a
+substantial financial interest.
+Under the related party transaction policy, a related person
+transaction is a transaction or arrangement involving a related
+person in which the Company is a participant or that would
+require disclosure in the Company’s filings with the SEC as
+a transaction with a related person.
+The related persons must disclose to the Audit Committee any
+potential related person transactions and must disclose all
+material facts with respect to such interest. All related person
+transactions will be reviewed by the Audit Committee. In
+determining whether to approve or ratify a transaction, the
+Audit Committee will consider the relevant facts and
+circumstances of the transaction which may include factors such
+as the relationship of the related person with the Company, the
+materiality or significance of
+26
+Table of Contents 
+the transaction to the Company and the business purpose and
+reasonableness of the transaction, whether the transaction is
+comparable to a transaction that could be available to the
+Company on an arms-length basis, and the impact of the
+transaction on the Company’s business and operations.
+From January 1, 2009 to the present, there was no
+transaction or series of transactions, or any currently proposed
+transaction, in which the amount involved exceeds $120,000 and
+in which any director, executive officer, holder of more than
+five percent of the Company’s common stock or any member of
+the immediate family of any of the foregoing persons had or will
+have a direct or indirect material interest.
+Indemnification
+of Directors and Officers 
+The Company’s By-Laws provide that the Company shall
+indemnify any Director, officer, employee, or other agent of the
+Company who is or was a party, or is threatened to be made a
+party, to any proceeding (other than an action by or in the
+right of the Company to procure a judgment in its favor) by
+reason of the fact that such person is or was an agent of the
+Company, against expenses, judgments, fines, settlements, and
+other amounts actually and reasonably incurred in connection
+with such proceeding, if that person acted in good faith and in
+a manner that person reasonably believed to be in the best
+interest of the Company, and in the case of a criminal
+proceeding, had no reasonable cause to believe the conduct of
+that person was unlawful.
+The Company has entered into separate indemnification agreements
+with each of its Directors whereby the Company has agreed to
+indemnify the Director against all expenses, including
+attorneys’ fees, and other amounts reasonably incurred by
+the director in connection with any threatened, pending or
+completed civil, criminal, administrative or investigative
+action or proceeding to which such person is party by reason of
+the fact that he is or was a Director, as the case may be, of
+the Company, if the person acted in good faith and in a manner
+reasonably believed to be in or not opposed to the best
+interests of the Company, and, with respect to any criminal
+action or proceeding, the person had no reasonable cause to
+believe such conduct to be unlawful. The agreements provide for
+the advancement of expenses and that the Company has the right
+to purchase and maintain insurance on behalf of the director
+against any liability or liabilities asserted against such
+person, whether or not the Company would have the power to
+indemnify the person against such liability under any provision
+of the agreement. The Company has agreed to indemnify such
+person against expenses actually and reasonably incurred in
+connection with any action in which the person has been
+successful on the merits or otherwise. Indemnification must also
+be provided by the Company (unless ordered otherwise by a court)
+only as authorized in the specific case upon a determination
+that the indemnification of the person is appropriate because he
+or she has met the applicable standard of conduct described in
+the agreement made by (1) the Board of Directors, by a
+majority vote of a quorum consisting of Directors who are not
+parties to such action or proceeding, (2) independent legal
+counsel in a written opinion or (3) the shareholders of the
+Company.
+Additional
+Information 
+The “Corporate Governance” section of the
+Company’s internet site contains additional information,
+including PDC’s Certificate of Incorporation and By-Laws,
+written charters for each Board committee, and Board policy
+statements.
+The Company files annual, quarterly and current reports, proxy
+statements and other information with the SEC. Copies of the
+Company’s filings with the SEC are available to the public
+at the SEC’s website at
+http://www.sec.gov .
+These documents may also be viewed at the SEC’s public
+reference room located at 100 F Street, N.E.,
+Washington, D.C. 20549. Please call the SEC at
+1-800-SEC-0330 
+for further information on the public reference room.
+27
+Table of Contents 
+EXECUTIVE
+OFFICERS 
+The current executive officers of the Company, their principal
+occupations for the past five years and additional information
+is set forth below.
+Name 
+Age 
+Position(s) 
+Richard W. McCullough
+58
+Chairman, Chief Executive Officer and Director
+Gysle R. Shellum
+58
+Chief Financial Officer
+Barton R. Brookman, Jr. 
+47
+Senior Vice President Exploration and Production
+Daniel W. Amidon
+49
+General Counsel and Secretary
+Lance
+Lauck (1) 
+47
+Senior Vice President Business Development
+(1) 
+Mr. Lauck became Senior Vice President Business Development
+on August 31, 2009. 
+RICHARD W. MCCULLOUGH was appointed Chief Executive
+Officer of the Company in June 2008 and Chairman of PDC’s

raw/proxies/0000077877/0000950123-11-037440/proxy_rpt.txt

@@ -0,0 +1,104 @@
+Under the related party transaction policy, a related person
+transaction is a transaction or arrangement involving a related
+person in which the Company is a participant or that would
+require disclosure in the Company’s filings with the SEC as
+a transaction with a related person. The related person must
+disclose to the Audit Committee
+27
+Table of Contents 
+any potential related person transactions and must disclose all
+material facts with respect to such interest. All related person
+transactions will be reviewed by the Audit Committee. In
+determining whether to approve or ratify a transaction, the
+Audit Committee will consider the relevant facts and
+circumstances of the transaction, which may include factors such
+as the relationship of the related person with the Company, the
+materiality or significance of the transaction to the Company
+and the business purpose and reasonableness of the transaction,
+whether the transaction is comparable to a transaction that
+could be available to the Company on an arms-length basis, and
+the impact of the transaction on the Company’s business and
+operations.
+ADDITIONAL
+INFORMATION 
+The Company files annual, quarterly and current reports, proxy
+statements and other information with the SEC. Copies of the
+Company’s filings with the SEC are available to the public
+at the SEC’s website at
+http://www.sec.gov .
+These documents may also be viewed at the SEC’s public
+reference room located at 100 F Street, N.E.,
+Washington, D.C. 20549. Please call the SEC at
+1-800-SEC-0330 
+for further information on the public reference room.
+EXECUTIVE
+OFFICERS 
+The current Named Executive Officers of the Company, their
+principal occupations for the past five years and additional
+information is set forth below.
+Name 
+Age 
+Position(s) 
+Richard W. McCullough
+59
+Chairman, Chief Executive Officer (“CEO”) and Director
+Gysle R. Shellum
+59
+Chief Financial Officer (“CFO”)
+Barton R. Brookman
+48
+Senior Vice President Exploration and Production
+Daniel W. Amidon
+50
+General Counsel and Secretary
+Lance A. Lauck
+48
+Senior Vice President Business Development
+Richard W. McCullough. See
+“Proposal No. 1 – Election of
+Directors – Continuing Directors with Term Expiring in
+2013 Class III” for Mr. McCullough’s
+biography.
+Gysle R. Shellum , 59, was appointed CFO in 2008. Prior to
+joining the Company, Mr. Shellum served as Vice President,
+Finance and Special Projects of Crosstex Energy, L.P., Dallas,
+Texas. Mr. Shellum served in this capacity from September
+2004 through September 2008. From March 2001 until September
+2004, Mr. Shellum served as a consultant to Value Capital,
+a private consulting firm in Dallas, Texas, where he worked on
+various projects, including corporate finance and Sarbanes-Oxley
+Act compliance. Crosstex Energy, L.P. is a publicly traded
+Delaware limited partnership whose securities are listed on the
+NASDAQ Global Select Market and is an independent midstream
+energy company engaged in the gathering, transmission, treating,
+processing and marketing of natural gas and natural gas liquids.
+Barton R. Brookman, Jr. , 48, was appointed Senior Vice
+President Exploration and Production in March 2008.
+Mr. Brookman previously served as Vice President
+Exploration and Production upon joining PDC in July 2005. Prior
+to joining PDC, Mr. Brookman worked for Patina Oil and Gas
+and its predecessor Snyder Oil for 17 years in a series of
+positions of increasing responsibility, ending his service as
+Vice President of Operations of Patina.
+Daniel W. Amidon , 50, was appointed General Counsel and
+Secretary in July 2007. Prior to joining PDC, Mr. Amidon
+was employed by Wheeling-Pittsburgh Steel Corporation beginning
+in July 2004, where he served in several positions including
+General Counsel and Secretary. Prior to his employment with
+Wheeling-Pittsburgh Steel, Mr. Amidon was employed by
+J&L Specialty Steel Inc. from 1992 through July 2004 in
+positions of increasing responsibility, including General
+Counsel and Secretary. Mr. Amidon practiced with the
+Pittsburgh law firm of Buchanan Ingersoll PC from 1986 through
+1992.
+Lance A. Lauck , 48, was appointed Senior Vice President
+Business Development in August 2009. Previously Mr. Lauck
+served as Vice President — Acquisitions and Business
+Development for Quantum Resources Management LLC from
+2006 — 2009. From 1988 until 2006, he held various
+management positions at Anadarko Petroleum Corporation in the
+areas of acquisitions and divestitures, corporate mergers and
+business development.
+28
+Table of Contents 
+COMPENSATION

raw/proxies/0000077877/0000950152-09-004472/proxy_rpt.txt

@@ -0,0 +1,236 @@
+The related party transaction policy applies to each director
+and executive officer of the Company, any nominee for election
+as a Director, any security holder who is known to own more than
+five percent of the Company’s voting securities, any
+immediate family member of any of the foregoing persons and any
+corporation, firm or association in which one or more of the
+Company’s directors are directors or officers, or have a
+substantial financial interest.
+Under the related party transaction policy, a related person
+transaction is a transaction or arrangement involving a related
+person in which the Company is a participant or that would
+require disclosure in the Company’s filings with the SEC as
+a transaction with a related person.
+17
+Table of Contents 
+The related persons must disclose to the Audit Committee any
+potential related person transactions and must disclose all
+material facts with respect to such interest. All related person
+transactions will be reviewed by the Audit Committee. In
+determining whether to approve or ratify a transaction, the
+Audit Committee will consider the relevant facts and
+circumstances of the transaction which may include factors such
+as the relationship of the related person with the Company, the
+materiality or significance of the transaction to the Company
+and the business purpose and reasonableness of the transaction,
+whether the transaction is comparable to a transaction that
+could be available to the Company on an arms-length basis, and
+the impact of the transaction on the Company’s business and
+operations.
+Since January 1, 2008 to the present, there was no
+transaction or series of transactions, or any currently proposed
+transaction, in which the amount involved exceeds $120,000 and
+in which any director, executive officer, holder of more than
+five percent of the Company’s common stock or any member of
+the immediate family of any of the foregoing persons had or will
+have a direct or indirect material interest.
+Indemnification
+of Directors and Officers 
+The Company’s By-Laws provide that the Company shall
+indemnify any director, officer, employee, or other agent of the
+Company who is or was a party, or is threatened to be made a
+party, to any proceeding (other than an action by or in the
+right of the Company to procure a judgment in its favor) by
+reason of the fact that such person is or was an agent of the
+Company, against expenses, judgments, fines, settlements, and
+other amounts actually and reasonably incurred in connection
+with such proceeding, if that person acted in good faith and in
+a manner that person reasonably believed to be in the best
+interest of the Company, and in the case of a criminal
+proceeding, had no reasonable cause to believe the conduct of
+that person was unlawful.
+The Company has entered into separate indemnification agreements
+with each of its Directors whereby the Company has agreed to
+indemnify the Director against all expenses, including
+attorneys’ fees, and other amounts reasonably incurred by
+the director in connection with any threatened, pending or
+completed civil, criminal, administrative or investigative
+action or proceeding to which such person is party by reason of
+the fact that he is or was a Director, as the case may be, of
+the Company, if the person acted in good faith and in a manner
+reasonably believed to be in or not opposed to the best
+interests of the Company, and, with respect to any criminal
+action or proceeding, the person had no reasonable cause to
+believe such conduct to be unlawful. The agreements provide for
+the advancement of expenses and that the Company has the right
+to purchase and maintain insurance on behalf of the director
+against any liability or liabilities asserted against such
+person, whether or not the Company would have the power to
+indemnify the person against such liability under any provision
+of the agreement. The Company has agreed to indemnify such
+person against expenses actually and reasonably incurred in
+connection with any action in which the person has been
+successful on the merits or otherwise. Indemnification must also
+be provided by the Company (unless ordered otherwise by a court)
+only as authorized in the specific case upon a determination
+that the indemnification of the person is appropriate because he
+or she has met the applicable standard of conduct described in
+the agreement made by (i) the Board of Directors, by a
+majority vote of a quorum consisting of Directors who are not
+parties to such action or proceeding, (ii) independent
+legal counsel in a written opinion or (iii) the
+shareholders of the Company.
+Additional
+Information 
+The “Corporate Governance” section of the
+Company’s internet site contains additional information,
+including PDC’s Certificate of Incorporation and By-Laws;
+written charters for each Board committee; and Board policy
+statements.
+The Company files annual, quarterly and current reports, proxy
+statements and other information with the SEC. Copies of the
+Company’s filings with the SEC are available to the public
+at the SEC’s website at
+http://www.sec.gov .
+These documents may also be viewed at the SEC’s public
+reference room located at 100 F Street, N.E.,
+Washington, D.C. 20549. Please call the SEC at
+1-800-SEC-0330 
+for further information on the public reference room.
+18
+Table of Contents 
+EXECUTIVE
+OFFICERS 
+The current executive officers of the Company, their principal
+occupations for the past five years and additional information
+is set forth below.
+Directorship 
+Director 
+Term 
+Name
+Age
+Position(s)
+Since
+Expires
+Richard W. McCullough (1)
+57
+Chairman, Chief Executive Officer and Director
+2007
+2010
+Eric R. Stearns
+51
+Executive Vice President
+–
+–
+Gysle R. Shellum (2)
+57
+Chief Financial Officer
+–
+–
+Barton R. Brookman, Jr. (3)
+46
+Senior Vice President Exploration and Production
+–
+–
+Daniel W. Amidon
+48
+General Counsel and Secretary
+–
+–
+R. Scott Meyers. (4)
+34
+Chief Accounting Officer
+–
+–
+(1)
+Mr. Williams retired as CEO effective June 23, 2008.
+Mr. McCullough was selected as his successor upon
+Mr. Williams’ retirement. 
+(2)
+Mr. Shellum became Chief Financial Officer in November 2008. 
+(3)
+Mr. Brookman was appointed to the executive position of
+Senior Vice President on March 8, 2008. 
+(4)
+Mr. Meyers assumed the duties of Chief Accounting Officer
+on April 2, 2009. During 2008 and until April 2, 2009,
+Darwin L. Stump served in that position. 
+Richard W. McCullough was appointed Chief Executive
+Officer in June 2008 and Chairman in November 2008.
+Mr. McCullough also served the Company as President since
+March 2008. Mr. McCullough served as Chief Financial
+Officer from November 2006 until November 2008. Prior to joining
+PDC, Mr. McCullough served as an energy consultant from
+July 2005 to November 2006. From January 2004 to July 2005,
+Mr. McCullough served as President and Chief Executive
+Officer of Gasource, LLC, Dallas, Texas, a marketer of
+long-term, natural gas supplies. From 2001 to 2003,
+Mr. McCullough served as an investment banker with
+J.P. Morgan Securities, Atlanta, Georgia, and served in the
+public finance utility group supporting bankers nationally in
+all natural gas matters. Additionally, Mr. McCullough has
+held senior positions with Progress Energy, Deloitte and Touche,
+and the Municipal Gas Authority of Georgia. Mr. McCullough,
+a CPA, was a practicing certified public accountant for
+8 years.
+Eric R. Stearns was appointed Executive Vice President in
+March 2008. Prior to his current position, Mr. Stearns
+served as Executive Vice President Exploration and Production
+since December 2004, Executive Vice President Exploration and
+Development from November 2003 until December 2004, and Vice
+President Exploration and Development from April 1995 until
+November 2003. Mr. Stearns joined PDC as a geologist in
+1985 after working at Hywell, Incorporated and for Petroleum
+Consultants.
+Gysle R. Shellum was appointed Chief Financial Officer
+effective November 11, 2008. Prior to joining the Company,
+Mr. Shellum served as Vice President, Finance and Special
+Projects of Crosstex Energy, L.P., Dallas, Texas.
+Mr. Shellum served in this capacity from September 2004
+through September 2008. Prior thereto from March 2001 until
+September 2004, Mr. Shellum served as a consultant to Value
+Capital, a private consulting firm in Dallas, where he worked on
+various projects, including corporate finance and Sarbanes-Oxley
+Act compliance. Crosstex Energy, L.P. is a publicly traded
+Delaware limited partnership, whose securities are listed on the
+NASDAQ Global Select Market and is an independent midstream
+energy company engaged in the gathering, transmission, treating,
+processing and marketing of natural gas and natural gas liquids.
+Barton R. Brookman, Jr. was appointed Senior Vice
+President Exploration and Production in March 2008. Previously
+Mr. Brookman served as Vice President Exploration and
+Production since joining PDC in July 2005. Prior to joining PDC,
+Mr. Brookman worked for Patina Oil and Gas and its
+predecessor Snyder Oil for 17 years in a series of
+positions of increasing responsibility, ending his service as
+Vice President of Operations of Patina.
+19
+Table of Contents 
+Daniel W. Amidon was appointed General Counsel and
+Secretary in July 2007. Prior to his current position,
+Mr. Amidon was employed by Wheeling-Pittsburgh Steel
+Corporation beginning in July 2004; he served in several
+positions including General Counsel and Secretary. Prior to his
+employment with Wheeling-Pittsburgh Steel, Mr. Amidon
+worked for J&L Specialty Steel Inc. from 1992 through July
+2004 in positions of increasing responsibility, including
+General Counsel and Secretary. Mr. Amidon practiced with
+the Pittsburgh law firm of Buchanan Ingersoll PC from 1986
+through 1992.
+Darwin L. Stump was Chief Accounting Officer from
+November 2006 until April 2, 2009. Mr. Stump has been
+an officer of PDC since April 1995 and held the position of
+Chief Financial Officer and Treasurer from November 2003 until
+November 2006. Previously, Mr. Stump served as Corporate
+Controller from 1980 until November 2003. Mr. Stump, a CPA,
+was a senior accountant with Main Hurdman, Certified Public
+Accountants prior to joining PDC.
+R. Scott Meyers was appointed Chief Accounting
+Officer on April 2, 2009. Prior to joining the Company,
+Mr. Meyers served as a Senior Manager with Schneider Downs
+Co., Inc., an accounting firm based in Pittsburgh, Pennsylvania.
+Mr. Meyers served in such capacity from April 2008 to March
+2009. Prior thereto, from November 2002 to March 2008,
+Mr. Meyers was employed by PricewaterhouseCoopers LLP, the
+last two and one-half years serving as Senior Manager.
+COMPENSATION

raw/proxies/0000077877/0001140361-08-013529/proxy_rpt.txt

@@ -0,0 +1,84 @@
+Transactions with Related Persons 
+The Board
+has adopted a written policy for the review, approval and ratification of
+transactions that involve related parties and potential conflicts of
+interest. 
+The
+related party transaction policy applies to each director and executive officer
+of the Company, any nominee for election as a director, any security holder who
+is known to own more than five percent of the Company's voting securities, any
+immediate family member of any of the foregoing persons and any corporation,
+firm or association in which one or more of the Company's directors are
+directors or officers, or have a substantial financial
+interest. 
+28 
+Table of Contents 
+Under the
+related party transaction policy a related person transaction is a transaction
+or arrangement involving a related person in which the Company is a participant
+or that would require disclosure in the Company's filings with the SEC as a
+transaction with a related person. 
+The
+related persons must disclose to the Audit Committee any potential related
+person transactions and must disclose all material facts with respect to such
+interest. All related person transactions will be reviewed by the
+Audit Committee. In determining whether to approve or ratify a
+transaction, the Audit Committee will consider the relevant facts and
+circumstances of the transaction which may include factors such as the
+relationship of the related person with the Company, the materiality or
+significance of the transaction to the Company and the business purpose and
+reasonableness of the transaction, whether the transaction is comparable to a
+transaction that could be available to the Company on an arms-length basis, and
+the impact of the transaction on the Company's business and
+operations. 
+During
+the year ended December 31, 2007, there was no transaction or series of
+transactions, or any currently proposed transaction, in which the amount
+involved exceeds $120,000 and in which any director, executive officer, holder
+of more than 5% of the Company's common stock or any member of the immediate
+family of any of the foregoing persons had or will have a direct or indirect
+material interest. 
+Indemnification of Directors and
+Officers 
+The
+Company's By-Laws provide that the Company shall indemnify any director,
+officer, employee, or other agent of the Company who is or was a party, or is
+threatened to be made a party, to any proceeding (other than an action by or in
+the right of the Company to procure a judgment in its favor) by reason of the
+fact that such person is or was an agent of the Company, against expenses,
+judgments, fines, settlements, and other amounts actually and reasonably
+incurred in connection with such proceeding, if that person acted in good faith
+and in a manner that person reasonably believed to be in the best interest of
+the Company, and in the case of a criminal proceeding, had no reasonable cause
+to believe the conduct of that person was unlawful. 
+The
+Company has entered into separate indemnification agreements with each of its
+directors and officers whereby the Company has agreed to indemnify the director
+or officer against all expenses, including attorneys' fees, and other amounts
+reasonably incurred by the officer or director in connection with any
+threatened, pending or completed civil, criminal, administrative or
+investigative action or proceeding to which such person is party by reason of
+the fact that he is or was a director or officer, as the case may be, of the
+Company, if the person acted in good faith and in a manner reasonably believed
+to be in or not opposed to the best interests of the Company, and, with respect
+to any criminal action or proceeding, the person had no reasonable cause to
+believe such conduct to be unlawful. The agreements provide for the
+advancement of expenses and that the Company has the right to purchase and
+maintain insurance on behalf of the director or officer against any liability or
+liabilities asserted against him, whether or not the Company would have the
+power to indemnify the person against such liability under any provision of the
+agreement. The Company has agreed to indemnify such person against
+expenses actually and reasonably incurred in connection with any action in which
+the person has been successful on the merits or
+otherwise. Indemnification must also be provided by the Company
+(unless ordered otherwise by a court) only as authorized in the specific case
+upon a determination that the indemnification of the person is appropriate
+because he has met the applicable standard of conduct described in the agreement
+made by (i) the Board of Directors, by a majority vote of a quorum consisting of
+directors who are not parties to such action or proceeding, (ii) independent
+legal counsel in a written opinion or (iii) the shareholders of the
+Company. 
+29 
+Table of Contents 
+Additional Information 
+The

raw/proxies/0000077877/0001193125-12-183630/proxy_rpt.txt

@@ -0,0 +1,17 @@
+TRANSACTIONS WITH RELATED PERSONS 
+Related Transactions 
+From
+January 1, 2011 to the present, there was no transaction or series of transactions, nor any currently proposed transaction, in which the amount involved exceeds $120,000 and in which any Director, executive officer, known holder of more than
+five percent of the Company’s common stock or any member of the immediate family of any of the foregoing persons had or will have a direct or indirect material interest. 
+Policies and Procedures With Respect to Transactions with Related Persons 
+The Board has adopted a written policy for the review, approval and ratification of transactions that involve related parties and potential conflicts of interest. The related party transaction policy
+applies to each Director and 
+23 
+Table of Contents 
+executive officer of the Company, any nominee for election as a Director, any security holder who is known to own more than five percent of the Company’s voting securities, any immediate
+family member of any of the foregoing persons and any corporation, firm or association in which one or more of the Company’s Directors are directors or officers, or have a substantial financial interest. 
+Under our related party transaction policy, a related person transaction is a transaction or arrangement involving a
+related person in which the Company is a participant or that would require disclosure in the Company’s filings with the SEC as a transaction with a related person. The related person must disclose to the Audit Committee any potential related
+person transactions and must disclose all material facts with respect to such interest. All related person transactions will be reviewed by the Audit Committee. In determining whether to approve or ratify a transaction, the Audit Committee will
+consider the relevant facts and circumstances of the transaction, which may include factors such as the relationship of the related person with the Company, the materiality or significance of the transaction to the Company and the business purpose
+and reasonableness of the transaction, whether the transaction is comparable to a transaction that could be available to the Company on an arms-length basis, and the impact of the transaction on the Company’s business and operations.

raw/proxies/0000077877/0001193125-13-168327/proxy_rpt.txt

@@ -0,0 +1,15 @@
+TRANSACTIONS WITH RELATED PERSONS 
+Related Transactions 
+From January 1, 2012 to the present, there was no transaction or series of transactions, nor is there any currently
+proposed transaction, in which the amount involved exceeds $120,000, in which the Company is participant and in which any Director, executive officer, known holder of more than five percent of the Company’s common stock or any member of the
+immediate family of any of the foregoing persons had or will have a direct or indirect material interest for which disclosure is required under SEC Rule S-K 404. 
+Policies and Procedures With Respect to Transactions with Related Persons 
+The Board has adopted a written policy for the review, approval and ratification of transactions that involve related parties and potential conflicts of interest. The related party transaction policy
+applies to each Director and executive officer of the Company, any nominee for election as a Director, any security holder who is known to own more than five percent of the Company’s voting securities, any immediate family member of any of the
+foregoing persons and any corporation, firm or association in which one or more of the Company’s Directors are directors or officers, or have a substantial financial interest. 
+Under our related party transaction policy, a related person transaction is a transaction or arrangement involving a
+related person in which the Company is a participant or that would require disclosure in the Company’s filings with the SEC as a transaction with a related person. The related person must disclose to the Audit Committee any potential related
+person transactions and must disclose all material facts with respect to such transaction and relationship. All related person transactions will be reviewed by the Audit Committee. In determining whether to approve or ratify a transaction, the Audit
+Committee will consider the relevant facts and circumstances of the transaction, which may include factors such as the relationship of the related person with the Company, the materiality or significance of the transaction to the Company and the
+business purpose and reasonableness of the transaction, whether the transaction is comparable to a transaction that could be available to the Company on an arms-length basis, and the impact of the transaction on the Company’s business and
+operations.

raw/proxies/0000874499/0001193125-08-094864/proxy_rpt.txt

@@ -0,0 +1,90 @@
+Certain Relationships and Related Transactions 
+Administrative Services Agreements 
+We are a party to administrative service agreements with Diamondback Energy Services LLC,
+which we refer to as Diamondback, Great White Energy Services LLC, which we refer to as Great White, Caliber Development Company, LLC, which we refer to as Caliber, Stampede Investments LLC, which we refer to as Stampede, and Grizzly Oil Sands ULC,
+which we refer to as Grizzly, which agreements were entered into effective as of September 29, 2006, July 26, 2006, February 9, 2005, November 1, 2007 and November 15, 2007, respectively. Under these
+agreements, our services include accounting, human resources, legal and technical support. The services provided to these entities and the fees for such services can be amended by mutual agreement of the parties to these agreements. Each
+administrative services agreement has a three-year term, and upon expiration of that term the agreement will continue on a month-to-month basis until cancelled by either party to such agreement with at least 30 days prior written notice. Each
+administrative services agreement is terminable (1) by the counterparty at any time with at least 30 days prior written notice to us and (2) by either party if the other party is in material breach and such breach has not been cured within
+30 days of receipt of written notice of such breach. Each of Diamondback, Great White, Caliber, Stampede and Grizzly reimbursed us for our dedicated employee time and related general and administrative costs based on the proportionate amount of time
+our employees spent performing services for such entity. We were reimbursed approximately $17,000, $754,000, $1,249,000, $123,000 and $953,000 by Diamondback, Great White, Caliber, Stampede and Grizzly, respectively, for services provided under
+these agreements during the year ended December 31, 2007. Each of Diamondback, Great White, Caliber, Stampede and Grizzly is controlled by Wexford Capital LLC. Charles Davidson, who beneficial owned approximately 35.7% of our outstanding common
+stock as of April 23, 2008, is the Chairman and Chief Investment Officer of Wexford Capital LLC. Our Chairman of the Board, Mike Liddell, is also the Chairman of the Board of Diamondback Energy Services, Inc., a subsidiary of Diamondback. Two
+of our directors, Scott Streller and Donald L. Dillingham, are also director nominees of Diamondback Energy Services, Inc. 
+We provide office space,
+furniture, telecommunications and computer and other information technology support to certain employees of Windsor Energy Resources LLC, or Windsor. Windsor has agreed to reimburse us for such services based on the number of employees we office and
+nature of services provided by us to such employees, which can vary from time to time. Windsor is controlled by Wexford Capital LLC. 
+Two of our petroleum
+engineers are providing services relating to evaluation of potential investments to Wexford Capital LLC and geological evaluations, seismic review and similar services to Tatex Thailand II, LLC, or Tatex II, and Tatex Thailand III LLC, or Tatex III.
+Wexford Capital LLC, Tatex II and Tatex III, respectively, have agreed to reimburse us based on the amount, scope and nature of services provided by our petroleum engineers to such entities, which can vary from time to time. Tatex II and Tatex III
+are controlled by Wexford Capital LLC. 
+We provide certain general and administrative services to Floran Technologies LLC, or Floran. We are reimbursed for
+our dedicated employee time and related general and administrative costs based on the proportionate amount of time our employees spent performing such services. For the year ended December 31, 2007, we were reimbursed approximately $61,000 by
+Floran and were owed an additional $31,000 for such services at that date. 
+Services Provided to Us by Our Affiliates 
+We contract with Athena Construction, L.L.C. to provide barge services in our West
+Cote Blanche Bay, or WCBB, and Hackberry fields located along the Louisiana Gulf Coast. In January 31, 2006, Athena was acquired by an entity controlled by Wexford Capital LLC. For the year ended December 31, 2007, we paid Athena
+$5,902,000 and owed an additional $1,561,000 for such services at that date. 
+26 
+Table of Contents 
+In February 2005, but effective as of December 1, 2004, we acquired an interest in the Marquiss field, an
+approximately 9,500 net acre coalbed methane play in Campbell County, Wyoming. Windsor Energy Group, LLC, an entity controlled by Wexford Capital LLC, was the operator of this field. For the year ended December 31, 2007, we paid Windsor Energy
+Group $363,000 and owed an additional $440,000 related to reimbursement for services provided. Our interest in the Marquiss field was sold in February 2007. 
+Packers & Service Tools, Inc., which we refer to as Packers, performs services for us at our WCBB and Hackberry fields. For the year ended December 31, 2007, we paid Packers $1,406,000 and owed an additional $425,000 related
+to these services at that date. Packers is an entity controlled by Wexford Capital LLC. 
+Diamondback Completions LLC, which we refer to as Completions,
+performs services for us at our WCBB and Hackberry fields. For the year ended December 31, 2007, we paid Completions $278,000 and owed an additional $241,000 related to these services at that date. Completions is an entity controlled by Wexford
+Capital LLC. 
+Great White Towing LLC, which we refer to as Towing, performs services for us at our WCBB field. For the year ended December 31, 2007,
+we paid Towing $95,000 and owed an additional $50,000 related to these services at that date. Towing is an entity controlled by Wexford Capital LLC. 
+Effective March 1, 2008, Windsor provides tax planning, preparation of supporting tax schedules and consultation services to us, based on agreed upon fee structure. The scope of such services can be modified upon mutual agreement of
+the parties. Windsor is controlled by Wexford Capital LLC. 
+Caliber provides building maintenance services for our headquarters in Oklahoma City, Oklahoma.
+For the year ended December 31, 2007, we paid Caliber $14,000 and owed an additional $3,000 related to these services at that date. Caliber is an entity controlled by Wexford Capital LLC. 
+Our Investments in Affiliates and Related Agreements 
+During 2005, we purchased a 23.5% ownership interest in Tatex II at a
+cost of $2,400,000. The remaining interests in Tatex II are owned by other entities controlled by Wexford Capital LLC. Tatex II, a privately-owned entity, holds 85,122 of the 1,000,000 outstanding shares of APICO, LLC, or APICO, an international oil
+and gas exploration company. APICO has a reserve base located in Southeast Asia through its ownership of concessions covering three million acres which includes the Phu Horm Field. During 2007, we paid $88,000 in cash calls in respect of our
+investment in Tatex II. 
+During 2008, we purchased a 5% ownership interest in Tatex III at a cost of $850,000. Approximately 68.7% of the remaining
+interests in Tatex III are owned by other entities and individuals affiliated with Wexford Capital LLC. 
+During 2005, we purchased a 20% ownership interest
+in Windsor Bakken, LLC, or Bakken. The remaining interests in Bakken are owned by other entities controlled by Wexford Capital LLC. In 2006, Bakken acquired leases on undeveloped acreage in the Williston Basin areas of western North Dakota and
+eastern Montana, which we refer to as the contract area. During 2007, we paid $127,000 in respect of our interest in Bakken. Effective January 1, 2008, we acquired a direct, undivided 20% interest in Bakken’s assets in redemption of our
+20% interest in Bakken. 
+In addition, effective January 1, 2008, we entered into an area of mutual interest agreement with Bakken and Windsor Dakota
+LLC, or Windsor Dakota, to jointly acquire oil and gas leases on certain lands located in North Dakota and Montana for the purpose of exploring, exploiting and producing oil and gas from the Bakken Shale. The agreement provides that each party must
+offer the other party the right to participate in such acquisition in proportion to its participating interest, which is 20% for us and 80% for Bakken and Windsor Dakota, collectively. The parties also agreed, subject to certain exceptions, to share
+third-party costs and expenses in proportion to their respective participating interests and pay certain other fees as provided in the agreement. In connection with this agreement, we, Bakken, Windsor Dakota and Windsor Energy Group, L.L.C., as the
+operator, also entered into the exploration agreement, effective as of January 1, 2008, pursuant to which we, Bakken and Windsor Dakota agreed to jointly evaluate, explore, exploit and develop the contract area, and 
+27 
+Table of Contents 
+Windsor Energy Group, L.L.C. agreed to act as the operator under the terms of a joint operating agreement, effective as of March 4, 2008. In the event
+Gulfport has greater than a 50% interest in a prospect, as defined in the exploration agreement, the parties agreed to support Gulfport as the operator. The parties agreed to pay Windsor Energy Group, L.L.C. for its services as the operator with
+respect to the contract area as provided in the joint operating agreement. 
+During the third quarter of 2006, we purchased, through our wholly owned
+subsidiary Grizzly Holdings, Inc., a 24.9999% interest in Grizzly, a Canadian unlimited liability company, for approximately $8,200,000. The remaining interests in Grizzly are owned by other entities controlled by Wexford Capital LLC. During 2006,
+Grizzly acquired leases in the Athabasca region located in the Alberta Province near Fort McMurray within a few miles of other existing oil sands projects. Grizzly has commenced drilling of core holes for feasibility of oil production in three
+separate lease blocks but has not commenced development of operations. As of December 31, 2007, our net investment in Grizzly was $27,801,000. 
+At
+December 31, 2007, our wholly owned subsidiary, Grizzly Holdings Inc., owed Grizzly approximately $151,000 for shares issued in 2007. 
+Option and Purchase Agreement and Related Agreements 
+On November 30, 2007, we entered into an option agreement with
+Windsor Permian LLC, an entity controlled by Wexford Capital LLC, which we refer to as Windsor Permian. Under the option agreement, we were granted the right to participate on a 50/50 basis with Windsor Permian in the acquisition of certain
+strategic assets in Upton County, Texas in the Permian Basin. We paid Windsor Permian $8.5 million for the option, which amount was applied to our portion of the purchase price for the acquisition. On December 12, 2007, we exercised the option
+and on December 18, 2007, the purchase agreement was amended to, among other things, add Gulfport as a buyer under the purchase agreement. On December 20, 2007, the acquisition was closed, effective as of November 1, 2007. We and
+Windsor Permian also agreed to share equally all third-party costs and expenses incurred by each of us in connection with the transaction, none of which had been paid as of December 31, 2007. 
+In addition, effective as of November 1, 2007, we and Windsor Permian entered into an area of mutual interest agreement to jointly acquire oil and gas leases in the
+Permian Basin. The agreement provides that each party must offer the other party the right to participate in 50% of each such acquisition. The parties also agreed, subject to certain exceptions, to share third-party costs and expenses in proportion
+to their respective participating interests and pay certain other fees as provided in the agreement. On March 20, 2008, in connection with this agreement, we received a six-month option to acquire a direct, undivided interest of up to 25% in
+Windsor Permian’s oil and gas interests acquired on February 29, 2008 in Midland County, Texas. The option price is the sum of (i) the option percentage of the acquisition consideration paid by Windsor Permian to a third party in
+connection with the acquisitions of these assets, subject to certain exceptions, (ii) a fee equal to 1% of our purchase price, (iii) the option percentage of the sum of all third-party costs and expenses incurred by Windsor Permian in
+connection with the acquisition of these assets, subject to certain exceptions, (iv) the option percentage of all capital costs and lease operating expenses incurred subsequent to Windsor Permian’s acquisition of these assets and prior to
+the date of the option exercise by Gulfport, subject to certain exceptions, and (v) interest, at 8% per annum, on the amounts set forth in items (i), (iii) and (iv) calculated from the time of accrual to the closing date of the
+option. 
+In connection with the Area of Mutual Interest Agreement, we, Windsor Permian and Windsor Energy Group, L.L.C., as the operator, entered into the
+joint development agreement, effective as of November 1, 2007, pursuant to which we and Windsor Permian agreed to develop certain jointly held oil and gas leases in the Permian Basin, and Windsor Energy Group, L.L.C. agreed to act as the
+operator under the terms of the joint operating agreement, effective as of November 1, 2007. In the event either party has greater than a 50% interest in a prospect, as defined in the development agreement, the majority party may designate the
+operator of its choice. The parties agreed to pay Windsor Energy Group, L.L.C. for its services as the operator with respect to the contract area as provided in the joint operating agreement. 
+28 
+Table of Contents

raw/proxies/0000874499/0001193125-09-094499/proxy_rpt.txt

@@ -0,0 +1,103 @@
+Certain Relationships and Related Transactions 
+Administrative Services Agreements 
+We are or have been a party to administrative service
+agreements with Caliber Development Company, LLC, which we refer to as Caliber, Great White Energy Services LLC, which we refer to as Great White, Diamondback Energy Services LLC, which we refer to as Diamondback, and Stampede Investments LLC, which
+we refer to as Stampede Investments, which agreements were entered into effective as of February 9, 2005, July 22, 2006, September 26, 2006 and November 1, 2007, respectively. Under these agreements, our services
+include accounting, human resources, legal and technical support. The services provided and the fees for such services can be amended by mutual agreement of the parties. Each of these administrative service agreements has a three-year term, and upon
+expiration of that term the agreements will continue on a month-to-month basis until cancelled by either party with at least 30 days prior written notice. Each administrative service agreement is terminable (1) by the counterparty at any time
+with at least 30 days prior written notice to us and (2) by either party if the other party is in material breach and such breach has not been cured within 30 days of receipt of written notice of such breach. Each of Caliber, Great White,
+Diamondback and Stampede Investments reimbursed us for our dedicated employee time and related general and administrative costs based on the proportionate amount of time our employees spent performing services for such entity. We were reimbursed
+approximately $60,000, $83,000, $10,000 and $0 by Caliber, Great White, Diamondback and Stampede Investments, respectively, for services provided under these agreements during the year ended December 31, 2008. Our administrative services
+agreements with Caliber and Diamondback were each terminated effective December 10, 2008. Each of Caliber, Great White and Stampede Investments is, and Diamondback was, controlled by Wexford Capital LLC. Charles Davidson, who beneficially owned
+approximately 36% of our outstanding common stock as of April 1, 2009, is the Chairman and Chief Investment Officer of Wexford Capital LLC. Our Chairman of the Board, Mike Liddell, served as the Chairman of the Board of Diamondback Energy
+Services, Inc., a subsidiary of Diamondback until December 2008. As of December 2008, Diamondback is no longer controlled by Wexford Capital LLC and is no longer an affiliate of ours. 
+We are also a party to administrative service agreements with Stampede Farms LLC, which we refer to as Stampede Farms, Grizzly Oil Sands ULC, which we refer to as Grizzly, and Everest Operations Management LLC, which
+we refer to as Everest, which agreements were each entered into effective March 1, 2008. Under these agreements, our services include professional and technical support. Under our agreements with Stampede Farms and Everest, we also provided
+office space during 2008. The services provided under these agreements and the fees for such services can be amended by mutual agreement of the parties. Each of these administrative service agreements has a two-year term, and upon expiration of that
+term such agreement will continue on a month-to-month basis until cancelled by either party to such agreement with at least 60 days prior written notice. Each administrative service agreement is terminable (1) by the counterparty at any time
+with at least 30 days prior written notice to us and (2) by either party if the other party is in material breach and such breach has not been cured within 30 days of receipt of written notice of such breach. We were reimbursed approximately
+$159,000, $368,000 and $154,000 by Stampede Farms, Grizzly and Everest, respectively, for services provided under these agreements during the year ended December 31, 2008. We were also reimbursed approximately $20,000 and 26,000 by Stampede
+Farms and Everest, respectively, for office space under these agreements for the year ended December 31, 2008. Each of Stampede Farms, Grizzly and Everest is controlled by Wexford Capital LLC. 
+28 
+Table of Contents 
+Effective July 1, 2008, we entered into an acquisition team agreement with Everest to identify and evaluate
+potential oil and gas properties in which we and Everest or its affiliates may wish to invest. Pursuant to this agreement, Gulfport and Everest each agreed to form an acquisition team. Upon a successful closing of an acquisition or divestiture, the
+party whose acquisition team identified the acquisition or divestiture is entitled to receive a fee from the other party and its affiliates, if applicable, participating in such closing. The fee is equal to 1% of the party’s proportionate share
+of the acquisition or divestiture consideration. The agreement has a one year term unless earlier terminated by either party upon 30 days notice. 
+We
+provide professional support, office space, furniture, telecommunications and computer and other information technology support to Windsor Energy Resources LLC, or Windsor, and Everest. Both Windsor and Everest have agreed to reimburse us for such
+services based on the number of employees we office and nature of services provided by us to each respective company, which can vary from time to time. We were reimbursed an aggregate of approximately $469,000 for the above services provided to
+Windsor and Everest for the year ended December 31, 2008. Both Windsor and Everest are controlled by Wexford Capital LLC. 
+From time to time, various
+members of our scientific staff provide services relating to evaluation of potential investments to Wexford Capital LLC and geological evaluations, seismic review and similar services to Tatex Thailand II, LLC, or Tatex II, and Tatex Thailand III
+LLC, or Tatex III. Wexford Capital LLC, Tatex II and Tatex III, respectively, have agreed to reimburse us based on the amount, scope and nature of services provided by our staff to such entities. Tatex II and Tatex III are controlled by Wexford
+Capital LLC. 
+We provide certain general and administrative services to Floran Technologies LLC, or Floran. We are reimbursed for our dedicated employee
+time and related general and administrative costs based on the proportionate amount of time our employees spent performing such services. For the year ended December 31, 2008, we were reimbursed approximately $46,000 by Floran and were owed an
+additional $16,000 for such services at that date. 
+Services Provided to Us by Our Affiliates 
+We contract with Athena Construction, L.L.C., which we refer to as Athena, to provide barge services in our West Cote Blanche Bay, or WCBB, and Hackberry fields located
+along the Louisiana Gulf Coast. For the year ended December 31, 2008, we paid Athena $3,888,000 and owed an additional $759,000 for such services at that date. Athena is controlled by Wexford Capital LLC. 
+Windsor Energy Group operates our Permian Basin wells in West Texas. For the year ended December 31, 2008, we paid Windsor Energy Group $39,137,000 and owed an
+additional $3,724,000 for such services at that date. Windsor Energy Group is controlled by Wexford Capital LLC. 
+Packers & Service Tools, Inc.,
+which we refer to as Packers, performs services for us at our WCBB and Hackberry fields. For the year ended December 31, 2008, we paid Packers $1,966,000 owed an additional $465,000 related to these services at that date. Packers was controlled
+by Wexford Capital LLC until November 18, 2008. On that date, Packers ceased to be an affiliate of ours. 
+Diamondback Completions LLC, which we refer
+to as Completions, performs services for us at our WCBB and Hackberry fields. For the year ended December 31, 2008, we paid Completions $444,000 and owed an additional $24,000 related to these services at that date. Completions were controlled
+by Wexford Capital LLC until November 18, 2008. On that date, Completions ceased to be an affiliate of ours. 
+Great White Towing LLC, which we refer
+to as Towing, performs services for us at our WCBB field. For the year ended December 31, 2008, we paid Towing $269,000 and owed an additional $222,000 related to these services at that date. Towing is an entity controlled by Wexford Capital
+LLC. 
+29 
+Table of Contents 
+Effective March 1, 2008, Windsor provides tax planning, preparation of supporting tax schedules and consultation
+services to us, based on agreed upon fee structure. The scope of such services can be modified upon mutual agreement of the parties. Windsor is controlled by Wexford Capital LLC. 
+Caliber provides building maintenance services for our headquarters in Oklahoma City, Oklahoma. For the year ended December 31, 2008, we paid Caliber $20,000 and owed an additional $2,000 at that date. Caliber is
+an entity controlled by Wexford Capital LLC. 
+Our Investments in Affiliates and Related Agreements 
+During 2005, we purchased a 23.5% ownership interest in Tatex II at a cost of $2,400,000. The remaining interests in Tatex II are owned by other entities controlled by
+Wexford Capital LLC. Tatex II, a privately-owned entity, holds 85,122 of the 1,000,000 outstanding shares of APICO, LLC, or APICO, an international oil and gas exploration company. APICO has a reserve base located in Southeast Asia through its
+ownership of concessions covering three million acres which includes the Phu Horm Field. During 2008, we paid $50,000 and received $912,000 in distributions in respect of our investment in Tatex II. 
+During the first quarter of 2008, we purchased a 5% ownership interest in Tatex III at a cost of $850,000. Approximately 68.7% of the remaining interests in Tatex III
+are owned by other entities and individuals affiliated with Wexford Capital LLC. During 2008, we paid $35,000 in cash calls in respect of our investment in Tatex III. 
+During 2005, we purchased a 20% ownership interest in Windsor Bakken, LLC, or Bakken, with the remaining interests in Bakken owned by other entities controlled by Wexford Capital LLC. In 2006, Bakken acquired leases
+on undeveloped acreage in the Williston Basin areas of western North Dakota and eastern Montana, which we refer to as the contract area. Effective January 1, 2008, we acquired a direct, undivided 20% interest in Bakken’s assets in
+redemption of our 20% interest in Bakken. 
+Effective January 1, 2008, we entered into an area of mutual interest agreement with Bakken and Windsor
+Dakota LLC, or Windsor Dakota, to jointly acquire oil and gas leases on certain lands located in North Dakota and Montana for the purpose of exploring, exploiting and producing oil and gas from the Bakken Shale. The agreement provides that each
+party must offer the other party the right to participate in such acquisition in proportion to its participating interest, which is 20% for us and 80% for Bakken and Windsor Dakota, collectively. The parties also agreed, subject to certain
+exceptions, to share third-party costs and expenses in proportion to their respective participating interests and pay certain other fees as provided in the agreement. In connection with this agreement, we, Bakken, Windsor Dakota and Windsor Energy
+Group, L.L.C., as the operator, also entered into an exploration agreement, effective as of January 1, 2008, pursuant to which we, Bakken and Windsor Dakota agreed to jointly evaluate, explore, exploit and develop the contract area, and Windsor
+Energy Group, L.L.C. agreed to act as the operator under the terms of a joint operating agreement. In the event Gulfport has greater than a 50% interest in a prospect, as defined in the exploration agreement, the parties agreed to support Gulfport
+as the operator. The parties agreed to pay Windsor Energy Group, L.L.C. for its services as the operator with respect to the contract area as provided in the joint operating agreement. 
+During the third quarter of 2006, we purchased, through our wholly owned subsidiary Grizzly Holdings, Inc., a 24.9999% interest in Grizzly, a Canadian unlimited liability company, for approximately $8,200,000. The
+remaining interests in Grizzly are owned by other entities controlled by Wexford Capital LLC. During 2006, Grizzly acquired leases in the Athabasca region located in the Alberta Province near Fort McMurray near other oil sands development projects.
+Grizzly has commenced drilling of core holes for feasability of oil production in five separate lease blocks but has not commenced development of operations. As of December 31, 2008, our net investment in Grizzly was $21,881,000. 
+We, through our wholly owned subsidiary Grizzly Holdings Inc., entered into a loan agreement with Grizzly effective January 1, 2008, under which Grizzly may borrow
+funds from us. Borrowed funds bear interest at 
+30 
+Table of Contents 
+LIBOR plus 4%. Interest is paid on a paid-in-kind basis by increasing the outstanding balance of the loan. The loan matures on December 31, 2012. We
+loaned Grizzly approximately $10,519,000 during the year ended December 31, 2008. The Company recognized interest income of approximately $410,000 for the year ended December 31, 2008 under this loan agreement. The note balance was
+decreased by approximately $1,776,000 as a result of a currency translation loss for the year ended December 31, 2008. 
+Option and Purchase Agreement and Related Agreements 
+On November 30, 2007, we entered into an option
+agreement with Windsor Permian LLC, an entity controlled by Wexford Capital LLC, which we refer to as Windsor Permian. Under the option agreement, we were granted the right to participate on a 50/50 basis with Windsor Permian in the acquisition of
+certain strategic assets in Upton County, Texas in the Permian Basin. On December 12, 2007, we exercised the option and on December 18, 2007, the purchase agreement was amended to, among other things, add Gulfport as a buyer under the
+purchase agreement. On December 20, 2007, the acquisition was closed, effective as of November 1, 2007. We and Windsor Permian also agreed to share equally all third-party costs and expenses incurred by each of us in connection with the
+transaction. 
+In addition, effective as of November 1, 2007, we and Windsor Permian entered into an area of mutual interest agreement to jointly
+acquire oil and gas leases in the Permian Basin. The agreement provides that each party must offer the other party the right to participate in 50% of each such acquisition. The parties also agreed, subject to certain exceptions, to share third-party
+costs and expenses in proportion to their respective participating interests and pay certain other fees as provided in the agreement. On March 20, 2008, in connection with this agreement, we received a six-month option to acquire a direct,
+undivided interest of up to 25% in Windsor Permian’s oil and gas interests acquired on February 29, 2008 in Midland County, Texas. The option price is the sum of (i) the option percentage of the acquisition consideration paid by
+Windsor Permian to a third party in connection with the acquisitions of these assets, subject to certain exceptions, (ii) a fee equal to 1% of our purchase price, (iii) the option percentage of the sum of all third-party costs and expenses
+incurred by Windsor Permian in connection with the acquisition of these assets, subject to certain exceptions, (iv) the option percentage of all capital costs and lease operating expenses incurred subsequent to Windsor Permian’s
+acquisition of these assets and prior to the date of the option exercise by Gulfport, subject to certain exceptions, and (v) interest, at 8% per annum, on the amounts set forth in items (i), (iii) and (iv) calculated from the
+time of accrual to the closing date of the option. 
+In connection with the area of mutual interest agreement, we, Windsor Permian and Windsor Energy Group,
+L.L.C., as the operator, entered into the joint development agreement, effective as of November 1, 2007, pursuant to which we and Windsor Permian agreed to develop certain jointly held oil and gas leases in the Permian Basin, and Windsor Energy
+Group, L.L.C. agreed to act as the operator under the terms of the joint operating agreement, effective as of November 1, 2007. In the event either party has greater than a 50% interest in a prospect, as defined in the development agreement,
+the majority party may designate the operator of its choice. The parties agreed to pay Windsor Energy Group, L.L.C. for its services as the operator with respect to the contract area as provided in the joint operating agreement. 
+31 
+Table of Contents

raw/proxies/0000874499/0001193125-10-096718/proxy_rpt.txt

@@ -0,0 +1,81 @@
+Certain Relationships and Related Transactions 
+Administrative Services Agreements 
+We are a party to an administrative service agreement with Great White Energy Services LLC, which we refer to as Great White, which agreement was entered
+into effective as of July 22, 2006. Under this agreement, our services include accounting, human resources, legal and technical support. The services provided and the fees for such services can be amended by mutual agreement of the parties.
+This administrative service agreement has a three-year term, and upon expiration of that term the agreement will continue on a month-to-month basis until cancelled by either party with at least 30 days prior written notice. This administrative
+service agreement is terminable (1) by the counterparty at any time with at least 30 days prior written notice to us and (2) by either party if the other party is in material breach and such breach has not been cured within 30 days of
+receipt of written notice of such breach. Great White reimbursed us for our dedicated employee time and related general and administrative costs based on the proportionate amount of time our employees spent performing services for such entity. We
+were reimbursed approximately $61,000 by Great White for services provided under this agreement during the year ended December 31, 2009. Great White is controlled by Wexford Capital LP. Charles Davidson, who beneficially owned approximately 36%
+of our outstanding common stock as of April 1, 2010, is the Chairman and Chief Investment Officer of Wexford Capital LP. 
+We are also a
+party to administrative service agreements with Stampede Farms LLC, which we refer to as Stampede Farms, Grizzly Oil Sands ULC, which we refer to as Grizzly, and Everest Operations Management LLC, which we refer to as Everest, which agreements were
+each entered into effective March 1, 2008. Under these agreements, our services include professional and technical support. Under our agreements with Stampede Farms and Everest, we also provide office space. The services provided under these
+agreements and the fees for such services can be amended by mutual agreement of the parties. Each of these administrative service agreements has a two-year term, and upon expiration of that term such agreement will continue on a month-to-month basis
+until cancelled by either party to such agreement with at least 60 days prior written notice. Each administrative service agreement is terminable (1) by the counterparty at any time with at least 30 days prior written notice to us and
+(2) by either party if the other party is in material breach and such breach has not been cured within 30 days of receipt of written notice of such breach. We were reimbursed approximately $0, $20,000 and $508,000 by Stampede Farms, Grizzly and
+Everest, respectively, for services provided under these agreements during the year ended December 31, 2009. We were also reimbursed approximately $2,000 and $1,000 by Stampede Farms and Everest, respectively, for office space under these
+agreements for the year ended December 31, 2009. Each of Stampede Farms, Grizzly and Everest is controlled by Wexford Capital LP. 
+Effective July 1, 2008, we entered into an acquisition team agreement with Everest to identify and evaluate potential oil and gas properties in
+which we and Everest or its affiliates may wish to invest. Pursuant to this agreement, Gulfport and Everest each agreed to form an acquisition team. Upon a successful closing of an acquisition or divestiture, the party whose acquisition team
+identified the acquisition or divestiture is entitled to receive a fee from the other party and its affiliates, if applicable, participating in such closing. The fee is equal to 1% of the party’s proportionate share of the acquisition or
+divestiture consideration. The agreement has a one year term unless earlier terminated by either party upon 30 days notice. 
+From time to
+time, two of our petroleum engineers provide services relating to evaluation of potential investments to Wexford Capital LLC and geological evaluations, seismic review and similar services to Tatex Thailand II, LLC, or Tatex II, and Tatex Thailand
+III LLC, or Tatex III. Wexford Capital LLC, Tatex II and Tatex III, respectively, have agreed to reimburse us based on the amount, scope and nature of services provided by our petroleum engineers to such entities. Each of Tatex II and Tatex III is
+controlled by Wexford Capital LP. 
+Services Provided to Us by Our Affiliates 
+We contract with Athena Construction, L.L.C., which we refer to as Athena, to provide barge services in our West Cote Blanche Bay, or WCBB, and Hackberry
+fields located along the Louisiana Gulf Coast. For the year 
+30 
+Table of Contents 
+ended December 31, 2009, we paid Athena $1,918,000 and owed an additional $836,000 for such services at that date. Athena is controlled by Wexford Capital LP. 
+Windsor Energy Group operates our Permian Basin wells in West Texas. For the year ended December 31, 2009, we paid Windsor Energy Group $7,158,000
+and owed an additional $1,631,000 for such services at that date. Windsor Energy Group is controlled by Wexford Capital LP. 
+Effective
+March 1, 2008, Everest provides tax planning, preparation of supporting tax schedules and consultation services to us, based on agreed upon fee structure. The scope of such services can be modified upon mutual agreement of the parties. Everest
+is controlled by Wexford Capital LP. 
+Caliber Development Company, LLC, or Caliber, provides building maintenance services for our
+headquarters in Oklahoma City, Oklahoma. For the year ended December 31, 2009, we paid Caliber $17,000 and owed an additional $0 at that date. Caliber is an entity controlled by Wexford Capital LP. 
+Our Investments in Affiliates and Related Agreements 
+During 2005, we purchased a 23.5% ownership interest in Tatex II at a cost of $2,400,000. The remaining interests in Tatex II are owned by other entities
+controlled by Wexford Capital LP. Tatex II, a privately-owned entity, holds 85,122 of the 1,000,000 outstanding shares of APICO, LLC, or APICO, an international oil and gas exploration company. APICO has a reserve base located in Southeast Asia
+through its ownership of concessions covering three million acres which includes the Phu Horm Field. During 2009, we paid $320,000 in cash calls and received $517,000 in distributions in respect of our investment in Tatex II. 
+During the first quarter of 2008, we purchased a 5% ownership interest in Tatex III at a cost of $850,000. In December 2009, we purchased an additional
+approximately 12.9% ownership interest at a cost of approximately $3,385,000 bringing our total ownership interest to approximately 17.9%. Approximately 68.7% of the remaining interests in Tatex III are owned by other entities and individuals
+affiliated with Wexford Capital LP. During 2009, we paid $428,000 in cash calls in respect of our investment in Tatex III. 
+During 2005, we
+purchased a 20% ownership interest in Windsor Bakken, LLC, or Bakken, with the remaining interests in Bakken owned by other entities controlled by Wexford Capital LP. In 2006, Bakken acquired leases on undeveloped acreage in the Williston Basin
+areas of western North Dakota and eastern Montana, which we refer to as the contract area. Effective January 1, 2008, we acquired a direct, undivided 20% interest in Bakken’s assets in redemption of our 20% interest in Bakken. During 2009,
+we sold approximately 18,000 net acres in the Bakken Shale and approximately 190 net BOEPD of production for approximately $18.8 million. 
+Effective January 1, 2008, we entered into an area of mutual interest agreement with Bakken and Windsor Dakota LLC, or Windsor Dakota, to jointly
+acquire oil and gas leases on certain lands located in North Dakota and Montana for the purpose of exploring, exploiting and producing oil and gas from the Bakken Shale. The agreement provides that each party must offer the other party the right to
+participate in such acquisition in proportion to its participating interest, which is 20% for us and 80% for Bakken and Windsor Dakota, collectively. The parties also agreed, subject to certain exceptions, to share third-party costs and expenses in
+proportion to their respective participating interests and pay certain other fees as provided in the agreement. In connection with this agreement, we, Bakken, Windsor Dakota and Windsor Energy Group, L.L.C., as the operator, also entered into an
+exploration agreement, effective as of January 1, 2008, pursuant to which we, Bakken and Windsor Dakota agreed to jointly evaluate, explore, exploit and develop the contract area, and Windsor Energy Group, L.L.C. agreed to act as the operator
+under the terms of a joint operating agreement. In the event Gulfport has greater than a 50% interest in a prospect, as defined in the exploration agreement, the parties agreed to support Gulfport as the operator. The parties agreed to pay Windsor
+Energy Group, L.L.C. for its services as the operator with respect to the contract area as provided in the joint operating agreement. 
+31 
+Table of Contents 
+During the third quarter of 2006, we purchased, through our wholly owned subsidiary Grizzly Holdings, Inc.,
+a 24.9999% interest in Grizzly, a Canadian unlimited liability company, for approximately $8,200,000. The remaining interests in Grizzly are owned by other entities controlled by Wexford Capital LP. During 2006 and 2007, Grizzly acquired leases in
+the Athabasca region located in the Alberta Province near Fort McMurray near other oil sands development projects. Grizzly has approximately 527,000 acres under lease and, at December 31, 2009, our net investment in Grizzly was approximately
+$41,000,000, including a note receivable of $15,900,000 as discussed in the following paragraph. 
+We, through our wholly owned subsidiary
+Grizzly Holdings Inc., entered into a loan agreement with Grizzly effective January 1, 2008, under which Grizzly may borrow funds from us. Borrowed funds bear interest at LIBOR plus 4%. Interest is paid on a paid-in-kind basis by increasing the
+outstanding balance of the loan. The loan matures on December 31, 2012. We loaned Grizzly approximately $4,377,000 during the year ended December 31, 2009. The Company recognized interest income of approximately $547,000 for the year ended
+December 31, 2009 under this loan agreement. The note balance was increased by approximately $1,843,000 as a result of a currency translation gain for the year ended December 31, 2009. 
+Option and Purchase Agreement and Related Agreements 
+On November 30, 2007, we entered into an option agreement with Windsor Permian LLC, an entity controlled by Wexford Capital LLC, which we refer to as
+Windsor Permian. Under the option agreement, we were granted the right to participate on a 50/50 basis with Windsor Permian in the acquisition of certain strategic assets in Upton County, Texas in the Permian Basin. On December 12, 2007, we
+exercised the option and on December 18, 2007, the purchase agreement was amended to, among other things, add Gulfport as a buyer under the purchase agreement. On December 20, 2007, the acquisition was closed, effective as of
+November 1, 2007. We and Windsor Permian also agreed to share equally all third-party costs and expenses incurred by each of us in connection with the transaction. 
+In addition, effective as of November 1, 2007, we and Windsor Permian entered into an area of mutual interest agreement to jointly acquire oil and
+gas leases in the Permian Basin. The agreement provides that each party must offer the other party the right to participate in 50% of each such acquisition. The parties also agreed, subject to certain exceptions, to share third-party costs and
+expenses in proportion to their respective participating interests and pay certain other fees as provided in the agreement. 
+In connection
+with the area of mutual interest agreement, we, Windsor Permian and Windsor Energy Group, L.L.C., as the operator, entered into the joint development agreement, effective as of November 1, 2007, pursuant to which we and Windsor Permian agreed
+to develop certain jointly held oil and gas leases in the Permian Basin, and Windsor Energy Group, L.L.C. agreed to act as the operator under the terms of the joint operating agreement, effective as of November 1, 2007. In the event either
+party has greater than a 50% interest in a prospect, as defined in the development agreement, the majority party may designate the operator of its choice. The parties agreed to pay Windsor Energy Group, L.L.C. for its services as the operator with
+respect to the contract area as provided in the joint operating agreement. 
+32 
+Table of Contents

raw/proxies/0000874499/0001193125-11-121660/proxy_rpt.txt

@@ -0,0 +1,109 @@
+Certain Relationships and Related Transactions 
+Review and Approval of Related Party Transactions 
+The Audit Committee, as provided in its charter, reviews and approves related party transactions. The Company does not have a formal set of standards to be substantively applied to each transaction
+reviewed by the Audit Committee. Instead of a formalized policy, related party transactions are reviewed and judgment is applied to determine whether such transactions are in the best interests of the Company. Further, the Company’s Code of
+Business Conduct and Ethics governs various compliance areas, including conflicts of interest and fair dealings, which are considered in the process of the review and approval of related party transactions. 
+The Company’s policy that all of its employees and directors, as well as their family members, must avoid any activity that is or has the appearance
+of conflicting with the Company’s business interest. This policy is a written policy included in the Company’s Code of Business Conduct and Ethics posted on its website. Each director and executive officer is instructed to always inform
+the designated compliance officer when confronted with any situation that may be perceived as a conflict of interest. Only the board of directors or a committee consisting solely of independent directors may grant waivers of the provisions of the
+Code of Business Conduct and Ethics for the Company’s executive officers and directors. In addition, at least annually, each director and executive officer completes a detailed questionnaire specifying any business relationship that may give
+rise to a conflict of interest. 
+Further, under the Audit Committee Charter, the Audit Committee is responsible for reviewing and monitoring
+compliance with our Code of Business Conduct and Ethics and recommending any warranted changes to the board of directors. In addition, the board of directors and, pursuant to its written charter, the Audit Committee, reviews and approves all
+relationships and transactions in which the Company and its directors, director nominees and executive officers and their immediate family members, as well as holders of more than 5% of any class of our voting securities and their family members,
+have a direct or indirect material interest. The board of directors and the Audit Committee approve only those transactions that, in light of known circumstances, are consistent, or are not inconsistent with, the Company’s best interests, as
+they determine in the good faith exercise of their discretion. 
+Administrative Services Agreements
+We are a party to an administrative service agreement with Great White Energy Services LLC, which we refer to as Great White, which
+agreement was entered into effective as of July 22, 2006. Under this agreement, our services include accounting, human resources, legal and technical support. The services provided and the fees for such services can be amended by mutual
+agreement of the parties. This administrative service agreement had an initial three-year term, and upon expiration of that term the agreement has continued on a month-to-month basis. This administrative service agreement is terminable by either
+party at any time with at least 30 days prior written notice. Great White reimburses us for our dedicated employee time and related general and administrative costs based on the proportionate amount of time our employees spent performing services
+for such entity. Our services under this agreement ceased in January 2007, and we were not reimbursed any amounts by Great White for services provided under this agreement during the year ended December 31, 2010. However, Great White owes
+continuing indemnification obligations to us in connection with the pending Cudd litigation described in more detail in our Annual Report on Form 10-K. Great White paid us $67,000 in 2010 as reimbursement for our attorneys fees and expenses in
+connection with such litigation. Great White is controlled by Wexford Capital LP. Charles Davidson, who beneficially owned approximately 18.0% of our outstanding common stock as of April 15, 2011, is the Chairman and Chief Investment Officer of
+Wexford Capital LP. Mike Liddell, our Chairman of the Board, is also Chairman of the Board of Great White. 
+We are also a party to
+administrative service agreements with Stampede Farms LLC, which we refer to as Stampede Farms, Grizzly Oil Sands ULC, which we refer to as Grizzly, Everest Operations Management LLC, 
+32 
+Table of Contents 
+which we refer to as Everest, and Tatex Thailand III, LLC, which we refer to as Tatex III, which agreements were each entered into effective March 1, 2008. Under these agreements, our
+services include professional and technical support. The services provided under these agreements and the fees for such services can be amended by mutual agreement of the parties. Each of these administrative service agreements had an initial
+two-year term, and has continued thereafter on a month-to-month basis. Each agreement may be cancelled by either party to such agreement with at least 60 days prior written notice and is also terminable (1) by the counterparty at any time with
+at least 30 days prior written notice to us and (2) by either party if the other party is in material breach and such breach has not been cured within 30 days of receipt of written notice of such breach. We did not provide services under any of
+these agreements in 2010 and received no reimbursements thereunder. Each of Stampede Farms, Grizzly, Everest and Tatex III is controlled by Wexford Capital LP. Our administrative service agreement with Grizzly was terminated effective
+December 31, 2010. 
+Effective July 1, 2008, we entered into an acquisition team agreement with Everest to identify and evaluate
+potential oil and gas properties in which we and Everest or its affiliates may wish to invest. Pursuant to this agreement, Gulfport and Everest each agreed to form an acquisition team. Upon a successful closing of an acquisition or divestiture, the
+party whose acquisition team identified the acquisition or divestiture is entitled to receive a fee from the other party and its affiliates, if applicable, participating in such closing. The fee is equal to 1% of the party’s proportionate share
+of the acquisition or divestiture consideration. The agreement has a one year term unless earlier terminated by either party upon 30 days notice. 
+From time to time, two of our petroleum engineers provide services relating to evaluation of potential investments to Wexford Capital LLC and geological evaluations, seismic review and similar services to
+Tatex Thailand II, LLC, or Tatex II, and Tatex III. Wexford Capital LLC, Tatex II and Tatex III, respectively, have agreed to reimburse us based on the amount, scope and nature of services provided by our petroleum engineers to such entities. Each
+of Tatex II and Tatex III is controlled by Wexford Capital LP. We did not provide any services under these arrangements in 2010. 
+Services Provided to Us by Our Affiliates 
+We contract with Athena Construction, L.L.C., which we refer to as Athena, to provide barge
+services in our West Cote Blanche Bay, or WCBB, and Hackberry fields located along the Louisiana Gulf Coast. For the year ended December 31, 2010, we paid Athena $3,036,000 and owed an additional $791,000 for such services at that date. Athena
+is controlled by Wexford Capital LP. 
+Windsor Energy Group operates our Permian Basin wells in West Texas. For the year ended
+December 31, 2010, we paid Windsor Energy Group $32,641,000 and owed an additional $5,871,000 for such services at that date. Mike Liddell, our Chairman of the Board, is also Chairman of the Board of Windsor Energy Group, L.L.C. Windsor Energy
+Group is controlled by Wexford Capital LP. 
+Effective March 1, 2008, Everest provides tax planning, preparation of supporting tax
+schedules and consultation services to us, based on agreed upon fee structure. The scope of such services can be modified upon mutual agreement of the parties. Everest is controlled by Wexford Capital LP. We paid Everest $10,000 for these services
+in 2010. 
+Caliber Development Company, LLC, or Caliber, provides building maintenance services for our headquarters in Oklahoma City,
+Oklahoma. For the year ended December 31, 2010, we paid Caliber $18,000 and owed an additional $3,000 at that date. Mike Liddell, our Chairman of the Board, is Chief Executive Officer of Caliber. Caliber is an entity controlled by Wexford
+Capital LP. 
+Great White Directional Services LLC, which we refer to as Directional, performs directional drilling services for us at our WCBB
+and Hackberry fields. For the year ended December 31, 2010, we paid Directional 
+33 
+Table of Contents 
+approximately $2,755,000 and owed an additional $952,000 for such services at that date. Directional is an entity controlled by Wexford Capital LP. 
+Great White Pressure Control, which we refer as Pressure Control, performs services for us at our WCBB field. At December 31, 2010, we owed $80,000
+to Pressure Control for such services at that date. No amounts were paid to Pressure Control in 2010. Pressure Control is an entity controlled by Wexford Capital LP. 
+Black Fin P&A, LLC, which we refer to as Black Fin, performs plugging and abandonment services for us at our WCBB field. For the year ended December 31, 2010, we paid $826,000 to Black Fin for
+such services at that date. No additional amounts were owed to Black Fin at December 31, 2010. Black Fin is an entity controlled by Wexford Capital LP. 
+Our Investments in Affiliates and Related Agreements 
+During
+2005, we purchased a 23.5% ownership interest in Tatex II at a cost of $2,400,000. The remaining interests in Tatex II are owned by other entities controlled by Wexford Capital LP. Tatex II, a privately-owned entity, holds 85,122 of the 1,000,000
+outstanding shares of APICO, LLC, or APICO, an international oil and gas exploration company. APICO has a reserve base located in Southeast Asia through its ownership of concessions covering three million acres which includes the Phu Horm Field.
+During 2010, we received $565,000 in distributions, reducing our total investment in Tatex II (including previous investments) to $1,907,000. 
+During the first quarter of 2008, we purchased a 5% ownership interest in Tatex III at a cost of $850,000. In December 2009, we purchased an additional
+approximately 12.9% ownership interest at a cost of approximately $3,385,000 bringing our total ownership interest to approximately 17.9%. Approximately 68.7% of the remaining interests in Tatex III are owned by other entities and individuals
+affiliated with Wexford Capital LP. During 2010, we paid $402,000 in capital calls, bringing our total investment in Tatex III to $4,660,000. 
+During the third quarter of 2006, we purchased, through our wholly owned subsidiary Grizzly Holdings, Inc., a 24.9999% interest in Grizzly, a Canadian
+unlimited liability company, for approximately $8,200,000. The remaining interests in Grizzly are owned by other entities controlled by Wexford Capital LP. During 2006 and 2007, Grizzly acquired leases in the Athabasca region located in the Alberta
+Province near Fort McMurray near other oil sands development projects. Grizzly has approximately 534,000 acres under lease and, at December 31, 2010, our net investment in Grizzly was approximately $46,460,000, including a note receivable of
+$20,006,000 as discussed in the following paragraph. 
+We, through our wholly owned subsidiary Grizzly Holdings Inc., entered into a loan
+agreement with Grizzly effective January 1, 2008, under which Grizzly may borrow funds from us. Borrowed funds bear interest at LIBOR plus 4% and had an original maturity date of December 31, 2012. Effective April 1, 2010, the loan
+agreement was amended to modify the interest rate to 0.69% and change the maturity date to December 31, 2011. Effective October 15, 2010, the loan agreement was further amended to change the maturity date to the original maturity date of
+December 31, 2012. Interest is paid on a paid-in-kind basis by increasing the outstanding balance of the loan. We loaned Grizzly approximately $2,877,000 during the year ended December 31, 2010. The Company recognized interest income of
+approximately $267,000 for the year ended December 31, 2010 under this loan agreement. The note balance was increased by approximately $942,000 as a result of a currency translation gain for the year ended December 31, 2010. 
+Area of Mutual Interest and Related Agreements 
+Effective as of November 1, 2007, we and Windsor Permian entered into an area of mutual interest agreement to jointly acquire oil and gas leases in the Permian Basin. The agreement provides that each
+party must offer the other party the right to participate in 50% of each such acquisition. The parties also agreed, subject to certain 
+34 
+Table of Contents 
+exceptions, to share third-party costs and expenses in proportion to their respective participating interests and pay certain other fees as provided in the agreement. 
+In connection with the area of mutual interest agreement, we, Windsor Permian and Windsor Energy Group, L.L.C., as the operator, entered into the joint
+development agreement, effective as of November 1, 2007, pursuant to which we and Windsor Permian agreed to develop certain jointly held oil and gas leases in the Permian Basin, and Windsor Energy Group, L.L.C. agreed to act as the operator
+under the terms of the joint operating agreement, effective as of November 1, 2007. In the event either party has greater than a 50% interest in a prospect, as defined in the development agreement, the majority party may designate the operator
+of its choice. The parties agreed to pay Windsor Energy Group, L.L.C. for its services as the operator with respect to the contract area as provided in the joint operating agreement. 
+Effective January 1, 2008, we entered into an area of mutual interest agreement with Bakken and Windsor Dakota LLC, or Windsor Dakota, to jointly acquire oil and gas leases on certain lands located
+in North Dakota and Montana for the purpose of exploring, exploiting and producing oil and gas from the Bakken Shale. The agreement provides that each party must offer the other party the right to participate in such acquisition in proportion to its
+participating interest, which is 20% for us and 80% for Bakken and Windsor Dakota, collectively. The parties also agreed, subject to certain exceptions, to share third-party costs and expenses in proportion to their respective participating
+interests and pay certain other fees as provided in the agreement. In connection with this agreement, we, Bakken, Windsor Dakota and Windsor Energy Group, L.L.C., as the operator, also entered into an exploration agreement, effective as of
+January 1, 2008, pursuant to which we, Bakken and Windsor Dakota agreed to jointly evaluate, explore, exploit and develop the contract area, and Windsor Energy Group, L.L.C. agreed to act as the operator under the terms of a joint operating
+agreement. In the event Gulfport has greater than a 50% interest in a prospect, as defined in the exploration agreement, the parties agreed to support Gulfport as the operator. The parties agreed to pay Windsor Energy Group, L.L.C. for its services
+as the operator with respect to the contract area as provided in the joint operating agreement. 
+Effective April 1, 2010, we entered into
+an area of mutual interest agreement with Windsor Niobrara LLC, which we refer to as Windsor Niobrara, to jointly acquire oil and gas leases on certain lands located in Northwest Colorado for the purpose of exploring, exploiting and producing oil
+and gas from the Niobrara Formation. The agreement provides that each party must offer the other party the right to participate in such acquisitions on a 50/50 basis. The parties also agreed, subject to certain exceptions, to share third-party costs
+and expenses in proportion to their respective participating interests and pay certain other fees as provided in the agreement. In connection with this agreement, we and Windsor Niobrara also entered into a development agreement, effective as of
+April 1, 2010, pursuant to which we and Windsor Niobrara agreed to jointly develop the contract area, and we agreed to act as the operator under the terms of a joint operating agreement. Windsor Niobrara is controlled by Wexford Capital LP.
+Utica Agreement 
+In February 2011, we entered into an agreement to acquire certain leasehold interests in 27,500 gross (13,750 net) acres located in the Utica Shale in Ohio. The agreement also grants us an exclusive right
+of first refusal for a period of six months on certain additional tracts leased by the seller. Windsor Energy Group, L.L.C., directly or through one or more of its affiliates, has agreed to participate with us on a 50/50 basis in the acquisition of
+all of the leases described above. We will be the operator on this acreage in the Utica Shale. The purchase price for our 50% interest in the initial acreage is approximately $31.6 million, subject to certain closing adjustments. This transaction is
+expected to close in mid-May 2011. Windsor Energy Group, L.L.C. is controlled by Wexford Capital LP. 
+35 
+Table of Contents

raw/proxies/0000874499/0001193125-12-196642/proxy_rpt.txt

@@ -0,0 +1,100 @@
+Certain Relationships and Related Transactions 
+Review and Approval of Related Party Transactions 
+The Audit Committee, as provided in its charter, reviews and approves related party transactions. The Company does not have a formal set of standards to be substantively applied to each transaction
+reviewed by the Audit Committee. Instead of a formalized policy, related party transactions are reviewed and judgment is applied to determine whether such transactions are in the best interests of the Company. Further, the Company’s Code of
+Business Conduct and Ethics governs various compliance areas, including conflicts of interest and fair dealings, which are considered in the process of the review and approval of related party transactions. 
+The Company’s policy that all of its employees and directors, as well as their family members, must avoid any activity that is or has the appearance
+of conflicting with the Company’s business interest. This policy is a written policy included in the Company’s Code of Business Conduct and Ethics posted on its website. Each director and executive officer is instructed to always inform
+the designated compliance officer when confronted with any situation that may be perceived as a conflict of interest. Only the board of directors or a committee consisting solely of independent directors may grant waivers of the provisions of the
+Code of Business Conduct and Ethics for the Company’s executive officers and directors. In addition, at least annually, each director and executive officer completes a detailed questionnaire specifying any business relationship that may give
+rise to a conflict of interest. 
+Further, under the Audit Committee Charter, the Audit Committee is responsible for reviewing and monitoring
+compliance with our Code of Business Conduct and Ethics and recommending any warranted changes to the board of directors. In addition, the board of directors and, pursuant to its written charter, the Audit Committee, reviews and approves all
+relationships and transactions in which the Company and its directors, director nominees and executive officers and their immediate family members, as well as holders of more than 5% of any class of our voting securities and their family members,
+have a direct or indirect material interest. The board of directors and the Audit Committee approve only those transactions that, in light of known circumstances, are consistent, or are not inconsistent with, the Company’s best interests, as
+they determine in the good faith exercise of their discretion. 
+Administrative Services Agreements
+We are a party to administrative service agreements with Stampede Farms LLC, which we refer to as Stampede Farms, Everest Operations
+Management LLC, which we refer to as Everest, and Tatex Thailand III, LLC, which we refer to as Tatex III. Under these agreements, our services include professional and technical support and the fees for such services can be amended by mutual
+agreement of the parties. Each of these administrative service agreements may be cancelled (1) by us with at least 60 days prior written notice and, (2) by the counterparty at any time with at least 30 days prior written notice to us and
+(3) by either party if the other party is in material breach and such breach has not been cured within 30 days of receipt of written notice of such breach. We did not provide services under any of these agreements in 2011 and received no
+reimbursements thereunder. Each of Stampede Farms, Everest and Tatex III is controlled by Wexford Capital LP, or Wexford. 
+Services Provided to Us by Our Affiliates 
+We contract with Athena Construction, L.L.C., which we refer to as Athena, to provide barge
+services in our West Cote Blanche Bay, or WCBB, and Hackberry fields located along the Louisiana Gulf Coast. For the year ended December 31, 2011, we paid Athena $3,389,000 and owed an additional $676,000 for such services at that date. Athena
+is controlled by Wexford. 
+34 
+Table of Contents 
+Effective March 1, 2008, Everest provides tax planning, preparation of supporting tax schedules and
+consultation services to us based on an agreed fee structure. The scope of such services can be modified with the mutual agreement of the parties. Everest is controlled by Wexford. We paid Everest $5,000 for these services in 2011. 
+Caliber Development Company, LLC, or Caliber, provides building maintenance services for our headquarters in Oklahoma City, Oklahoma. For the year ended
+December 31, 2011, we paid Caliber $20,000 and owed an additional $2,000 at that date. Caliber is an entity controlled by Wexford. 
+Great
+White Directional Services LLC, which we refer to as Directional, performs directional drilling services for us at our WCBB and Hackberry fields. Directional was an entity controlled by Wexford until August 24, 2011 when it was sold to an
+unrelated third party. Directional is no longer a related party. While still a related party, we paid Directional approximately $2,625,000 and owed an additional $1,133,000 for such services at that date. 
+Great White Pressure Control, which we refer as Pressure Control, performs services for us at our WCBB field. Pressure Control was an entity controlled
+by Wexford until August 24, 2011 when it was sold to an unrelated third party. Pressure Control is no longer a related party. While still a related party, we paid Pressure Control approximately $80,000. No amounts were owed to Pressure Control
+as of August 24, 2011. 
+Black Fin P&A, LLC, which we refer to as Black Fin, performs plugging and abandonment services for us at our
+WCBB field. For the year ended December 31, 2011, we did not pay any amounts to Black Fin and owed $436,000 to for such services at that date. Black Fin is an entity controlled by Wexford. 
+Our Investments in Affiliates and Related Agreements 
+We have a 23.5% ownership interest in Tatex Thailand II, LLC, or Tatex II. The remaining interests in Tatex II are owned by other entities controlled by Wexford. Tatex II holds 85,122 of the 1,000,000
+outstanding shares of APICO, LLC, or APICO, an international oil and gas exploration company. APICO has a reserve base located in Southeast Asia through its ownership of concessions covering two million acres which includes the Phu Horm Field.
+During 2011, we received $870,000 in distributions from Tatex II. 
+We have a 17.9% ownership interest in Tatex III. Tatex III owns a
+concession covering approximately one million acres in Thailand. Approximately 68.7% of the remaining interests in Tatex III are owned by other entities and individuals affiliated with Wexford. During the year ended December 31, 2011, we paid
+$3,794,000 in cash calls to Tatex III. 
+We own a 24.9999% interest in Grizzly, a Canadian unlimited liability company, through our wholly
+owned subsidiary Grizzly Holdings, Inc. The remaining interests in Grizzly are owned by other entities controlled by Wexford. As of December 31, 2011, Grizzly had approximately 754,000 acres under lease in the Athabasca region located in the
+Alberta Province near Fort McMurray. Grizzly Holdings Inc. entered into a loan agreement with Grizzly effective January 1, 2008, under which Grizzly borrowed funds from us. Borrowed funds initially bore interest at LIBOR plus 4% and had an
+original maturity date of December 31, 2012. Effective April 1, 2010, the loan agreement was amended to modify the interest rate to 0.69% and change the maturity date to December 31, 2011. Effective October 15, 2010, the loan
+agreement was further amended to change the maturity date to December 31, 2012. Interest was paid on a paid-in-kind basis by increasing the outstanding balance of the loan. During the year ended December 31, 2011, we loaned Grizzly
+approximately $3,182,000 and recognized interest income of approximately $147,000. Effective December 7, 2011, Grizzly Holdings Inc. entered into a debt settlement agreement with Grizzly under which Grizzly agreed to satisfy the entire
+outstanding debt and accrued interest of $22,325,000 by issuing additional common shares of Grizzly with no effect to the ownership structure of Grizzly. 
+35 
+Table of Contents 
+During the third quarter of 2011, we purchased a 25% ownership interest in Bison Drilling and Field Services
+LLC, or Bison, at a cost of $6,009,000, subject to adjustment. In April 2012, we increased our ownership interest in Bison to 40% for an additional payment of $6,152,000. The remaining interests in Bison are owned by entities controlled by Wexford,
+including Windsor Permian LLC, or Windsor. Bison owns and operates drilling rigs. 
+During the fourth quarter of 2011, we purchased a 25%
+ownership interest in Muskie Holdings LLC, or Muskie, at a cost of $2,142,000, subject to adjustment. The remaining interests in Muskie are owned by entities controlled by Wexford, including Windsor. Muskie holds certain assets, real estate and
+rights in a lease covering land in Wisconsin that is prospective for mining oil and natural gas fracture grade sand. 
+Area of Mutual Interest and Related Agreements 
+Effective as of November 1, 2007, we and Windsor entered into an area of mutual
+interest agreement to jointly acquire oil and gas leases in the Permian Basin. The agreement provides that each party must offer the other party the right to participate in 50% of each such acquisition. The parties also agreed, subject to certain
+exceptions, to share third-party costs and expenses in proportion to their respective participating interests and pay certain other fees as provided in the agreement. During 2011, we acquired approximately 604 net acres from Windsor under the terms
+of this agreement for an aggregate of $1,102,000. Windsor is controlled by Wexford. 
+Windsor is the operator of all of our acreage in the
+Permian Basin. As operator of these properties, Windsor is responsible for the daily operations, monthly operation billings and monthly revenue disbursements for the properties in which we hold an interest. For the year ended December 31, 2011,
+Windsor billed us approximately $56,103,000 and at December 31, 2011, we owed $5,593,000 for these services. 
+Effective April 1,
+2010, we entered into an area of mutual interest agreement with Windsor Niobrara LLC, which we refer to as Windsor Niobrara, to jointly acquire oil and gas leases on certain lands located in Northwest Colorado for the purpose of exploring,
+exploiting and producing oil and gas from the Niobrara Formation. The agreement provides that each party must offer the other party the right to participate in such acquisitions on a 50/50 basis. The parties also agreed, subject to certain
+exceptions, to share third-party costs and expenses in proportion to their respective participating interests and pay certain other fees as provided in the agreement. We are the operator of this acreage in the Niobrara Formation. As operator, we are
+responsible for daily operations, monthly operation billings and monthly revenue disbursements for these properties. For the year ended December 31, 2011, we billed Windsor Niobrara $6,642,000 and, at December 31, 2011, Windsor Niobrara
+owed us $3,557,000 for these services. Windsor Niobrara is controlled by Wexford. 
+In February 2011, we entered into an agreement with an
+unrelated third party to acquire certain leasehold interests in acreage located in the Utica Shale in Ohio. The agreement also granted us an exclusive right of first refusal for a period of six months on certain additional tracts leased by the
+seller. As of December 31, 2011, we had acquired leasehold interests in approximately 98,000 gross (49,000 net) acres in the Utica Shale in Eastern Ohio under these and other agreements for approximately $118,421,000. As of February 20,
+2012, we had closed on additional acquisitions bringing our leasehold interests to approximately 107,000 gross (53,500 net) acres. We have commitments with various future closing dates that could increase our acreage position in the Utica Shale to
+an aggregate of approximately 125,000 gross (62,500 net) leasehold acres. Entities affiliated with Wexford, primarily Windsor Ohio LLC, or Windsor Ohio, participated with us on a 50/50 basis in the acquisition of the leases described above and, at
+December 31, 2011, held leasehold interests in approximately 49,000 net acres for which they paid approximately $118,413,000, excluding fees and expenses of $1,184,000 billed under the acquisition team agreement described below. We are the
+operator on this acreage in the Utica Shale. 
+Effective July 1, 2008, we entered into an acquisition team agreement with Everest to
+identify and evaluate potential oil and gas properties in which we and Everest or its affiliates may wish to invest. Pursuant to this agreement, Gulfport and Everest each agreed to form an acquisition team. Upon a successful closing of an
+acquisition or divestiture, the party whose acquisition team identified the acquisition or divestiture is entitled to 
+36 
+Table of Contents 
+receive a fee from the other party and its affiliates, if applicable, participating in such closing. The fee is equal to 1% of the party’s proportionate share of the acquisition or
+divestiture consideration. The agreement has a one-year term unless earlier terminated by either party upon 30 days notice. 
+From time to
+time, certain of our petroleum engineers provide services relating to evaluation of potential investments to Wexford and geological evaluations, seismic review and similar services to Tatex II and Tatex III. Wexford, Tatex II and Tatex III,
+respectively, have agreed to reimburse us based on the amount, scope and nature of services provided by our petroleum engineers to such entities. We did not provide any services under these arrangements in 2011. 
+Our Relationships with Wexford and its Affiliates 
+Charles E. Davidson is the Chairman and Chief Investment Officer of Wexford and he beneficially owned approximately 16.8% of our outstanding common stock as of December 31, 2011. Wexford is the manager of
+the Wexford-controlled entities described above. As manager, Wexford has the exclusive authority to, among other things, purchase, hold and dispose of the assets of each such entity. Mr. Liddell, our Chairman of the Board, is the operating member
+and, in some cases, an officer, of certain of these entities. All distributions made by these entities are first paid to the Wexford members in accordance with their respective ownership interests until they have received amounts equal to their
+respective capital contributions. Thereafter, distributions are to be made 90% to the Wexford members in accordance with their respective ownership interests and 10% to Mr. Liddell. Mr. Liddell is not currently entitled to, and has not received,
+distributions from any of these entities. All transactions between us and these entities are reviewed and approved by our independent directors. 
+37 
+Table of Contents

raw/proxies/0000874499/0001193125-13-188014/proxy_rpt.txt

@@ -0,0 +1,138 @@
+Certain Relationships and Related Transactions 
+Review and Approval of Related Party Transactions 
+The Audit Committee, as provided in its charter, reviews and approves related party transactions. The Company does not have a formal set of standards to be substantively applied to each transaction
+reviewed by the Audit Committee. Instead of a formalized policy, related party transactions are reviewed and judgment is applied to determine whether such transactions are in the best interests of the Company. Further, the Company’s Code of
+Business Conduct and Ethics governs various compliance areas, including conflicts of interest and fair dealings, which are considered in the process of the review and approval of related party transactions. 
+The Company’s policy is that all of its employees and directors, as well as their family members, must avoid any activity that is or has the
+appearance of conflicting with the Company’s business interest. This policy is included in the Company’s Code of Business Conduct and Ethics posted on its website. Each director and executive officer is instructed to always inform the
+designated compliance officer when confronted with any situation that may be perceived as a conflict of interest. Only the board of directors or a committee consisting solely of independent directors may grant waivers of the provisions of the Code
+of Business Conduct and Ethics for the Company’s executive officers and directors. In addition, at least annually, each director and executive officer completes a detailed questionnaire specifying any business relationship that may give rise to
+a conflict of interest. 
+Further, under the Audit Committee Charter, the Audit Committee is responsible for reviewing and monitoring
+compliance with our Code of Business Conduct and Ethics and recommending any warranted changes to the board of directors. In addition, the board of directors and, pursuant to its written charter, the Audit Committee, reviews and approves all
+relationships and transactions in which the Company and its directors, director nominees and executive officers and their immediate family members, as well as holders of more than 5% of any class of our voting securities and their family members,
+have a direct or indirect material interest. The board of directors and the Audit Committee approve only those transactions that, in light of known circumstances, are consistent, or are not inconsistent with, the Company’s best interests, as
+they determine in the good faith exercise of their discretion. 
+Services Provided to Us by Affiliated Entities
+We contract with Athena Construction, L.L.C., or Athena, to provide barge services in our West Cote Blanche Bay, or WCBB, and Hackberry
+fields located along the Louisiana Gulf Coast. During 2012, we paid Athena $4,675,000 and owed an additional $1,453,000 for such services at December 31, 2012. Athena is controlled by Wexford Capital LP, or Wexford. Our relationship with
+Wexford is described below under the heading “Our Relationships with Wexford and its Affiliates.” 
+Caliber Development Company, LLC,
+or Caliber, provides building maintenance services for our headquarters in Oklahoma City, Oklahoma. We also lease office space from Caliber. During 2012, we paid Caliber $73,000 and owed an additional $12,000 as of December 31, 2012. Caliber is
+an entity controlled by Wexford. 
+During the first six months of 2012, Black Fin P&A, LLC, or Black Fin, performed plugging and
+abandonment services for us at our WCBB field. We paid Black Fin $1,086,000 for such services. In mid-2012, we ceased using Black Fin’s services. Black Fin is an entity controlled by Wexford. 
+Our Investments in Affiliated Entities and Related Agreements 
+On May 7, 2012, we entered into a contribution agreement with Diamondback Energy, Inc., or Diamondback, in which we agreed to contribute to Diamondback, prior to the closing of its initial public
+offering, or the Diamondback IPO, all of our oil and natural gas interests in the Permian Basin. On October 11, 2012, we completed this contribution, which we refer to in this proxy statement as the Contribution. At the closing of the
+Contribution, Diamondback issued to us (i) 7,914,036 shares of Diamondback common stock and (ii) a 
+38 
+Table of Contents 
+promissory note for $63.6 million, which was repaid to us at the closing of the Diamondback IPO on October 17, 2012. This aggregate consideration was subject to a post-closing cash
+adjustment based on changes in the working capital, long-term debt and certain other items of a Diamondback subsidiary as of the date of the Contribution. In January 2013, we received an additional payment from Diamondback of $18.6 million as a
+result of this post-closing adjustment. In connection with the Contribution, we and Diamondback entered into an investor rights agreement in which we have the right, for so long as we beneficially own more than 10% of Diamondback’s outstanding
+common stock, to designate one individual as a nominee to serve on Diamondback’s board of directors. Such nominee, if elected to Diamondback’s board, will also serve on each committee of the board so long as he or she satisfies the
+independence and other requirements for service on the applicable committee of the board. So long as we have the right to designate a nominee to Diamondback’s board and there is no nominee of ours actually serving as a Diamondback director, we
+will have the right to appoint one individual as an advisor to the board who shall be entitled to attend board and committee meetings. We are also entitled to certain information rights and Diamondback granted us certain demand and
+“piggyback” registration rights obligating Diamondback to register with the SEC any shares of Diamondback common stock that we own. As of April 1, 2013, we held approximately 21.4% of Diamondback’s outstanding common stock. As of
+December 11, 2012, Wexford beneficially owned approximately 44.4% of Diamondback’s outstanding common stock. Diamondback was the operator of all of the acreage in the Permian Basin that we contributed in the Contribution. As operator of
+these properties, Diamondback was responsible for the daily operations, monthly operation billings and monthly revenue disbursements for the properties in which we held an interest. For the year ended December 31, 2012, we paid Diamondback
+approximately $49,418,000 for these services and, at December 31, 2012, we owed $269,000 for these services. 
+Effective as of
+November 1, 2007, we and an entity then-known as Windsor Permian LLC (which is currently a wholly-owned subsidiary of Diamondback and now known as Diamondback O&G LLC) entered into an area of mutual interest agreement to jointly acquire oil
+and gas leases in the Permian Basin. The agreement provided that each party must offer the other party the right to participate in 50% of each such acquisition. The parties also agreed, subject to certain exceptions, to share third-party costs and
+expenses in proportion to their respective participating interests and pay certain other fees as provided in the agreement. During 2012, we acquired approximately 5,000 net acres from Windsor Permian LLC under the terms of this agreement for an
+aggregate of $5,410,000. This area of mutual interest agreement was terminated in connection with the Contribution. 
+We own a 24.9999%
+interest in Grizzly Oil Sands ULC, or Grizzly, a Canadian unlimited liability company, through our wholly owned subsidiary Grizzly Holdings, Inc. The remaining interests in Grizzly are owned by Grizzly Oils Sands Inc., an entity owned by certain
+investment funds managed by Wexford. As of December 31, 2012, Grizzly had approximately 800,000 acres under lease in the Athabasca region located in the Alberta Province near Fort McMurray. On October 5, 2012, we entered into an agreement
+with Grizzly in which we committed to make monthly payments from October 2012 to May 2013 in the aggregate amount of approximately $8.5 million to fund our proportionate share of the construction and development costs of the Algar Lake facility. We
+also agreed to fund our proportionate share of any unfunded cost overruns in excess of $2.0 million. The remaining aggregate commitment at December 31, 2012 was approximately $6.3 million. During 2012, we paid an aggregate of $103,915,000 under
+this agreement and in cash calls, increasing our total net investment in Grizzly to $172,766,000. 
+We have a 23.5% indirect ownership interest
+in Tatex Thailand II, LLC, or Tatex II. The remaining indirect interests in Tatex II are owned by entities controlled by Wexford. Tatex II holds 85,122 of the 1,000,000 outstanding shares of APICO, LLC, or APICO, an international oil and gas
+exploration company. APICO has a reserve base located in Southeast Asia through its ownership of concessions covering 243,000 acres which includes the Phu Horm Field. During 2012, we received $820,000 in distributions in respect of our interest in
+Tatex II. 
+We have a 17.9% ownership interest in Tatex Thailand III, or Tatex III. Tatex III owns a concession covering approximately 490,000
+acres in Thailand. Approximately 68.7% of the remaining interests in Tatex III are owned by an entity controlled by Wexford. During the year ended December 31, 2012, we paid $626,000 in cash calls to Tatex III. 
+39 
+Table of Contents 
+During the third quarter of 2011, we purchased a 25% ownership interest in Bison Drilling and Field Services
+LLC, or Bison. In April 2012, we increased our ownership interest in Bison to 40% for a payment of $6,152,000. The remaining interests in Bison are owned by entities controlled by Wexford. Bison owns and operates drilling rigs. During the year ended
+December 31, 2012, we paid $1,373,000 in cash calls, increasing our total net investment in Bison to $13,518,000. In addition, we entered into a loan agreement with Bison, effective May 15, 2012, under which Bison may borrow funds from us.
+Interest accrues at LIBOR plus 0.28% or 8%, whichever is lower, and is paid on a paid-in-kind basis by increasing the outstanding balance of the loan. The loan has a maturity date of January 31, 2015. We loaned Bison $1,594,000 in principal
+amount during the first nine months of 2012, all of which was repaid by Bison during the third quarter of 2012 along with $1,000 in accrued interest. No borrowings were outstanding as of December 31, 2012 under this loan agreement with Bison.
+We have a 25% ownership interest in Muskie Proppant LLC, or Muskie (formerly known as Muskie Holdings LLC). The remaining interests in Muskie
+are owned by entities controlled by or affiliated with Wexford. Muskie holds certain assets, real estate and rights in a lease covering land in Wisconsin that is prospective for mining oil and natural gas fracture grade sand. During the year ended
+December 31, 2012, we paid $6,213,000 in cash calls, increasing our total net investment in Muskie to $7,320,000. 
+During the first
+quarter of 2012, we and entities controlled by or affiliated with Wexford formed Timber Wolf Terminals LLC, or Timber Wolf. We have a 50% interest in Timber Wolf and our initial investment during 2012 was $1,000,000. Timber Wolf was formed to
+operate a crude/condensate terminal and a sand transloading facility in Ohio. 
+During the first quarter of 2012, we purchased a 22.5%
+ownership interest in Windsor Midstream LLC, or Midstream, at a cost of $7,021,000. The remaining interests in Midstream are owned by entities controlled by Wexford. Midstream owns a 28.4% interest in MidMar Gas LLC, a gas processing plant in West
+Texas. During the year ended December 31, 2012, we paid $1,819,000 in cash calls, increasing our total net investment in Midstream to $9,503,000. 
+During 2012, we and other individuals and entities formed Stingray Pressure Pumping LLC, or Stingray Pressure, Stingray Cementing LLC, or Stingray Cementing, and Stingray Logistics LLC, or Stingray
+Logistics, which provide well completion services, well cementing services and well services, respectively. Our initial interest in each Stingray entity is 50% and we are the manager of each entity. During the year ended December 31, 2012, we
+paid (a) $14,500,000 in cash calls to Stingray Pressure, increasing our total net investment in Stingray Pressure to $13,265,000, (b) $3,269,000 in cash calls to Stingray Cementing, increasing our net investment in Stingray Cementing to
+$3,110,000, and (c) $983,000 in cash calls to Stingray Logistics, increasing our net investment in Stingray Logistics to $947,000. The remaining interests in each of the Stingray entities are owned by the president of the entity, by Mike
+Liddell, our Chairman of the Board, and by individuals and entities affiliated with Wexford. Mr. Liddell is not entitled to any distribution in respect of his interest in any Stingray entity until we and the Wexford affiliates have received
+repayment in full of our and their respective capital accounts with respect to such entity. Thereafter, all future distributions to which the Wexford affiliates may be entitled from the applicable entity will be paid 90% to the Wexford affiliates
+and 10% to Mr. Liddell. Mr. Liddell will not receive, or be entitled to receive, any distributions in respect of our interest in any Stingray entity. 
+During the second quarter of 2012, we and Windsor Ohio LLC, an entity controlled by Wexford, formed Blackhawk Midstream LLC, or Blackhawk. We are the manager of Blackhawk and have an initial 50% ownership
+interest. Blackhawk coordinates gathering, compression, processing and marketing activities for us in connection with the development of our Utica Shale acreage. During the year ended December 31, 2012, we paid $436,000 in cash calls to
+Blackhawk. 
+40 
+Table of Contents 
+Area of Mutual Interest and Related Agreements 
+Effective April 1, 2010, we entered into an area of mutual interest agreement with Windsor Niobrara LLC, or Windsor Niobrara, to jointly acquire oil
+and gas leases in Northwest Colorado for the purpose of exploring, exploiting and producing oil and gas from the Niobrara Formation. The agreement provides that each party must offer the other party the right to participate in such acquisitions on a
+50/50 basis. The parties also agreed, subject to certain exceptions, to share third-party costs and expenses in proportion to their respective participating interests and pay certain other fees as provided in the agreement. In connection with this
+agreement, we and Windsor Niobrara also entered into a development agreement, effective as of April 1, 2010, pursuant to which we and Windsor Niobrara agreed to jointly develop the contract area, and we agreed to act as the operator under the
+terms of a joint operating agreement. As operator, we are responsible for daily operations, monthly operation billings and monthly revenue disbursements for these properties. For the year ended December 31, 2012, we billed Windsor Niobrara
+$7,545,000 and, at December 31, 2012, Windsor Niobrara owed us $173,000 for these services. Windsor Niobrara is controlled by Wexford. 
+Effective July 1, 2008, we entered into an acquisition team agreement with Everest Operations Management LLC, or Everest, to identify and evaluate
+potential oil and gas properties in which we and Everest or its affiliates may wish to invest. Pursuant to this agreement, the Company and Everest each agreed to form an acquisition team. Upon a successful closing of an acquisition or divestiture,
+the party whose acquisition team identified the acquisition or divestiture is entitled to receive a fee from the other party and its affiliates, if applicable, participating in such closing. The fee is equal to 1% of the party’s proportionate
+share of the acquisition or divestiture consideration. The agreement has a one-year term unless earlier terminated by either party upon 30 days notice. Affiliates of Everest were billed approximately $1,087,000 under this acquisition team agreement
+during the year ended December 31, 2012. 
+Utica Shale Transactions 
+Windsor Ohio LLC, or Windsor Ohio, an entity controlled by Wexford, participated with us in the acquisition of certain leasehold interests in acreage located in the Utica Shale in Ohio. We are the
+operator of this acreage in the Utica Shale. As operator, we are responsible for daily operations, monthly operation billings and monthly revenue disbursements for these properties. For the year ended December 31, 2012, we billed Windsor Ohio
+approximately $163,650,000 for these services. At December 31, 2012, Windsor Ohio owed us approximately $6,520,000 for these services. Liddell Investments, LLC, or Liddell Investments, an entity controlled by our Chairman of the Board, has a
+10% interest in Windsor Ohio. For the year ended December 31, 2012, we billed approximately $2,020,000 to Liddell Investments directly for these services and, at December 31, 2012, all of this amount was owed to us. For the year ended
+December 31, 2012, we paid Liddell Investments approximately $102,000 in respect of its interest in Windsor Ohio. 
+In December 2012, we
+entered into a purchase and sale agreement with Windsor Ohio pursuant to which Windsor Ohio agreed to sell to us approximately 30,000 net acres which, at the time, represented 50% of its right, title and interest in and to certain leasehold
+interests in the Utica Shale in Eastern Ohio. The parties subsequently amended that agreement to provide for our acquisition of approximately 7,000 additional net acres. The aggregate purchase price for these interests was approximately $372.0
+million, subject to certain adjustments. Windsor Ohio retained its interest in 14 existing wells, along with certain acreage surrounding those wells. As discussed above, Windsor Ohio participated with us in the acquisition of our Utica Shale leases
+and through this transaction, we acquired an additional approximately 27.5% interest in these leases, increasing our working interest in the acreage to 77.7%. The transaction closed on December 24, 2012. All of the acreage included in this
+transaction was nonproducing at the time of the acquisition and we are the operator of all of this acreage, subject to existing development and operating agreements between the parties. Pending the completion of title review after the closing,
+approximately $53.9 million of the purchase price was placed in an escrow account. The escrow account will terminate on April 30, 2013 and the escrow amount will be distributed to either us or Windsor Ohio based on any title benefits or title
+defects resulting from the title review. The transaction was approved by a special committee of our board of directors, which engaged independent counsel and financial advisors to assist with its review. 
+41 
+Table of Contents 
+In February 2013, we entered into another purchase and sale agreement with Windsor Ohio pursuant to which
+Windsor Ohio agreed to sell to us approximately 22,000 net acres representing 100% of its right, title and interest in and to certain leasehold interests in the Utica Shale in Eastern Ohio for approximately $220.4 million, subject to certain
+adjustments. This transaction, which closed on February 15, 2013, excluded Windsor Ohio’s interest in 14 existing wells and 16 proposed future wells together with certain acreage surrounding those wells. Through this most recent
+transaction, we acquired an additional approximately 16.2% interest in our Utica Shale leases, increasing our working interest in the acreage to 93.8%. All of the acreage included in this transaction was nonproducing at the time of the acquisition
+and we are the operator of all of this acreage, subject to existing development and operating agreements between the parties. Pending the completion of title review after the closing, approximately $33.6 million of the purchase price has been placed
+in an escrow account. The escrow account will terminate on May 1, 2013 and the escrow amount will be distributed to either us or Windsor Ohio based on any title benefits or title defects resulting from the title review. The transaction was also
+approved by a special committee of our board of directors, which engaged independent counsel and financial advisors to assist with its review. As noted above, Mr. Liddell, our Chairman of the Board, has a 10% interest in Windsor Ohio. We have
+been advised by Windsor Ohio that Mr. Liddell received approximately $2.9 million in respect of this interest in connection with the December 2012 transaction and approximately $19.3 million in respect of this interest in connection with the
+February 2013 transaction. Mr. Liddell may also receive up to an additional $5.4 million and $3.4 million in connection with these transactions, respectively, upon termination of the escrow accounts. 
+Rhino Exploration LLC, or Rhino, an affiliate of Wexford, has also participated with us in the acquisition of certain leasehold interest in acreage
+located in the Utica Shale in Ohio. We are the operator of this acreage in the Utica Shale. As operator, we are responsible for daily operations, monthly operation billings and monthly revenue disbursements for these properties. For the year ended
+December 31, 2012, we billed Rhino approximately $4,443,000 for these services. At December 31, 2012, Rhino owed us approximately $4,257,000 for these services. 
+Our Relationships with Wexford and its Affiliates 
+Charles E. Davidson is the Chairman
+and Chief Investment Officer of Wexford. He beneficially owned approximately 13.3% of our outstanding common stock as of December 31, 2011 and approximately 9.5% of our outstanding common stock as of March 13, 2012, which ownership
+interest was reduced to less than 1% of our outstanding common stock as of December 31, 2012. Wexford is the manager of the Wexford-controlled entities described above. As manager, Wexford has the exclusive authority to, among other things,
+purchase, hold and dispose of the assets of each such entity. Mr. Liddell, our Chairman of the Board, was the operating member of Windsor Permian prior to the Contribution, is the operating member of Athena, Caliber, Black Fin, Windsor
+Midstream, Windsor Ohio, DB Energy and Windsor Niobrara, which we refer to collectively as the “operating member companies,” and the chairman or an officer of Everest, Bison, Timber Wolf, Windsor Midstream, Windsor Ohio and Windsor
+Niobrara. Mr. Liddell also holds an equity interest in each of the operating member companies, Bison, Muskie and Timber Wolf, and an indirect profits interest in Grizzly Oil Sands, Inc. As a result, all distributions made by these entities and
+payable to the Wexford members are to be first made to the Wexford members in accordance with their respective ownership interests until they have received amounts equal to their respective capital contributions. Thereafter, distributions are to be
+made 90% to the Wexford members in accordance with their respective ownership interests and 10% to Mr. Liddell. Except as described above with respect to Windsor Ohio, Mr. Liddell is not currently entitled to, and has not received,
+distributions from any of these entities. Transactions between us and these entities are reviewed and approved by our independent directors. Mr. Liddell is not standing for re-election as one of our directors and his tenure as Chairman of the Board
+will end upon the conclusion of our 2013 Annual Meeting of Stockholders. 
+42 
+Table of Contents

raw/proxies/0000874499/0001193125-14-172975/proxy_rpt.txt

@@ -0,0 +1,72 @@
+Certain Relationships and Related Transactions 
+Review and Approval of Related Party Transactions 
+The Audit Committee, as provided in its charter, reviews and approves related party transactions. The Company does not have a formal set of standards to be
+substantively applied to each transaction reviewed by the Audit Committee. Instead of a formalized policy, related party transactions are reviewed and judgment is applied to determine whether such transactions are in the best interests of the
+Company. Further, the Company’s Code of Business Conduct and Ethics governs various compliance areas, including conflicts of interest and fair dealings, which are considered in the process of the review and approval of related party
+transactions. 
+The Company’s policy is that all of its employees and directors, as well as their family members, must avoid any activity that is or
+has the appearance of conflicting with the Company’s business interest. This policy is included in the Company’s Code of Business Conduct and Ethics posted on its website. Each director and executive officer is instructed to always inform
+the designated compliance officer when confronted with any situation that may be perceived as a conflict of interest. Only the board of directors or a committee consisting solely of independent directors may grant waivers of the provisions of the
+Code of Business Conduct and Ethics for the Company’s executive officers and directors. In addition, at least annually, each director and executive officer completes a detailed questionnaire specifying any business relationship that may give
+rise to a conflict of interest. 
+Further, under the Audit Committee Charter, the Audit Committee is responsible for reviewing and monitoring compliance
+with our Code of Business Conduct and Ethics and recommending any warranted changes to the board of directors. In addition, the board of directors and, pursuant to its written charter, the Audit Committee, reviews and approves all relationships and
+transactions in which the Company and its directors, director nominees and executive officers and their immediate family members, as well as holders of more than 5% of any class of our voting securities and their family members, have a direct or
+indirect material interest. The board of directors and the Audit Committee approve only those transactions that, in light of known circumstances, are consistent, or are not inconsistent with, the Company’s best interests, as they determine in
+the good faith exercise of their discretion. 
+Related Party Transactions and Relationships 
+We contract with Athena Construction, L.L.C., or Athena, to provide barge services in our West Cote Blanche Bay and Hackberry fields located along the
+Louisiana Gulf Coast. During 2013, we paid Athena $5.2 million and owed an additional $1.0 million for such services at December 31, 2013. 
+Caliber
+Development Company, LLC, or Caliber, provides building maintenance services for our headquarters in Oklahoma City, Oklahoma. We also lease office space from Caliber. During 2013, we paid Caliber $175,000 and owed $43,000 as of December 31,
+2013. 
+We own a 24.9999% interest in Grizzly Oil Sands ULC, or Grizzly, a Canadian unlimited liability company, through our wholly owned subsidiary
+Grizzly Holdings, Inc. The remaining interests in Grizzly are owned by Grizzly Oils Sands Inc. As of December 31, 2013, Grizzly had approximately 830,000 acres under lease in the Athabasca and Peace River oil sands regions located in the
+Alberta Province near Fort McMurray. On October 5, 2012, we entered into an agreement with Grizzly in which we committed to make monthly payments from October 2012 to May 2013 in the aggregate amount of approximately $8.5 million to fund our
+proportionate share of the construction and development costs of the Algar Lake facility. We also agreed to fund our proportionate share of any unfunded cost overruns in excess of $2.0 million. During 2013, we paid an aggregate of $33.9 million
+under this agreement and in cash calls. 
+We have a 25% ownership interest in Muskie Proppant LLC, or Muskie (formerly known as Muskie Holdings LLC).
+Muskie processes and sells sand for use in hydraulic fracturing by the oil and natural gas industry and holds certain assets, real estate and rights in a lease covering land in Wisconsin that is prospective for mining oil and natural gas fracture
+grade sand. During the year ended December 31, 2013, we paid $2.2 million in cash calls, increasing our total net investment in Muskie to $7.5 million. We also entered into a loan agreement with Muskie effective July 1, 2013, under which
+we have loaned Muskie $0.9 million. Interest accrues at the prime rate plus 2.5%. The loan has a maturity date of July 31, 2014. At December 31, 2013, the outstanding balance of the loan was $0.9 million. 
+During 2011, we invested in Bison Drilling and Field Services LLC, or Bison. Bison owns and operates drilling rigs. During the year ended December 31,
+2013, we paid $2.3 million in cash calls. We entered into a loan agreement with Bison effective May 15, 2012, under which Bison may borrow funds from us. Interest accrues at LIBOR plus 0.28% or 8%, whichever is lower, and is to be paid on a
+paid-in-kind basis by increasing the outstanding balance of the loan. The loan has a maturity date of January 31, 2015. We loaned Bison $1.6 million during the first nine months of 2012, all of which was repaid by Bison during the third quarter
+of 2012. We have made no loans to Bison since that time. 
+37 
+Table of Contents 
+During the first quarter of 2012, we, Windsor Ohio LLC, or Windsor Ohio, and Rhino Energy LLC formed Timber Wolf
+Terminals LLC, or Timber Wolf. We currently have a 50% interest in Timber Wolf and paid $0.1 million in cash calls during 2013. Timber Wolf was formed to operate a crude/condensate terminal and a sand transloading facility in Ohio. 
+During the first quarter of 2012, we purchased a 22.5% ownership interest in Windsor Midstream LLC, or Midstream, at a cost of $7.0 million. Midstream owns a
+28.4% interest in Coronado Midstream LLC (formerly known as MidMar Gas LLC), a gas processing plant in West Texas. During the year ended December 31, 2013, we paid an immaterial amount in net cash calls. 
+During the second quarter of 2012, we and Windsor Ohio formed Blackhawk Midstream LLC, or Blackhawk. We are the manager of Blackhawk and have a 50% ownership
+interest. Blackhawk coordinates gathering, compression, processing and marketing activities for us in connection with the development of our Utica Shale acreage. During the year ended December 31, 2013, we paid $0.7 million in cash calls to
+Blackhawk. On January 28, 2014, Blackhawk closed on the sale of its equity interest in Ohio Gathering Company, LLC and Ohio Condensate Company, LLC for a purchase price of $190.0 million, of which $14.3 million was placed in escrow. We received
+$84.8 million in net proceeds from this transaction. 
+Panther Drilling Systems, LLC, or Panther, performs directional drilling services for the Company.
+During the year ended December 31, 2013, we were billed $12.6 million for these services and, at December 31, 2013, we owed Panther approximately $1.8 million. 
+Redback Directional Services, LLC, or Redback, provides coil tubing and flow back services for the Company. Redback billed us $0.1 million for these services
+during the year ended December 31, 2013, and no amounts were owed to Redback at December 31, 2013. 
+Effective April 1, 2010, we entered
+into an area of mutual interest agreement with Windsor Niobrara LLC, or Windsor Niobrara, to jointly acquire oil and gas leases in Northwest Colorado for the purpose of exploring, exploiting and producing oil and gas from the Niobrara Formation. The
+agreement provides that each party must offer the other party the right to participate in such acquisitions on a 50/50 basis. The parties also agreed, subject to certain exceptions, to share third-party costs and expenses in proportion to their
+respective participating interests and pay certain other fees as provided in the agreement. In connection with this agreement, we and Windsor Niobrara also entered into a development agreement, effective as of April 1, 2010, pursuant to which
+we and Windsor Niobrara agreed to jointly develop the contract area, and we agreed to act as the operator under the terms of a joint operating agreement. As operator, we are responsible for daily operations, monthly operation billings and monthly
+revenue disbursements for these properties. For the year ended December 31, 2013, we billed Windsor Niobrara $0.9 million and, at December 31, 2013, Windsor Niobrara owed us an immaterial amount for these services. 
+Windsor Ohio participated with us in the acquisition of certain leasehold interests in acreage located in the Utica Shale in Ohio. We are the operator of this
+acreage in the Utica Shale. As operator, we are responsible for daily operations, monthly operation billings and monthly revenue disbursements for these properties. For the year ended December 31, 2013, we billed Windsor Ohio approximately
+$73.4 million for these services. At December 31, 2013, Windsor Ohio owed us approximately $1.6 million for these services. 
+In February 2013, we
+entered into a purchase and sale agreement with Windsor Ohio pursuant to which Windsor Ohio agreed to sell to us approximately 22,000 net acres representing 100% of its right, title and interest in and to certain leasehold interests in the Utica
+Shale in Eastern Ohio for approximately $220.4 million, subject to certain adjustments. This transaction, which closed on February 15, 2013, excluded Windsor Ohio’s interest in 14 existing wells and 16 proposed future wells together with
+certain acreage surrounding those wells. Through this transaction, we acquired an additional approximately 16.2% interest in our Utica Shale leases, increasing our working interest in the acreage to 93.8%. All of the acreage included in this
+transaction was nonproducing at the time of the acquisition and we are the operator of all of this acreage, subject to existing development and operating agreements between the parties. Pending the completion of title review after the closing,
+approximately $33.6 million of the purchase price was placed in an escrow account. In May 2013, the escrow accounts for both this acquisition and a prior acquisition with Windsor Ohio that was completed in December 2012 were terminated, and an
+aggregate of $10.0 million was returned to us. The $77.5 million balance of the escrow accounts was disbursed to Windsor Ohio based on the results of title review. The transaction was approved by a special committee of our board of directors, which
+engaged independent counsel and financial advisors to assist with its review. 
+Mr. Mike Liddell, our former Chairman of the Board and one of our
+named executive officers during 2013, is the operating member and/or an officer of each of Windsor Niobrara, Windsor Ohio, Windsor Midstream, Athena, Panther, Redback, Timber Wolf, Bison and Caliber and holds a 10% participation interest in Windsor
+Ohio and a direct or indirect contingent participation or profits interest ranging from 2.5% to 10.0% in Windsor Niobrara, Athena, Redback, Caliber, Windsor Midsteam, Muskie, Bison, Panther and Grizzly Oil Sands Inc., none of which interests are
+dilutive to the interests, if any, that we hold in such entities. 
+38 
+Table of Contents

raw/proxies/0000913241/0001019056-01-500081/proxy.txt

@@ -0,0 +1,1222 @@
+DEF 14A
+1
+file001.txt
+DEFINITIVE 14A
+SCHEDULE 14A
+Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
+(Amendment No. )
+[X] Filed by Registrant
+[ ] Filed by a Party other than the Registrant
+Check the appropriate box:
+[ ] Preliminary Proxy Statement
+[X] Definitive Proxy Statement
+[ ] Definitive Additional Materials
+[ ] Soliciting Material Pursuant toss.240.14a-11(c) orss.240.14a-12
+STEVEN MADDEN, LTD.
+(Name of Registrant As Specified in its Charter)
+Payment of Filing Fee (Check the appropriate box):
+[X] No fee required.
+[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
+0-11.
+1) Title of each class of securities to which transaction applies:
+N/A
+-----------------------------------------------------------------------
+2) Aggregate number of securities to which transaction applies:
+N/A
+-----------------------------------------------------------------------
+3) Per unit price or other underlying value of transaction computed
+pursuant to Exchange Act Rule 0-11:(1)
+N/A
+-----------------------------------------------------------------------
+4) Proposed maximum aggregate value of transaction:
+N/A
+-----------------------------------------------------------------------
+(1) Set forth the amount on which the filing fee is calculated and state
+how it was determined.
+[ ] Check box if any part of the fee is offset as provided by Exchange
+Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
+paid previously. Identify the previous filing by registration statement number,
+or the Form or Schedule and date of its filing.
+1) Amount Previously Paid:
+N/A
+------------------------------------------------------
+2) Form, Schedule or Registration Statement No.:
+N/A
+------------------------------------------------------
+3) Filing Party:
+N/A
+------------------------------------------------------
+4) Date Filed:
+N/A
+------------------------------------------------------
+STEVEN MADDEN, LTD.
+52-16 BARNETT AVENUE
+LONG ISLAND CITY, NY 11104
+-----------------------------------
+NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
+TO BE HELD ON MAY 25, 2001
+-----------------------------------
+TO THE STOCKHOLDERS OF STEVEN MADDEN, LTD.:
+NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the
+"Annual Meeting") of Steven Madden, Ltd., a Delaware corporation (the
+"Company"), will be held on May 25, 2001, at the Company's showroom located at
+1370 Avenue of the Americas, 12th Floor, New York, New York at 10:00 a.m., local
+time, and thereafter as it may from time to time be adjourned, for the purposes
+stated below.
+1. To elect eight (8) directors to the Board of the Company for a
+one (1) year term;
+2. To approve an amendment to the Company's 1999 Stock Plan to
+increase the maximum number of shares of the Company's common
+stock subject to the plan from 975,000 shares to 1,600,000
+shares;
+3. To ratify the appointment of Richard A. Eisner & Company, LLP
+as independent auditors of the Company for fiscal year 2001;
+and
+4. To transact such other business as may properly come before
+the Annual Meeting or any adjournments thereof.
+All Stockholders are cordially invited to attend the Annual Meeting.
+Only those Stockholders of record at the close of business on April 16, 2001 are
+entitled to notice of and to vote at the Annual Meeting and any adjournments
+thereof. A complete list of stockholders entitled to vote at the Annual Meeting
+will be available at the Meeting.
+BY ORDER OF THE BOARD OF DIRECTORS
+/s/ STEVEN MADDEN
+-----------------------------------------
+April 25, 2001 Steven Madden,
+Chief Executive Officer
+WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE MEETING, PLEASE DATE AND SIGN THE
+ENCLOSED FORM OF PROXY AND MAIL IT PROMPTLY IN THE ENCLOSED ENVELOPE TO AMERICAN
+STOCK TRANSFER & TRUST COMPANY, 40 WALL STREET, NEW YORK, NEW YORK 10005.
+STEVEN MADDEN, LTD.
+52-16 BARNETT AVENUE
+LONG ISLAND CITY, NY 11104
+PROXY STATEMENT
+INTRODUCTION
+This Proxy Statement is furnished in connection with the solicitation
+of proxies by the Board of Directors of Steven Madden, Ltd., a Delaware
+corporation (the "Company"), for use at the annual meeting of the Company's
+stockholders to be held at the Company's showroom located at 1370 Avenue of the
+Americas, 12th Floor, New York, New York on May 25, 2001 at 10:00 a.m., local
+time, and at any adjournments thereof (the "Annual Meeting").
+The Annual Meeting has been called to consider and take action on the
+following proposals: (i) to elect eight (8) directors to the Board of Directors
+of the Company for a one (1) year term, (ii) to approve an amendment to the
+Company's 1999 Stock Plan to increase the maximum number of shares of Company's
+Common Stock subject to the plan from 975,000 shares to 1,600,000 shares, (iii)
+to ratify the appointment of Richard A. Eisner & Company, LLP as independent
+auditors of the Company for fiscal year 2001, and (iv) to transact such other
+business as may properly come before the Annual Meeting or any adjournments
+thereof. The Board of Directors knows of no other matters to be presented for
+action at the Annual Meeting. However, if any other matters properly come before
+the Annual Meeting, the persons named in the proxy will vote on such other
+matters and/or for other nominees in accordance with their best judgment. THE
+COMPANY'S BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE IN FAVOR OF
+EACH OF THE PROPOSALS. Only holders of record of common stock, $.0001 par value
+(the "Common Stock"), of the Company at the close of business on April 16, 2001
+(the "Record Date") will be entitled to vote at the Annual Meeting.
+The principal executive offices of the Company are located at 52-16
+Barnett Avenue, Long Island City, NY 11104 and its telephone number is (718)
+446-1800. The approximate date on which this Proxy Statement, the proxy card and
+other accompanying materials are first being sent or given to stockholders is
+April 25, 2001. The Company's Annual Report for the fiscal year ended December
+31, 2000, including audited financial statements, are being sent to stockholders
+together with this Proxy Statement and are incorporated herein by reference.
+INFORMATION CONCERNING SOLICITATION AND VOTING
+As of the Record Date, there were outstanding 11,366,605 shares of
+Common Stock held by approximately 72 holders of record and 3,836 beneficial
+owners. Only holders of shares of Common Stock on the Record Date will be
+entitled to vote at the Annual Meeting. The holders of Common Stock are entitled
+to one vote on all matters presented at the meeting for each share held of
+record. The presence in person or by proxy of holders of record of a majority of
+the shares outstanding and entitled to vote as of the Record Date shall be
+required for a quorum to transact business at the Annual Meeting. If a quorum
+should not be present, the Annual Meeting may be adjourned until a quorum is
+obtained. The nominees to be selected as a Director named in Proposal 1 must
+receive a plurality of the eligible votes cast at the Annual Meeting with
+respect to such Proposal. The approval of the amendment to the Company's 1999
+2
+Stock Plan described in Proposal 2 and the ratification of the appointment of
+Richard A. Eisner & Company, LLP as independent auditors of the Company for
+fiscal year 2001 described in Proposal 3 must be approved by the affirmative
+vote of the holders of a majority of the total votes cast on such proposal in
+person or by proxy. Abstentions and broker non-votes will have no effect with
+respect to any of the Proposals. Brokers who hold shares in street name may vote
+on behalf of beneficial owners with respect to Proposals 1,2 and 3. The approval
+of all other matters to be considered at the Annual Meeting requires the
+affirmative vote of a majority of the eligible votes cast at the Annual Meeting
+on such matters.
+The expense of preparing, printing and mailing this Proxy Statement,
+exhibits and the proxies solicited hereby will be borne by the Company. In
+addition to the use of the mails, proxies may be solicited by officers and
+directors and regular employees of the Company, without additional remuneration,
+by personal interviews, telephone, telegraph or facsimile transmission. The
+Company will also request brokerage firms, nominees, custodians and fiduciaries
+to forward proxy materials to the beneficial owners of shares of capital stock
+held of record and will provide reimbursements for the cost of forwarding the
+material in accordance with customary charges.
+Proxies given by stockholders of record for use at the Annual Meeting
+may be revoked at any time prior to the exercise of the powers conferred. In
+addition to revocation in any other manner permitted by law, stockholders of
+record giving a proxy may revoke the proxy by an instrument in writing, executed
+by the stockholder or his attorney authorized in writing or, if the stockholder
+is a corporation, under its corporate seal, by an officer or attorney thereof
+duly authorized, and deposited either at the corporate headquarters of the
+Company at any time up to and including the last business day preceding the day
+of the Annual Meeting, or any adjournment thereof, at which the proxy is to be
+used, or with the chairman of such Annual Meeting on the day of the Annual
+Meeting or adjournment thereof, and upon either of such deposits the proxy is
+revoked.
+ALL PROXIES RECEIVED WILL BE VOTED IN ACCORDANCE WITH THE CHOICES
+SPECIFIED ON SUCH PROXIES. PROXIES WILL BE VOTED IN FAVOR OF A PROPOSAL IF NO
+CONTRARY SPECIFICATION IS MADE. ALL VALID PROXIES OBTAINED WILL BE VOTED AT THE
+DISCRETION OF THE BOARD OF DIRECTORS WITH RESPECT TO ANY OTHER BUSINESS THAT MAY
+COME BEFORE THE ANNUAL MEETING.
+None of the matters to be acted on at the Annual Meeting give rise to
+any statutory right of a Stockholder to dissent and obtain the appraisal of or
+payment for such Stockholder's shares.
+PROPOSAL ONE
+TO ELECT EIGHT DIRECTORS TO SERVE FOR ONE YEAR AND UNTIL THEIR SUCCESSORS HAVE
+BEEN DULY ELECTED AND QUALIFIED
+Under the By-Laws of the Company (the "By-Laws"), the Board of
+Directors of the Company is required to be comprised of a minimum of one (1)
+director, subject to which limitation the number of directors may be fixed from
+time to time by action of the stockholders or of the directors, with all
+3
+directors elected by the stockholders each year at the annual stockholders
+meeting. The Company's board presently consists of eight (8) directors whose
+terms expire at the Annual Meeting. Officers are elected annually by and serve
+at the discretion of the Board of Directors.
+The Board has nominated eight (8) candidates to serve as directors all
+of whom are currently directors. The names and biographical summaries of the
+eight (8) persons who have been nominated by the Board of Directors to stand for
+election at the Annual Meeting have been provided below for your information.
+The Board of Directors has proposed that these persons be elected at the Annual
+Meeting to serve until the next annual meeting of stockholders. The Proxies will
+be voted for the election of the eight (8) nominees listed below as directors of
+the Company unless otherwise specified on the form provided. The vote of a
+majority of the capital stock, present and constituting a quorum at the Annual
+Meeting, will be necessary to elect the directors listed below. If, for any
+reasons, any of the nominees shall be unable or unwilling to serve, the Proxies
+will be voted for a substitute nominee who will be designated by the Board of
+Directors at the Annual Meeting. Stockholders may abstain from voting by marking
+the appropriate boxes on the enclosed Proxy. Abstentions shall be counted
+separately and shall be used for purposes of calculating quorum.
+BIOGRAPHICAL SUMMARIES OF NOMINEES FOR THE BOARD OF DIRECTORS
+CHARLES KOPPELMAN has been a director of the Company since June 1998
+and acting Chairman of the Board since June 2000. Since February 4, 1998, Mr.
+Koppelman has been the Chairman and Chief Executive Officer of CAK Universal
+Credit Corp., a joint venture created with Prudential Securities to provide
+financing to the entertainment, sports and licensing industries. From 1988 to
+1997, Mr. Koppelman served as the Chairman and Chief Executive Officer of EMI
+Capital Music, N.A. See "Recent Developments."
+STEVEN MADDEN has been the Chief Executive Officer and a director since
+the Company's inception. In February 2000, Mr. Madden relinquished the position
+of President which he held since the Company's inception, and in June 2000, Mr.
+Madden resigned as Chairman of the Board. In 1980, Mr. Madden joined L.J.
+Simone, a domestic footwear manufacturer, as an Account Executive. At that time,
+L.J. Simone had annual sales of approximately $800,000. Mr. Madden was promoted
+to Sales Manager and Director of Product Development and was instrumental in the
+company's growth to $28 million in annual sales. After leaving L.J. Simone in
+1988, Mr. Madden joined M.C.M. Footwear, where he commenced the design,
+development and marketing of the "Souliers" line of footwear for women. In 1990,
+Mr. Madden founded the Company. See "Recent Developments."
+RHONDA J. BROWN has been the President of the Company since February
+2000 and a director of the Company since October 1996. Ms. Brown also served as
+Chief Operating Officer of the Company from July 1996 to January 2001. Prior to
+joining the Company, Ms. Brown served as President and Chief Executive Officer
+of Icing, Inc. from May 1995 to December 1995. Previously, from August 1992 to
+December 1994, Ms. Brown served as Merchandise President of Macy's East, a
+division of R.H. Macy & Co., Inc. From July 1988 to July 1992. Ms. Brown served
+as Senior Vice-President and General Merchandise Manager to Lord & Taylor, a
+division of the May Company. Ms. Brown attended the American University,
+receiving a BS in Marketing and Public Communications in 1976. See "Recent
+Developments."
+4
+ARVIND DHARIA has been the Chief Financial Officer of the Company since
+October 1992 and a director since December 1993. From December 1988 to September
+1992, Mr. Dharia was Assistant Controller of Millennium III Real Estate Corp.
+See "Recent Developments."
+JAMIESON KARSON has been a director of the Company since January 2,
+2001. Mr. Karson has practiced law for over 16 years. He has been a partner in
+the real estate department of the law firm Tannenbaum Helpern Syracuse &
+Hirshtritt, LLP since January 1, 1997. Previously, he was a partner at Karson
+McCormick from February 1992 through December 31, 1996.
+JOHN L. MADDEN has been a director of the Company since the Company's
+inception. Since April 1998, Mr. Madden has owned and managed a branch office of
+Tradeway Securities Group, Inc. in Florida. From May 1996 through December 1996,
+Mr. Madden formed JLM Consultants, Inc. which acted as a branch office of Merit
+Capital, Inc. for several broker-dealers. From May 1994 to May 1996, Mr. Madden
+served as Vice President of Investments for GKN Securities, Inc. From August
+1993 to April 1994, Mr. Madden was employed by Biltmore Securities, Inc. as
+Managing Director and registered sales representative. Mr. Madden is the brother
+of Steven Madden, the Company's founder and Chief Executive Officer. See "Recent
+Developments."
+PETER MIGLIORINI has been a director of the Company since October 1996.
+From 1994 to present, Mr. Migliorini has served as Sales Manager for Greschlers,
+Inc., a major supply company located in Brooklyn, New York. From 1987 to 1994
+Mr. Migliorini served as Director of Operations for Mackroyce Group. Mr.
+Migliorini has previously served in a number of capacities, ranging from
+Assistant Buyer to Chief Planner/Coordinator for several shoe companies
+including Meldico Shoes, Perry Shoes, and Fasco Shoes. See "Recent
+Developments".
+HEYWOOD WILANSKY has been a director of the Company since January 2,
+2001. Mr. Wilansky served as the President and Chief Executive Officer of
+Bon-Ton Stores, Inc, from August 1995 to July 2000 and a director of Bon-Ton
+Stores, Inc. from August 1995 to present. Prior to that, he was employed by The
+May Department Stores Company for more than 19 years, last serving as President
+and Chief Executive Officer of the Foley's division from1992 to 1995. Mr.
+Wilansky is a director of First Washington Realty Trust, a real estate
+organization which principally owns neighborhood shopping centers.
+THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE ELECTION
+OF MS. RHONDA BROWN AND MESSRS. CHARLES KOPPELMAN, STEVEN MADDEN, ARVIND DHARIA,
+JAMIESON KARSON, JOHN L. MADDEN, PETER MIGLIORINI, AND HEYWOOD WILANSKY. UNLESS
+OTHERWISE INSTRUCTED OR UNLESS AUTHORITY TO VOTE IS WITHHELD, THE ENCLOSED PROXY
+WILL BE VOTED FOR THE ELECTION OF THE ABOVE LISTED NOMINEES.
+DIRECTOR COMPENSATION
+Directors who are also employees of the Company are not paid any fees
+or other remuneration, for service on the Board or any of its Committees. Each
+non-employee director receives (i) an annual grant of options to purchase 10,000
+shares of Common Stock at an exercise price per share equal to two dollars
+($2.00) above the fair market value of the Common Stock on the date of grant and
+5
+(ii) twenty thousand dollars ($20,000) in immediately available funds. In
+addition, non-employee directors are reimbursed by the Company for all expenses
+related to attending meetings.
+On July 18, 2000, the Company granted Mr. Koppelman 50,000 options (the
+"Options") at an exercise price of $7.00 per share as compensation for assuming
+the duties of Chairman of the Board of the Company. These Options vested on July
+18, 2000 and will expire on July 18, 2005. Provided that Mr. Koppelman continues
+his service as acting Chairman of the Board, he is entitled to receive (i)
+75,000 options on May 31, 2001 at an exercise price of $7.00 per share, (ii)
+75,000 options on May 31, 2002 at an exercise price per share equal to the
+closing bid price of the Company's common stock on May 31, 2002 as quoted on The
+Nasdaq Stock Market, (iii) 75,000 options on May 31, 2003, at an exercise price
+per share equal to the closing bid price of the Company's common stock on May
+31, 2003 as quoted on The Nasdaq Stock Market, and (iv) 75,000 options on May
+31, 2004 at an exercise price per share equal to the closing bid price of the
+Company's common stock on May 31, 2004 as quoted on The Nasdaq Stock Market.
+Each of these options will expire five (5) years following the date of the
+grant. In the event there is a change of control transaction requiring the
+approval of the Company's stockholders, the Options will be granted and vest
+immediately prior to the closing of the change of control transaction at an
+exercise price of $7.00 per share.
+MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
+The Board of Directors met six (6) times during the fiscal year ended
+December 31, 2000. The Board of Directors has standing Audit, Real Estate and
+Compensation Committees.
+The Audit Committee of the Board of Directors consists of directors
+Charles Koppelman, Peter Migliorini and Heywood Wilansky, none of whom was an
+employee of the Company during 2000. This Committee is primarily responsible for
+reviewing the services performed by the Company's independent auditors,
+evaluating the Company's accounting policies and its system of internal
+controls, and reviewing significant finance transactions.
+The audit functions of the Audit Committee are focused on three areas:
+- the adequacy of the Company's internal controls and financial
+reporting process and the reliability of the Company's
+financial statements.
+- the independence and performance of the Company's independent
+auditors.
+- the Company's compliance with legal and regulatory
+requirements.
+The Audit Committee meets with management periodically to consider the
+adequacy of the Company's internal controls and the objectivity of its financial
+reporting. The Audit Committee discusses these matters with the Company's
+independent auditors and with appropriate Company financial personnel. Meetings
+are held with the independent auditors who have unrestricted access to the
+committee. The Audit Committee also recommends to the Board the appointment of
+the independent auditors and review periodically their performance and
+independence from management. In addition, the committee reviews the Company's
+financing plans and reports recommendations to the full Board of Directors for
+approval and to authorize action. The Directors who serve on the committee are
+6
+all "Independent" for purposes of The Nasdaq Stock Market listing standards.
+That is, the Board of Directors has determined that no member of the Audit
+Committee has a relationship to the Company that may interfere with its
+independence from the Company and its management. The Board has adopted a
+written charter setting out the audit related functions the committee is to
+perform. A copy of that charter is attached to this proxy statement as Annex B.
+Management has primary responsibility for the Company's financial
+statements and the overall reporting process, including the Company's system of
+internal controls. The independent auditors audit the annual financial
+statements prepared by management, express an opinion as to whether those
+financial statements present fairly the financial position, results of
+operations and cash flows of the Company in conformity with generally accepted
+accounting principles and discuss with the Audit Committee any issues they
+believe should be raised with the Audit Committee.
+This year, the committee reviewed the Company's audited financial
+statements and met with both management and Richard A. Eisner & Company, LLP,
+the Company's independent auditors, to discuss those financial statements.
+Management has represented to the committee that the financial statements were
+prepared in accordance with generally accepted accounting principles. The
+committee has received from and discussed with Richard A. Eisner & Company, LLP
+the written disclosure and the letter required by Independence Standards Board
+Standard No. 1 (Independence Discussions with Audit Committees). These items
+relate to that firm's independence from the company. The committee also
+discussed with Richard A. Eisner & Company, LLP any matters required to be
+discussed by Statement on Auditing Standards No. 61 (Communication with Audit
+Committees). Based on these reviews and discussions, the committee recommended
+to the Board that the Company's audited financial statements be included in the
+Company's Annual Report on Form 10-K for the fiscal year ended December 31,
+2000.
+For the year ended December 31, 2000, the Company incurred professional
+fees to its auditors in the amount of $356,000, of which $120,000 related to
+auditing services and $236,000 related to all other services. The Audit
+Committee has considered whether the non-audit services provided by the
+Company's auditors in connection with the year ended December 31, 2000 were
+compatible with the auditor's independence and has concluded that the Company's
+auditors have maintained its independence.
+AUDIT COMMITTEE
+Charles Koppelman,
+Peter Migliorini
+Heywood Wilansky
+The Compensation Committee of the Board of Directors consists of
+directors Charles Koppelman, John Madden and Peter Migliorini. The Compensation
+Committee is primarily responsible for approving salaries, bonuses and other
+compensation for the Company's Chief Executive Officer and named executive
+officers, reviewing management recommendations relating to new incentive
+compensation plans and changes to existing incentive compensation plans, and for
+administering the Company's stock plans, including granting options and setting
+the terms thereof pursuant to such plan (all subject to approval by the Board of
+Directors).
+7
+The Real Estate Committee of the Board of Directors consists of
+directors Steven Madden, Rhonda Brown and Jamieson Karson. This Committee is
+primarily responsible for overseeing real estate transactions for the Company.
+In light of the Company's aggressive retail store expansion plan, the Real
+Estate Committee was formed to consider proposed real estate transactions for
+approval.
+COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
+Section 16(a) of the Securities Exchange Act of 1934 requires the
+Company's directors and executive officers, and persons who own more than ten
+percent (10%) of a registered class of the Company's equity securities, to file
+with the Securities and Exchange Commission ("SEC") initial reports of ownership
+and reports of changes in ownership of common stock and other equity securities
+of the Company. Officers, directors and greater than ten percent stockholders
+are required by SEC regulation to furnish the Company with copies of all Section
+16(a) forms they file.
+To the Company's knowledge, based solely on its review of the copies of
+such reports furnished to the Company during the year ended December 31, 2000,
+all Section 16(a) filing requirements applicable to its officers, directors and
+greater than ten percent beneficial owners were satisfied.
+RECENT DEVELOPMENTS
+On June 20, 2000, Steven Madden, the Company's former Chairman and
+current Chief Executive Officer, was indicted in the Southern District and
+Eastern District of New York. The indictments allege that Mr. Madden engaged in
+securities fraud and money laundering activities. In addition, the Securities
+and Exchange Commission filed a complaint in the United States District Court
+for the Eastern District of New York alleging that Mr. Madden violated Section
+17(a) of the Securities Exchange Act of 1934, as amended.
+Neither the indictments nor the SEC complaint alleges any wrongdoing by
+the Company or its other officers and directors. Mr. Madden has denied any
+improper conduct and has advised the Company that he will vigorously defend
+himself against any and all charges.
+On June 21, 2000, Steven Madden resigned as Chairman of the Board of
+Directors and the Company appointed Charles Koppelman acting Chairman of the
+Board. Mr. Koppelman has been a director of the Company since June 1998. Mr.
+Madden continues to serve as the Company's Chief Executive Officer.
+On March 14, 2001, the Company became aware that the Securities and
+Exchange Commission had issued a formal order of investigation with respect to
+trading in the Company's securities. The Company has reason to believe that the
+Staff is investigating possible securities law violations by persons trading in
+the Company's securities prior to June 20, 2000 who may have been in possession
+of alleged material, non-public information. As previously disclosed on Form 4's
+filed with the Securities and Exchange Commission, certain officers and
+directors of the Company sold shares of the Company's common stock during 1999
+and the first half of 2000. Each of such officers and directors denies having
+knowledge of any material, non-public information prior to engaging in such
+transactions.
+8
+DIRECTORS AND EXECUTIVE OFFICERS
+Certain information concerning the directors and executive officers of
+the Company is set forth below:
+Name Age Position(s) with the Company
+---- --- ----------------------------
+Charles Koppelman 60 Acting Chairman of the Board(1)
+Steven Madden 44 Chief Executive Officer and Director(2)
+Rhonda Brown 45 President and Director(3)
+Arvind Dharia 51 Chief Financial Officer, Director and
+Secretary
+Richard Olicker 43 Chief Operating Officer(4)
+Gerald Mongeluzo 60 President of Adesso-Madden, Inc.
+Mark Jankowski 40 General Merchandise Manager
+Robert Schmertz 37 President of Shoe Biz, Inc. and Diva
+Acquisition Corp.
+Joseph Masella 52 President of l.e.i. Footwear and Stevies,
+Inc.
+Les Wagner 60 Vice President of Real Estate of Steven
+Madden Retail, Inc. and Director(5)
+John L. Madden 53 Director
+Peter Migliorini 52 Director
+Jamieson Karson 43 Director(6)
+Heywood Wilansky 52 Director(7)
+John Basile 49 Executive Vice President and Director(8)
+-----------------
+(1) Mr. Koppelman was appointed Acting Chairman of the Board in June 2000.
+(2) Mr. Madden held the additional titles of President until February 2000 and
+Chairman of the Board until June 2000. See "Recent Developments."
+(3) Ms. Brown was appointed President in February 2000 and relinquished her
+position as Chief Operating Officer in January 2001.
+(4) Mr. Olicker commenced his employment with the Company in January 2001.
+(5) Mr. Wagner resigned as officer of Steven Madden Retail, Inc. and a director
+of the Company in March 2001.
+(6) Mr. Karson was appointed as a director of the Company in January 2001.
+(7) Mr. Wilansky was appointed as a director of the Company in January 2001.
+(8) Mr. Basile resigned as officer and director of the Company in December
+2000.
+9
+See "Biographical Summaries of Nominees for the Board of Directors" for
+biographical summaries of Ms. R. Brown and Messrs. A. Dharia, J. Karson, C.
+Koppelman, J. Madden, S. Madden, P. Migliorini, and H. Wilansky.
+RICHARD OLICKER has been Chief Operating Officer of the Company since
+January 3, 2001. Prior to joining the Company, Mr. Olicker spent more than 12
+years at AeroGroup International, Inc., marketers of Aerosoles and What's What
+shoes. As cofounder of Aerosoles, Mr. Olicker served as President of the
+company's private label division and was responsible for managing all aspects of
+sourcing, production, pricing, sales, service, systems and finance. Mr. Olicker
+began his career in footwear in 1982 as the General Counsel and Licensing
+Director at El Greco Leather Products and later held an executive position with
+the apparel licensing firm New Retail Concepts, Inc.
+GERALD MONGELUZO has been President of Adesso-Madden, Inc., a wholly
+owned subsidiary of the Company, since September 1995. Previously, Mr. Mongeluzo
+was the founder and President of Adesso Shoes, Inc., a buying agent of private
+label shoes. From 1987 through 1991, Mr. Mongeluzo was the President of the
+Prima Barabaro Division of Cells Enterprise, Inc. Mr. Mongeluzo founded Prima
+Shoes, Inc., a buying agent of private label shoes, and served as President from
+1974 to 1987.
+MARK JANKOWSKI has been the General Merchandise Manager of the Company
+since December 2000. Previously, Mr. Jankowski had been the President of Steve
+Madden Retail, Inc. from February 1999 to December 2000 and the Company's Vice
+President of Product Development from 1995 to 1999. From 1980 to 1995, Mr.
+Jankowski held several positions at Edison Brothers including Head of Buying.
+ROBERT SCHMERTZ has been the President of Shoe Biz, Inc., a wholly
+owned subsidiary of Steve Madden Retail Inc. since May 1998 and President of
+Diva Acquisition Corp. since January 2001. Before joining the Company, Mr.
+Schmertz was President of Daniel Scott Inc. from November 1995 to May 1998.
+Previously, Mr. Schmertz was the East Coast Sales Manager for Impo International
+from January 1993 through November 1995. From April 1990 to December 1992, Mr.
+Schmertz served as a sales representative for Espirit de Corp. based in San
+Francisco, California.
+JOSEPH MASELLA has been President of Stevies, Inc. since April 2000 and
+the Company's l.e.i. Footwear since July 1998. Previously, he was Vice
+President-Sales of the Company's Adesso-Madden subsidiary since October 1995.
+From 1992 to 1995, Mr. Masella served as General Manager-Far East Division of US
+Shoe Co.
+LES WAGNER was the Vice President-Real Estate for Steven Madden Retail,
+Inc. from April 1999 to March 2001 and a Director of the Company from October
+1996 to March 2001. Mr. Wagner resigned as officer of Steven Madden Retail, Inc.
+and a Director of the Company in March 2001. From 1993 to 1996, Mr. Wagner
+served as the President of Baker/Leeds Shoe Store, a Division of Edison Brothers
+Stores, Inc. Mr. Wagner has served in a number of other capacities for
+Baker/Leeds from 1963 to 1993 which included, General Merchandise Manager from
+1989 to 1993; Vice President Real Estate Northeast Area from 1988 to 1989; and
+President, Gussini Discount Shoe Division from 1987 to 1988. Mr. Wagner attended
+Harvard University, completing the Advanced Management Program (AMP 100).
+10
+JOHN BASILE was the Company's Director of Operations from June 1994
+until December 1997 and the Company's Executive Vice President from January 1998
+through December 2000. Mr. Basile was a director of the Company from November
+1996 through December 2000. Mr. Basile resigned as officer and Director of the
+Company in December 2000. Currently, Mr. Basile is a consultant to the Company.
+From 1990 to 1994, Mr. Basile was Executive Vice President of Cougar U.S.A.
+responsible for the United States Division of Susan Shoes of Canada. Previously,
+Mr. Basile was a Sales Manager at Bellini Imports from 1980 to 1990.
+COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
+SUMMARY COMPENSATION TABLE
+The following table sets forth for each of the last three fiscal years
+ended December 31, 2000, December 31, 1999 and December 31, 1998 the
+remuneration paid by the Company to its Chief Executive Officer and the four
+other most highly compensated executive officers:
+SUMMARY COMPENSATION TABLE
+--------------------------------------------------------------------------------
+LONG-TERM COMPENSATION
+ANNUAL COMPENSATION
+-------------------------------------------------------
+NAME AND FISCAL AWARDS OTHER ANNUAL
+PRINCIPAL POSITION YEAR SALARY($) BONUS($) OPTIONS(1) COMPENSATION
+--------------------------------------------------------------------------------
+Steven Madden, 2000 $300,000 $400,000 -0- $311,437(2)
+Chief Executive Officer 1999 $275,000 $800,000 -0- $318,641(2)
+1998 $274,231 $ 0.00 191,189 $315,394(2)
+Rhonda Brown, 2000 $270,052 $581,150 190,575
+President 1999 $257,278 $537,920 -0-
+1998 $236,888 $242,493 188,811
+John Basile, Executive 2000 $250,000 $614,047 -0-
+Vice President 1999 $299,135 $ 88,299 100,000
+1998 $274,711 $189,000 250,000
+Arvind Dharia, 2000 $171,769 $ 80,000 25,000 $ 91,743(3)
+Chief Financial Officer 1999 $140,000 $ 39,367 25,000 $ 88,606(3)
+1998 $140,000 $ 46,561 32,000 $ 86,891(3)
+Gerald Mongeluzo 2000 $257,653 $ 75,000 -0-
+President, Adesso- 1999 $249,769 $ 50,000 -0-
+Madden, Inc. 1998 $230,992 $ 35,000 50,000
+----------
+(1) Options to purchase shares of Common Stock.
+(2) Life insurance premium and other expenses paid on behalf of Mr. Madden.
+(3) Life insurance premium paid on behalf of Mr. Dharia.
+11
+The following table sets forth certain 2000 information with respect to
+options granted during the last fiscal year to the Company's executive officers
+named in the above Summary Compensation Table.
+OPTION/SAR GRANTS IN LAST FISCAL YEAR
+Number of Securities Percent of Total Exercise or
+Underlying Options/SARS Granted to Base Price
+Name Options/SARS Granted (#) Employees in Fiscal Year % ($/Sh) Expiration Date
+---- ------------------------ -------------------------- ------ ---------------
+Rhonda Brown 190,575 38.9% $11.63 August 30, 2010
+Arvind Dharia 25,000 5.1% $ 6.57 June 29, 2010
+The following table sets forth certain information with respect to
+options exercised during the last fiscal year by the Company's executive
+officers named in the Summary Compensation Table, and with respect to
+unexercised options held by such persons at the end of the last fiscal year:
+AGGREGATE OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END
+OPTION/SAR VALUES
+Shares Number of Securities Value of Unexercised in the
+Acquired on Value Realized Underlying Unexercised Money Options/SARS at
+Name Exercise (#) $ Options/SARS At FY-End (#) FY-End ($) (1)
+---- ------------ - -------------------------- --------------
+Exercisable Unexercisable Exercisable Unexercisable
+----------- ------------- ----------- -------------
+Steven Madden 100,000 $ 1,268,943 1,051,189 -- 4,734,238 --
+Rhonda Brown 100,000 $ 1,036,803 230,454 142,931 0 0
+Arvind Dharia 15,000 $ 157,488 95,750 6,250 118,136 6,625
+John Basile 45,000 $ 418,359 470,000 -- 1,601,100 --
+Gerald Mongeluzo -- -- 62,500 -- 25,625 --
+----------
+(1) Based upon a closing price on December 29, 2000 of $7.63 per share as
+reported by The Nasdaq Stock Market.
+12
+1999 STOCK PLAN
+As of March 15, 1999, the Board of Directors of the Company, adopted
+the 1999 Stock Plan (the "1999 Plan"), and on June 4, 1999 the Company's
+stockholders approved the adoption of the 1999 Plan. In May 2000, the Company's
+stockholders approved an amendment to the 1999 Plan increasing the number of
+shares of common stock subject to the plan from 400,000 to 975,000 shares. The
+purpose of the 1999 Plan is to provide a means whereby directors and selected
+employees, officers, agents, consultants, and independent contractors of the
+Company, may be granted incentive stock options and/or nonqualified stock
+options to purchase shares of common stock, in order to attract and retain the
+services or advice of such directors, employees, officers, agents, consultants,
+and independent contractors and to provide additional incentive for such persons
+to exert maximum efforts for the success of the Company by encouraging stock
+ownership in the Company. The 1999 Plan is expected to provide even greater
+flexibility to the Company's compensation methods, after giving due
+consideration to competitive conditions and the impact of federal tax laws. See
+Proposal Number 2 - Amendment of the 1999 Stock Plan.
+OTHER OPTIONS
+In March 1995, the Company issued options to purchase 1,000,000 shares
+of its Common Stock to a company wholly owned by the Company's Chief Executive
+Officer. The options were subsequently transferred to the Chief Executive
+Officer. The options which are fully exercisable, have an exercise price of
+$1.75 and an exercise period of 10 years. Unearned compensation was recorded in
+the amount of $575,000 which represented the difference between the exercise
+price and the fair value of the stock on the date of grant and was classified as
+a component of stockholders equity. The unamortized portion was charged to
+operations in 1997 in connection with the President's amended employment
+agreement.
+EMPLOYMENT AGREEMENTS
+In July 1997, the Company entered into a ten (10) year Employment
+Agreement with Steven Madden, the Company's founder, Chief Executive Officer and
+Chairman of the Board. In February 2000, the term of the Employment Agreement
+with Mr. Madden was extended to December 31, 2009 and Mr. Madden relinquished
+his title as President of the Company. The Company agreed to pay Mr. Madden an
+annual salary of $275,000 for the two year period commencing January, 1998,
+$300,000 for the year commencing January, 2000 and an incremental increase of
+ten percent (10%) per annum for each year thereafter. The agreement provided for
+payment of a signing bonus of $200,000, and annual non-accountable expense
+allowance of $50,000 and use of an automobile having a retail selling price of
+no more than $50,000. In addition, in the event of Mr. Madden's total disability
+or his death, the Company is obligated to pay to Mr. Madden's estate an amount
+equal to the appropriate salary for the twelve (12) month period immediately
+subsequent to the date of total disability or his death. In the event Mr.
+Madden's employment agreement is terminated for any reason other than "for
+cause" or due to his "total disability", the Company is obligated to pay Mr.
+Madden the balance of his salary, fifty percent (50%) upon termination and the
+remaining fifty percent (50%) in annual installments over the life of the
+agreement. Further, in the event of a "change of control" of the Company, Mr.
+Madden is entitled to terminate the Employment Agreement and to receive the
+balance of his salary upon termination and an amount equal to his bonus (if any)
+13
+for the preceding calendar year multiplied by the remaining years left under his
+Employment Agreement. Mr. Madden's Employment Agreement contains other customary
+provisions. See "Recent Developments."
+In July 1996, the Company entered into a three (3) year Employment
+Agreement with Rhonda Brown pursuant to which Ms. Brown agreed to serve as the
+Company's Chief Operating Officer. The Company agreed to pay Ms. Brown an annual
+salary of $200,000 plus a 10% annual increase in the base salary. The agreement
+provided that Ms. Brown received options to purchase 66,000 shares of the
+Company's Common Stock at an exercise price equal to the closing bid price of
+the Company's Common Stock on June 28, 1996, as quoted on The Nasdaq Stock
+Market. As of May 1, 1998, the Company and Ms. Brown amended her employment
+agreement so that (i) the term of her employment agreement is extended to July
+31, 2001 and (ii) her annual base salary increase will be reduced from 10% per
+annum to 5% per annum commencing on July 1, 2000. In addition, in the event that
+a "change of control" of the Company occurs without Ms. Brown's consent, she is
+entitled to receive an amount equal to the greater of (i) the balance of the
+Base Salary during the remainder of the Term, and (ii) the Base Salary for two
+years and Ms. Brown's most recent annual bonus multiplied by the number of years
+remaining under the agreement. As of March 15, 1999, the Company and Ms. Brown
+executed a second amendment to her employment agreement. The second amendment
+accelerated the reduction in her annual base salary increase from July 1, 2000
+to July 1, 1999 and reduced by one half (1/2) the number of the options issuable
+as an Option Bonus. Ms. Brown's Employment Agreement contains other customary
+provisions. In February 2000, Ms. Brown was appointed as the President of the
+Company and in January, 2001 Ms. Brown relinquished her title as Chief Operating
+Officer.
+In November 2000, the Company and Ms. Brown amended her employment
+agreement to extend the term of her employment agreement to December 31, 2003.
+The Company agreed to pay Ms. Brown an annual base salary of (i) two hundred
+seventy five thousand dollars ($275,000) through December 31, 2000, (ii) three
+hundred fifty thousand dollars ($350,000) from January 1, 2001 through June 30,
+2002, and (iii) four hundred thousand dollars ($400,000) from July 1, 2002
+through December 31, 2003. In addition, the most recent amendment provides that
+Ms. Brown is entitled to receive a cash bonus equal to four percent (4%) of the
+amount by which the aggregate EBIT-D (earnings before the payment of interest or
+taxes or a deduction for depreciation) for the four (4) calendar quarters ending
+on the most recent December 31st exceeds EBIT-D for the four (4) calendar
+quarters ending on the preceding December 31st. The agreement also provides that
+on each August 31st during the term of the Agreement, Ms. Brown is entitled to
+receive options (the "Performance Options") to purchase 100,000 shares of Common
+Stock of the Company. The options comprising the Performance Options are
+exercisable at a price equal to the average closing bid price of the Company's
+shares of Common Stock for the five trading days ending on August 29th.
+In January 1998, the Company entered into a four (4) year Employment
+Agreement with Arvind Dharia, pursuant to which Mr. Dharia will serve as the
+Company's Chief Financial Officer. The term of the agreement is subject to
+automatic extension for one (1) year unless either party terminates the
+agreement with ninety (90) days' prior notice. The Company agreed to pay Mr.
+Dharia an annual salary of $140,000 subject to annual incremental increases of
+ten percent (10%) commencing on the third anniversary of the Employment
+Agreement. The agreement provides that Mr. Dharia receive options to purchase
+25,000 shares of the Company's Common Stock on June 30 of each year during the
+14
+term of the agreement. The options are to vest quarterly over a period of one
+(1) year and are exercisable at an exercise price equal to the closing bid price
+of the Company's Common Stock on June 30 of each year, as quoted on The Nasdaq
+Stock Market. If the Company does not extend the term of Mr. Dharia's Employment
+Agreement (other than "for cause" or "total disability"), Mr. Dharia shall
+receive severance pay equal to three months salary on the expiration of the
+agreement. In addition, in the event of Mr. Dharia's total disability or death
+the Company is obligated to pay Mr. Dharia or his estate an amount equal to the
+appropriate salary for the twelve (12) month period immediately subsequent to
+the date of his total disability or death. In the event Mr. Dharia's employment
+agreement is terminated for any reason other than "for cause" or due to his
+"total disability", the Company is obligated to pay Mr. Dharia the balance of
+his salary and benefits, fifty percent (50%) on January 1 after the date of
+termination and the remaining fifty percent (50%) one year after. Further, in
+the event of a "change in control" of the Company, Mr. Dharia is entitled to
+terminate the Employment Agreement and to receive the balance of his salary upon
+termination and an amount equal to his bonus (if any) for the preceding calendar
+year multiplied by the remaining years left under his Employment Agreement plus
+$200,000 as severance pay. Mr. Dharia's Employment Agreement contains other
+customary provisions.
+In January 2001, the Company entered into a two (2) year Employment
+Agreement with Richard Olicker pursuant to which Mr. Olicker agreed to serve as
+the Company's Executive Vice President and Chief Operating Officer. The Company
+agreed to pay Mr. Olicker an annual base salary of $225,000 plus a 5% annual
+increase in the base salary. The agreement provides that Mr. Olicker receive
+options to purchase 75,000 shares of the Company's Common Stock at an exercise
+price equal to the closing bid price of the Company's Common Stock on January 2,
+2001, as quoted on The Nasdaq Stock Market. Mr. Olicker is entitled to receive a
+cash bonus equal to two percent (2%) of the amount by which the aggregate EBIT-D
+(earnings before the payment of interest or taxes or a deduction for
+depreciation) for the fiscal year ending on the most recent December 31st
+exceeds EBIT-D the fiscal year ending on the preceding December 31st. The
+agreement also provides that Mr. Olicker receive a one time cash bonus of
+$125,000 in the event that the aggregate EBIT-D for any 4 consecutive fiscal
+quarters during the term of the agreement equals or exceeds $40,000,000. Mr.
+Olicker's Employment Agreement contains other customary provisions.
+COMPENSATION COMMITTEE
+REPORT ON EXECUTIVE COMPENSATION
+The Compensation Committee ("Committee") is responsible for reviewing
+and approving the Company's compensation policies and the compensation paid to
+its executive officers, including the Chief Executive Officer and the other
+named executive officers. The Compensation Committee is comprised of Charles
+Koppelman, Peter Migliorini and John Madden each of whom are non-employee
+Directors of the Company.
+The Compensation Committee's goal is to develop executive compensation
+policies and practices that are consistent with and linked to the Company's long
+term goal of maximizing shareholder value. The program is designed to facilitate
+the long-term success and growth of the Company through the attraction,
+motivation, and retention of outstanding executives.
+15
+The objectives of the Company's executive compensation programs are to:
+(i) attract and retain the highest quality executives, (ii) inspire and motivate
+executive officers to increase Company performance, (iii) align executive
+officers' financial interest with those of the Company's long-term investors,
+and (iv) reward executive officers for exceptional individual contributions to
+the achievement of the Company's objectives.
+Executive compensation consists of three components: base salary,
+annual incentive bonuses and long-term incentive awards (stock options). Each
+compensation component is offered to executives in varying combinations,
+structured in each case, to meet varying business objectives and to provide a
+level of total compensation comparable to similarly situated public companies.
+The Company has negotiated employment agreements with respect to base
+salary, annual incentive awards and stock option awards for each of the
+Company's named executive officers based upon the Company's performance and
+individual performance.
+Steven Madden, the Company's Chief Executive Officer, is eligible to
+participate in the same compensation plans available to the other executive
+officers.
+The Internal Revenue Code of 1986 prohibits the Company from taking a
+tax deduction in any year for compensation paid the persons who would be named
+executive officers in that year in excess of $1 million unless such compensation
+is "performance-based compensation." The Company did not pay in 2000 any officer
+compensation which will be subject to the $1 million deduction limitation;
+however, the Company's Chief Executive Officer exercised options which when
+combined with other compensation paid by the Company resulted in his total
+compensation exceeding the $1 million deduction limitation. The Compensation
+Committee will take into consideration the $1 million deduction limitation when
+structuring future compensation packages for the Company's executive officers
+and, if appropriate and in the best interests of the Company, will conform such
+packages to permit the Company to take a deduction for the full amount of all
+compensation.
+COMPENSATION COMMITTEE
+Charles Koppelman
+John Madden
+Peter Migliorini
+16
+STOCK PERFORMANCE GRAPH
+The following graph compares the yearly percentage change in the
+cumulative total shareholder return on the Common Stock during the period
+beginning on December 31, 1996 and ending on December 31, 2000 with the
+cumulative total return on the Russell 2000 Index and the Standard & Poor's
+Footwear Index. The comparison assumes that $100 was invested on December 31,
+1996 in the Company's Common Stock and in the foregoing indices and assumes the
+reinvestment of dividends.
+GRAPHIC CHART OMITTED
+PLOT POINTS FOR GRAPHIC CHART APPEAR BELOW
+--------------------------------------------------------------------------------
+12/31/96 12/31/97 12/31/98 12/31/99 12/31/00
+--------------------------------------------------------------------------------
+Steven Madden, Ltd. 100 147.55 165.85 371.94 148.78
+--------------------------------------------------------------------------------
+Russell 2000 Index 100 120.69 116.53 139.40 133.53
+--------------------------------------------------------------------------------
+S&P Footwear Index 100 66.90 64.80 76.23 91.31
+--------------------------------------------------------------------------------
+17
+SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
+MANAGEMENT
+The following table sets forth information as of the Record Date with
+respect to the beneficial ownership of the outstanding shares of the Company's
+Common Stock by (i) each person known by the Company to beneficially own five
+percent or more of the outstanding shares; (ii) the Company's officers and
+directors; and (iii) the Company's officers and directors as a group. A person
+is deemed to be a beneficial owner of any securities of which that person has
+the right to acquire beneficial ownership within sixty (60) days. See
+"Compensation of Directors and Executive Officers."
+Amount and
+Nature of Percentage
+Name and Address Beneficial (%) of
+of Beneficial Owner(1) Ownership(2) Class(2)
+---------------------- ------------- ------------
+Steven Madden(3) 2,241,005(4) 16.5%
+BOCAP Corp.(5) 2,241,005(6) 16.5%
+John Madden(7) 15,000(8) *
+Arvind Dharia(9) 102,000(10) *
+John Basile(11) 300,000(12) 2.6%
+Les Wagner(13) 20,000(14) *
+Rhonda Brown(15) 373,386(16) 3.2%
+Gerald Mongeluzo(17) 62,500(18) *
+Joseph Masella(19) 90,425(20) *
+Mark Jankowski(21) 50,000(22) *
+Robert Schmertz(23) 19,000(24) *
+Peter Migliorini(25) 20,000(26) *
+Charles Koppelman(27) 124,000(28) *
+Richard Olicker(29) 1,200 *
+Kennedy Capital
+Management, Inc.(30) 833,750 6.8%
+Directors and Officers
+as a Group (13 persons) 3,418,516 25.3%
+* indicates beneficial ownership of less than 1%.
+(1) Unless otherwise indicated, the address of each beneficial owner is c/o
+Steven Madden, Ltd., 52-16 Barnett Avenue, Long Island City, New York
+11104.
+(2) Beneficial ownership as reported in the table above has been determined
+in accordance with Item 403 of Regulation S-K of the Securities Act of
+1933 and Rule 13(d)-3 of the Securities Exchange Act, and based upon
+11,366,605 shares of Common Stock outstanding.
+(3) Mr. Madden is Chief Executive Officer and a director of the Company.
+(4) Includes (i) 1,184,816 shares of Common Stock held by BOCAP, a
+corporation owned by Mr. Madden, (ii) 1,051,189 shares of Common Stock
+issuable upon the exercise of options held by Mr. Madden. See
+"Executive Compensation-Employment Agreements."
+(5) BOCAP Corp. is a company wholly-owned by Steven Madden, Chief Executive
+Officer of the Company.
+(6) Includes (i) 1,051,189 shares of Common Stock issuable upon the
+exercise of options held by Mr. Madden and (ii) 5,000 shares of Common
+Stock held by Mr. Madden.
+(7) John Madden, a director of the Company, is the brother of Steven
+Madden.
+(8) Includes 15,000 shares of Common Stock issuable upon the exercise of
+options held by Mr. Madden.
+(9) Mr. Dharia is a director and the Chief Financial Officer of the
+Company.
+18
+(10) Includes 102,000 shares of Common Stock issuable upon the exercise of
+options held by Mr. Dharia.
+(11) Mr. Basile resigned as a director and Executive Vice President of the
+Company in December 2000.
+(12) Includes 300,000 shares of Common Stock issuable upon the exercise of
+options held by Mr. Basile.
+(13) Mr. Wagner resigned as a director of the Company and the Vice
+President-Real Estate of Steven Madden Retail, Inc. in March 2001.
+(14) Includes 20,000 shares of Common Stock issuable upon the exercise of
+options held by Mr. Wagner.
+(15) Ms. Brown is a director and the President of the Company.
+(16) Includes 373,386 shares of Common Stock issuable upon the exercise of
+options held by Ms. Brown.
+(17) Mr. Mongeluzo is the President of Adesso-Madden, Inc., a subsidiary of
+the Company.
+(18) Includes 62,500 shares of Common Stock issuable upon the exercise of
+options held by Mr. Mongeluzo.
+(19) Mr. Masella is the President of l.e.i. Footwear and Stevies, Inc., a
+subsidiary of the Company.
+(20) Includes 90,425 shares of Common Stock issuable upon the exercise of
+options held by Mr. Masella.
+(21) Mr. Jankowski is the General Merchandise Manager of the Company.
+(22) Includes 50,000 shares of Common Stock issuable upon the exercise of
+options held by Mr. Jankowski.
+(23) Mr. Schmertz is the President of Shoe Biz, Inc., a subsidiary of the
+Steven Madden Retail, Inc. and the President of Diva Acquisition Corp.
+(24) Includes 9,000 shares held by Mr. Schmertz's wife.
+(25) Mr. Migliorini is a director of the Company.
+(26) Includes 20,000 shares issuable upon the exercise of options held by
+Mr. Migliorini.
+(27) Mr. Koppelman is acting Chairman of the Board of the Company.
+(28) Includes 50,000 shares of Common Stock issuable upon the exercise of
+options held by Mr. Koppelman.
+(29) Mr. Olicker is the Chief Operating Officer of the Company.
+(30) Based upon a Schedule 13G filed with the Securities and Exchange
+Commission on February 14, 2001. The address for such stockholder is
+10829 Olive Blvd., St. Louis, MO 63141.
+19
+PROPOSAL TWO
+AMENDMENT OF THE 1999 STOCK PLAN
+At the 1999 Annual Meeting of Stockholders, the Company's stockholders
+approved the adoption of the Company's 1999 Stock Plan (the "1999 Plan"). The
+1999 Plan originally authorized up to 400,000 shares of Company common stock for
+grants of non-qualified and incentive stock options. In May 2000, the Company's
+stockholders approved an amendment to the 1999 Plan increasing the number of
+shares of common stock subject to the plan from 400,000 to 975,000 shares. The
+Board of Directors has amended the 1999 Plan, subject to stockholder approval,
+to authorize 625,000 additional shares for future awards (the "1999 Plan
+Proposal").
+Because of the limited number of remaining shares that may be granted
+under the 1999 Plan, the Board of Directors believes it is appropriate and
+necessary at this time to authorize additional shares for future awards.
+Authorization of these additional shares will allow grants to employees,
+consultants and directors in furtherance of the Company's goal of continuing to
+achieve significant gains in stockholder value and operating results.
+The Company intends to continue awarding options in order to attract
+and retain the services or advice of such directors, employees, officers,
+agents, consultants, and independent contractors and to provide additional
+incentive for such persons to exert maximum efforts for the success of the
+Company and its affiliates. The following is a summary of the principal features
+of the 1999 Plan. The summary is qualified in its entirety be reference to the
+complete text of the 1999 Plan, as proposed to be amended. The proposed
+amendment to the 1999 Plan is set forth as Annex A to this Proxy Statement.
+DESCRIPTION OF THE 1999 PLAN
+The maximum number of shares of Common Stock with respect to which
+awards may be presently granted pursuant to the 1999 Plan is 975,000 shares. The
+1999 Plan Proposal would authorize the use of up to an additional 625,000 shares
+of the Company's common stock for a total of 1,600,000 shares being subject of
+the 1999 Plan. Shares issuable under the 1999 Plan may be either treasury shares
+or authorized but unissued shares. The number of shares available for issuance
+will be subject to adjustment to prevent dilution in the event of stock splits,
+stock dividends or other changes in the capitalization of the Company.
+Subject to compliance with Rule 16b-3 of the Securities Exchange Act of
+1934, the Plan shall be administered by the Board of Directors of the Company
+(the "Board") or, in the event the Board shall appoint and/or authorize a
+committee, such as the Compensation Committee, of two or more members of the
+Board to administer the Plan, by such committee. The administrator of the Plan
+shall hereinafter be referred to as the "Plan Administrator". Except for the
+terms and conditions explicitly set forth herein, the Plan Administrator shall
+have the authority, in its discretion, to determine all matters relating to the
+options to be granted under the Plan, including, without limitation, selection
+of whether an option will be an incentive stock option or a nonqualified stock
+option, selection of the individuals to be granted options, the number of shares
+to be subject to each option, the exercise price per share, the timing of grants
+and all other terms and conditions of the options.
+20
+Options granted under the 1999 Plan may be "incentive stock options"
+("Incentive Options") within the meaning of Section 422 of the Internal Revenue
+Code (the "Code") or stock options which are not incentive stock options
+("Non-Incentive Options" and, collectively with Incentive Options, hereinafter
+referred to as "Options"). Each option may be exercised in whole or in part;
+provided, that only whole shares may be issued pursuant to the exercise of any
+option. Subject to any other terms and conditions herein, the Plan Administrator
+may provide that an option may not be exercised in whole or in part for a stated
+period or periods of time during which such option is outstanding; provided,
+that the Plan Administrator may rescind, modify, or waive any such limitation
+(including by the acceleration of the vesting schedule upon a change in control
+of the Company) at any time and from time to time after the grant date thereof.
+During an Optionee's lifetime, any incentive stock options granted under the
+Plan are personal to such Optionee and are exercisable solely by such Optionee.
+The Plan Administrator can determine at the time the option is granted
+in the case of incentive stock options, or at any time before exercise in the
+case of nonqualified stock options, that additional forms of payment will be
+permitted. To the extent permitted by the Plan Administrator and applicable laws
+and regulations (including, without limitation, federal tax and securities laws
+and regulations and state corporate law), an option may be exercised by:
+(a) delivery of shares of Common Stock of the Company held by an
+Optionee having a fair market value equal to the exercise price, such fair
+market value to be determined in good faith by the Plan Administrator;
+(b) delivery of a properly executed Notice of Exercise, together
+with irrevocable instructions to a broker, all in accordance with the
+regulations of the Federal Reserve Board, to promptly deliver to the Company the
+amount of sale or loan proceeds to pay the exercise price and any federal,
+state, or local withholding tax obligations that may arise in connection with
+the exercise; or
+(c) delivery of a properly executed Notice of Exercise, together
+with instructions to the Company to withhold from the shares of Common Stock
+that would otherwise be issued upon exercise that number of shares of Common
+Stock having a fair market value equal to the option exercise price.
+Upon a Change in Control of the Company, any award carrying a right to
+exercise that was not previously exercisable shall become fully exercisable, the
+restrictions, deferral limitations and forfeiture conditions applicable to any
+other award granted shall lapse and any performance conditions imposed with
+respect to awards shall be deemed to be fully achieved.
+Awards under the 1999 Plan may not be transferred, pledged, mortgaged,
+hypothecated or otherwise encumbered other than by will or under the laws of
+descent and distribution, except that the Committee may permit transfers of
+awards for estate planning purposes if, and to the extent, such transfers do not
+cause a participant who is then subject to Section 16 of the Exchange Act to
+lose the benefit of the exemption under Rule 16b-3 for such transactions.
+The Board may amend, alter, suspend, discontinue or terminate the 1999
+Plan at any time, except that any such action shall be subject to stockholder
+approval at the annual meeting next following such Board action if such
+stockholder approval is required by federal or state law or regulation or the
+21
+rules of any exchange or automated quotation system on which the Common Stock
+may then be listed or quoted, or if the Board of Directors otherwise determines
+to submit such action for stockholder approval. In addition, no amendment,
+alteration, suspension, discontinuation or termination to the 1999 Plan may
+materially impair the rights of any participant with respect to any award
+without such participant's consent. Unless terminated earlier by action of the
+Board of Directors, the 1999 Plan shall terminate ten (10) years after adoption
+by the shareholders.
+RECOMMENDATION OF BOARD OF DIRECTORS
+THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE 1999 PLAN
+PROPOSAL. UNLESS MARKED TO THE CONTRARY, PROXIES RECEIVED FROM STOCKHOLDERS WILL
+BE VOTED IN FAVOR OF THE PROPOSED 1999 PLAN.
+PROPOSAL THREE
+RATIFICATION OF SELECTION OF THE FIRM OF RICHARD A. EISNER &
+COMPANY, LLP AS INDEPENDENT PUBLIC ACCOUNTANTS FOR THE COMPANY
+The Board of Directors upon recommendation of the members of the Audit
+Committee, concluded that the continued engagement of Richard A. Eisner &
+Company, LLP as the Company's independent public accountants for the 2001 fiscal
+year was in the best interests of the Company. The Board of Directors recommends
+that Stockholders ratify its choice of Richard A. Eisner & Company, LLP.
+The Board of Directors unanimously recommends a vote FOR the ratification of the
+selection of Richard A. Eisner & Company, LLP as independent public accountants
+for the Company. Unless marked to the contrary, proxies received from
+Stockholders will be voted in favor of the proposed amendment.
+UNLESS MARKED TO THE CONTRARY, PROXIES RECEIVED FROM STOCKHOLDERS WILL BE VOTED
+IN FAVOR OF THE PROPOSED AMENDMENT.
+STOCKHOLDER PROPOSALS AND SUBMISSIONS
+If any Stockholder wishes to present a proposal for inclusion in the proxy
+materials to be solicited by the Company's Board of Directors with respect to
+the 2002 Annual Meeting of Stockholders, that proposal must be presented to the
+Company's secretary prior to December 1, 2001.
+22
+WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE ANNUAL MEETING, PLEASE SIGN AND
+RETURN THE ENCLOSED PROXY PROMPTLY. YOUR VOTE IS IMPORTANT. IF YOU ARE A
+STOCKHOLDER OF RECORD AND ATTEND THE ANNUAL MEETING AND WISH TO VOTE IN PERSON,
+YOU MAY WITHDRAW YOUR PROXY AT ANY TIME PRIOR TO THE VOTE.
+STEVEN MADDEN, LTD.
+April 25, 2001 By: /s/ STEVEN MADDEN
+-------------------------------------
+Steven Madden, Chief Executive Officer
+and Director
+23
+ANNEX A
+STEVEN MADDEN, LTD.
+1999 STOCK PLAN
+This Steven Madden, Ltd. 1999 Stock Plan (the "1999 Plan") is hereby
+amended as follows:
+1. Section 3 of the 1999 Plan is amended to read as follows:
+SECTION 3. STOCK SUBJECT TO THE PLAN. The stock subject to this Plan
+shall be the Common Stock, presently authorized but unissued or subsequently
+acquired by the Company. Subject to adjustment as provided in Section 7 hereof,
+the aggregate amount of Common Stock to be delivered upon the exercise of all
+options granted under the Plan shall not exceed in the aggregate 1,600,000
+shares as such Common Stock was constituted on the effective date of the Plan.
+If any option granted under the Plan shall expire, be surrendered, exchanged for
+another option, canceled, or terminated for any reason without having been
+exercised in full, the unpurchased shares subject thereto shall thereupon again
+be available for purposes of the Plan, including for replacement options which
+may be granted in exchange for such surrendered, canceled, or terminated
+options.
+2. Except as expressly amend, the provisions of the Plan shall remain
+in full force and effect.
+3. This Amendment shall be effective immediately upon approval by the
+Company's Board of Directors and stockholders of the Company.
+Adopted by the Board of Directors
+this 30th day of March, 2001
+Approved by the Stockholders
+this ________ day of May, 2001
+24
+ANNEX B
+AUDIT COMMITTEE CHARTER
+OF
+STEVEN MADDEN, LTD.
+The Audit Committee is appointed by the Company's Board of Director to
+assist the Board in monitoring (1) the integrity of the financial statements of
+the Company, (2) the compliance by the Company with legal and regulatory
+requirements and (3) the independence and performance of the Company's auditors.
+The members of the Audit Committee shall meet the independence and
+experience requirements of The Nasdaq Stock Market. The members of the Audit
+Committee shall be appointed by the Board.
+The Audit Committee shall have the authority to retain special legal,
+accounting or other consultants to advise the Committee. The Audit Committee may
+request any officer or employee of the Company or the Company's outside counsel
+or independent auditor to attend a meeting of the Committee or to meet with any
+members of, or consultants to, the Committee.
+The Audit Committee shall make regular reports to the Board.
+The Audit Committee shall:
+1. Review and reassess the adequacy of this Charter annually and
+recommend any proposed changes to the Board for approval.
+2. Review the annual audited financial statements with
+management, including major issues regarding accounting and
+auditing principles and practices as well as the adequacy of
+internal controls that could significantly affect the
+Company's financial statements.
+3. Review an analysis prepared by management and the independent
+auditor of significant financial reporting issues and
+judgments made in connection with the preparation of the
+Company's financial statements.
+4. Review with management and the independent auditor the
+Company's quarterly financial statements prior to the filing
+of its Form 10-Q.
+5. Meet periodically with management to review the Company's
+major financial risk exposures and the steps management has
+taken to monitor and control such exposures.
+6. Review major changes to the Company's auditing and accounting
+principles and practices as suggested by the independent
+auditor or management.
+7. Recommend to the Board the appointment of the independent
+auditor, which firm is ultimately accountable to the Audit
+Committee and the Board.
+25
+8. Approve the fees to be paid to the independent auditor.
+9. Receive periodic reports from the independent auditor
+regarding the auditor's independence, discuss such reports
+with the auditor, and if so determined by the Audit Committee,
+recommend that the Board replace the independent auditor.
+10. Evaluate together with the Board the performance of the
+independent auditor and, if so determined by the Audit
+Committee, recommend that the Board replace the independent
+auditor.
+11. Review the appointment and replacement of the senior internal
+auditing executive, if any.
+12. Review the significant reports to management prepared by the
+accounting department and management's responses.
+13. Meet with the independent auditor prior to the audit to review
+the planning and staffing of the audit.
+14. Obtain from the independent auditor assurance that Section 10A
+of the Securities Exchange Act of 1934 has not been
+implicated.
+15. Obtain reports from management, the Company's senior financial
+executive and the independent auditor that the Company's
+subsidiaries and/or affiliated entities are in conformity with
+applicable legal requirements.
+16. Discuss with the independent auditor the matters required to
+be discussed by Statement on Auditing Standards No. 61
+relating to the conduct of the audit.
+17. Review with the independent auditor any problems or
+difficulties the auditor may have encountered and any
+management letter provided by the auditor and management's
+response to that letter. Such review should include:
+(a) Any difficulties encountered in the course of the
+audit work, including any restrictions on the scope
+of activities or access to required information; and
+(b) Any changes required in the planned scope of the
+audit.
+18. Prepare the report required by the rules of the Securities and
+Exchange Commission to be included in the Company's annual
+proxy statement.
+19. Advise the Board with respect to the Company's policies and
+procedures regarding compliance with applicable laws and
+regulations and with the Company's Employee Handbook and/or
+Code of Conduct.
+20. Review with the Company's legal counsel legal matters that may
+have a material impact on the financial statements, the
+Company's compliance policies and any material reports or
+inquiries received from regulators or governmental agencies.
+21. Meet at least annually with the chief financial officer, the
+senior financial executive and the independent auditor in
+separate executive sessions.
+26
+While the Audit Committee has the responsibilities and powers set forth
+in this Charter, it is not the duty of the Audit Committee to plan or conduct
+audits or to determine that the Company's financial statements are complete and
+accurate and are in accordance with generally accepted accounting principles.
+This is the responsibility of management and the independent auditor. Nor is it
+the duty of the Audit Committee to conduct investigations, to resolve
+disagreements, if any, between management and the independent auditor or to
+assure compliance with laws and regulations and the Company's Employee Handbook
+and/or Code of Conduct.
+27
+STEVEN MADDEN, LTD. PROXY
+STEVEN MADDEN, LTD.
+THIS PROXY IS BEING SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
+PLEASE CLEARLY INDICATE A RESPONSE BY CHECKING EITHER THE PROXY (THE "PROXY")
+[FOR] OR [AGAINST] BOX NEXT TO EACH OF THE THREE (3) PROPOSALS
+THE UNDERSIGNED HEREBY APPOINT(S) MR. STEVEN MADDEN WITH THE POWER OF
+SUBSTITUTION AND RESUBSTITUTION TO VOTE ANY AND ALL SHARES OF CAPITAL STOCK OF
+STEVEN MADDEN, LTD. (THE "COMPANY") WHICH THE UNDERSIGNED WOULD BE ENTITLED TO
+VOTE AS FULLY AS THE UNDERSIGNED COULD DO IF PERSONALLY PRESENT AT THE ANNUAL
+MEETING OF THE COMPANY, TO BE HELD ON MAY 25, 2001, AT 10:00 A.M. LOCAL TIME,
+AND AT ANY ADJOURNMENTS THEREOF, HEREBY REVOKING ANY PRIOR PROXIES TO VOTE SAID
+STOCK, UPON THE FOLLOWING ITEMS MORE FULLY DESCRIBED IN THE NOTICE OF ANY PROXY
+STATEMENT FOR THE ANNUAL MEETING (RECEIPT OF WHICH IS HEREBY ACKNOWLEDGED):
+1. ELECTION OF DIRECTORS
+VOTE
+[ ] FOR ALL NOMINEES LISTED BELOW EXCEPT AS MARKED TO THE CONTRARY
+BELOW
+[ ] WITHHOLD AUTHORITY TO VOTE FOR ALL NOMINEES LISTED BELOW
+(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL
+NOMINEE STRIKE A LINE THROUGH THE NOMINEE'S NAME BELOW.)
+[ ] ABSTAIN
+RHONDA J. BROWN, ARVIND DHARIA, JAMIESON KARSON, CHARLES KOPPELMAN, JOHN L.
+MADDEN, STEVEN MADDEN, PETER MIGLIORINI, AND HEYWOOD WILANSKY
+2. AMENDMENT OF THE 1999 STOCK PLAN
+[ ] FOR THE AMENDMENT OF THE 1999 STOCK PLAN
+[ ] WITHHOLD AUTHORITY
+[ ] ABSTAIN
+28
+3. RATIFICATION OF THE APPOINTMENT OF RICHARD A. EISNER & COMPANY, LLP. AS
+INDEPENDENT AUDITORS OF THE COMPANY FOR FISCAL YEAR 2001.
+[ ] FOR THE RATIFICATION OF THE APPOINTMENT OF RICHARD A. EISNER &
+COMPANY, LLP.
+[ ] WITHHOLD AUTHORITY
+[ ] ABSTAIN
+THIS PROXY WILL BE VOTED AS SPECIFIED ABOVE; UNLESS OTHERWISE
+INDICATED, THIS PROXY WILL BE VOTED FOR ELECTION OF THE EIGHT (8) NOMINEES NAMED
+IN ITEM 1, THE AMENDMENT OF THE 1999 STOCK PLAN IN ITEM 2, AND THE RATIFICATION
+OF THE APPOINTMENT OF RICHARD A. EISNER & CO., LLP. AS INDEPENDENT AUDITORS OF
+THE COMPANY FOR FISCAL YEAR 2001 IN ITEM 3.
+IN HIS DISCRETION, THE PROXY IS AUTHORIZED TO VOTE UPON SUCH OTHER
+BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING.
+PLEASE MARK, SIGN DATE AND RETURN THIS PROXY PROMPTLY USING THE
+ACCOMPANYING POSTAGE PRE-PAID ENVELOPE. THIS PROXY IS SOLICITED ON BEHALF OF THE
+BOARD OF DIRECTORS OF STEVEN MADDEN, LTD.
+DATED:
+-----------------------------------
+-----------------------------------------
+SIGNATURE
+-----------------------------------------
+SIGNATURE IF JOINTLY OWNED:
+-----------------------------------------
+PRINT NAME:
+PLEASE SIGN EXACTLY AS THE NAME APPEARS ON YOUR STOCK CERTIFICATE. WHEN SHARES
+OF CAPITAL STOCK ARE HELD BY JOINT TENANTS, BOTH SHOULD SIGN. WHEN SIGNING AS
+ATTORNEY, EXECUTOR, ADMINISTRATOR, TRUSTEE, GUARDIAN, OR CORPORATE OFFICER,
+PLEASE INCLUDE FULL TITLE AS SUCH. IF THE SHARES OF CAPITAL STOCK ARE OWNED BY A
+CORPORATION, SIGN IN THE FULL CORPORATE NAME BY AN AUTHORIZED OFFICER. IF THE
+SHARES OF CAPITAL STOCK ARE OWNED BY A PARTNERSHIP, SIGN IN THE NAME OF THE
+PARTNERSHIP BY AN AUTHORIZED OFFICER.
+PLEASE MARK, DATE, SIGN AND RETURN THIS PROXY PROMPTLY
+IN THE ENCLOSED ENVELOPE
+29

raw/proxies/0000913241/0001019056-02-000300/proxy.txt

@@ -0,0 +1,1456 @@
+DEF 14A
+1
+sm-def14a_v8.txt
+DEFINITIVE 14A
+SCHEDULE 14A
+Proxy Statement Pursuant to Section 14(a)
+of the Securities Exchange Act of 1934
+(Amendment No. )
+[X] Filed by Registrant
+[ ] Filed by a Party other than the Registrant
+Check the appropriate box:
+[ ] Preliminary Proxy Statement
+[X] Definitive Proxy Statement
+[ ] Definitive Additional Materials
+[ ] Soliciting Material Under Rule 14a-12
+STEVEN MADDEN, LTD.
+--------------------------------------------------------------------------------
+(Name of Registrant as Specified in its Charter)
+--------------------------------------------------------------------------------
+(Name of Person(s) Filing Proxy Statement if other than the Registrant)
+Payment of Filing Fee (Check the appropriate box):
+[X] No fee required.
+[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. 1)
+1) Title of each class of securities to which transaction applies:
+N/A
+----------------------------------------------------------------------
+2) Aggregate number of securities to which transaction applies:
+N/A
+----------------------------------------------------------------------
+3) Per unit price or other underlying value of transaction computed
+pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
+filing fee is calculated and state how it was determined.):
+N/A
+----------------------------------------------------------------------
+4) Proposed maximum aggregate value of transaction:
+N/A
+----------------------------------------------------------------------
+5) Total fee paid:
+N/A
+----------------------------------------------------------------------
+[ ] Fee paid previously with preliminary materials:
+N/A
+----------------------------------------------------------------------
+[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
+0-11(a)(2) and identify the filing for which the offsetting fee was paid
+previously. Identify the previous filing by registration statement number,
+or the Form or Schedule and date of its filing.
+1) Amount Previously Paid:
+N/A
+----------------------------------------------------------------------
+2) Form, Schedule or Registration Statement No.:
+N/A
+----------------------------------------------------------------------
+3) Filing Party:
+N/A
+----------------------------------------------------------------------
+4) Date Filed:
+N/A
+----------------------------------------------------------------------
+STEVEN MADDEN, LTD.
+52-16 BARNETT AVENUE
+LONG ISLAND CITY, NY 11104
+----------------------------------------
+NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
+TO BE HELD ON MAY 17, 2002
+----------------------------------------
+To the Stockholders of Steven Madden, Ltd.:
+NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the "Annual
+Meeting") of the Company will be held on May 17, 2002, at the Company's showroom
+located at 1370 Avenue of the Americas, 12th Floor, New York, New York at 10:00
+a.m., local time, and thereafter as it may from time to time be adjourned, for
+the purposes stated below.
+1. To elect eight (8) directors to the Board of Directors of the Company
+for a one (1) year term;
+2. To approve an amendment to the Company's 1999 Stock Plan to increase
+the maximum number of shares of the Company's common stock available
+for issuance under the plan from 1,600,000 shares to 2,280,000 shares;
+3. To ratify the appointment of Richard A. Eisner & Company, LLP as
+independent public accountants for the Company for fiscal year 2002;
+and
+4. To transact such other business as may properly come before the Annual
+Meeting or any adjournments thereof.
+All stockholders are cordially invited to attend the Annual Meeting. Only
+those stockholders of record at the close of business on April 12, 2002 are
+entitled to notice of and to vote at the Annual Meeting and any adjournments
+thereof. A complete list of stockholders entitled to vote at the Annual Meeting
+will be available at the Meeting.
+BY ORDER OF THE BOARD OF DIRECTORS
+/s/ JAMIESON A. KARSON
+April 19, 2002 ----------------------------------------
+Jamieson A. Karson
+Chief Executive Officer
+WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE MEETING, PLEASE DATE
+AND SIGN THE ENCLOSED FORM OF PROXY AND MAIL IT PROMPTLY IN THE
+ENCLOSED ENVELOPE TO AMERICAN STOCK TRANSFER & TRUST COMPANY, 40 WALL
+STREET, NEW YORK, NEW YORK 10005.
+STEVEN MADDEN, LTD.
+52-16 Barnett Avenue
+Long Island City, NY 11104
+PROXY STATEMENT
+INTRODUCTION
+This Proxy Statement is furnished in connection with the solicitation of
+proxies by the Board of Directors of Steven Madden, Ltd., a Delaware corporation
+(the "Company"), for use at the annual meeting of the Company's stockholders to
+be held at the Company's showroom located at 1370 Avenue of the Americas, 12th
+Floor, New York, New York on May 17, 2002 at 10:00 a.m., local time, and at any
+adjournments thereof (the "Annual Meeting").
+The Annual Meeting has been called to consider and take action on the
+following proposals: (i) to elect eight (8) directors to the Board of Directors
+of the Company for a one (1) year term, (ii) to approve an amendment to the
+Company's 1999 Stock Plan to increase the maximum number of shares of Company's
+common stock subject to the plan from 1,600,000 shares to 2,280,000 shares,
+(iii) to ratify the selection of Richard A. Eisner & Company, LLP as independent
+public accountants for the Company for fiscal year 2002, and (iv) to transact
+such other business as may properly come before the Annual Meeting or any
+adjournments thereof. The Board of Directors knows of no other matters to be
+presented for action at the Annual Meeting. However, if any other matters
+properly come before the Annual Meeting, the persons named in the proxy will
+vote on such other matters and/or for other nominees in accordance with their
+best judgment. The Company's Board of Directors recommends that the stockholders
+vote in favor of each of the proposals. Only holders of record of common stock,
+$.0001 par value (the "Common Stock"), of the Company at the close of business
+on April 12, 2002 (the "Record Date") will be entitled to vote at the Annual
+Meeting.
+The principal executive offices of the Company are located at 52-16 Barnett
+Avenue, Long Island City, NY 11104 and its telephone number is (718) 446-1800.
+The approximate date on which this Proxy Statement, the proxy card and other
+accompanying materials are first being sent or given to stockholders is April
+19, 2002. The Company's Annual Report for the fiscal year ended December 31,
+2001, including audited financial statements, is being sent to stockholders
+together with this Proxy Statement.
+INFORMATION CONCERNING SOLICITATION AND VOTING
+As of the Record Date, there were outstanding 12,407,716 shares of Common
+Stock (excluding treasury shares) held by approximately 73 holders of record and
+3,401 beneficial owners. Only holders of shares of Common Stock on the Record
+Date will be entitled to vote at the Annual Meeting. The holders of Common Stock
+are entitled to one vote on all matters presented at the meeting for each share
+held of record. The presence in person or by proxy of holders of record of a
+majority of the shares outstanding and entitled to vote as of the Record Date
+shall be required for a quorum to transact business at the Annual Meeting. If a
+quorum should not be present, the Annual Meeting may be adjourned until a quorum
+is obtained. Each nominee to be elected as a director named in Proposal 1 must
+receive a plurality of the votes cast by the holders of Common Stock present in
+person or represented by proxy at the Annual Meeting with respect to such
+proposal. The amendment to the Company's 1999 Stock Plan described in Proposal 2
+and the ratification of the selection of Richard A. Eisner & Company, LLP as
+independent public accountants of the Company for fiscal year 2002 described in
+Proposal 3 must be approved by the affirmative vote of the holders of a majority
+of the total votes cast on such proposals in person or by proxy. Abstentions and
+broker non-votes are counted as present and entitled to vote and are, therefore,
+included for purposes of determining whether a quorum of shares is present at
+the meeting. An abstention from a vote with respect to Proposal 1 will have no
+effect. An abstention from a vote with respect to Proposal 2 or 3 will have the
+same practical effect as a vote against such proposal. Broker "non-votes" are
+not deemed to be "votes cast." As a result, broker "non-votes" are not included
+in the tabulation of the voting result on the election of directors or issues
+requiring approval of a majority of the votes cast and, therefore, do not have
+the effect of votes in opposition in such tabulations and as such will have the
+practical effect of reducing the number of affirmative votes required to achieve
+a majority vote for a matter by reducing the total number of shares from which a
+majority is calculated. Brokers who hold shares in
+street name may vote on behalf of beneficial owners with respect to Proposals 1,
+2 and 3. The approval of all other matters to be considered at the Annual
+Meeting requires the affirmative vote of a majority of the eligible votes cast
+at the Annual Meeting on such matters.
+The expense of preparing, printing and mailing this Proxy Statement, the
+exhibits hereto and the proxies solicited hereby will be borne by the Company.
+In addition to the use of the mails, proxies may be solicited by officers and
+directors and regular employees of the Company, without additional remuneration,
+by personal interviews, telephone, telegraph or facsimile transmission. The
+Company will also request brokerage firms, nominees, custodians and fiduciaries
+to forward proxy materials to the beneficial owners of shares of Common Stock
+held of record and will provide reimbursements for the cost of forwarding the
+material in accordance with customary charges.
+Proxies given by stockholders of record for use at the Annual Meeting may
+be revoked at any time prior to the exercise of the powers conferred. In
+addition to revocation in any other manner permitted by law, stockholders of
+record giving a proxy may revoke the proxy by an instrument in writing, executed
+by the stockholder or his attorney authorized in writing or, if the stockholder
+is a corporation, under its corporate seal, by an officer or attorney thereof
+duly authorized, and deposited either at the corporate headquarters of the
+Company at any time up to and including the last business day preceding the day
+of the Annual Meeting, or any adjournment thereof, at which the proxy is to be
+used, or with the chairman of such Annual Meeting on the day of the Annual
+Meeting or adjournment thereof, and upon either of such deposits the proxy is
+revoked.
+ALL PROXIES RECEIVED WILL BE VOTED IN ACCORDANCE WITH THE CHOICES SPECIFIED
+ON SUCH PROXIES. PROXIES WILL BE VOTED IN FAVOR OF A PROPOSAL IF NO CONTRARY
+SPECIFICATION IS MADE. ALL VALID PROXIES OBTAINED WILL BE VOTED AT THE
+DISCRETION OF THE PERSONS NAMED IN THE PROXY WITH RESPECT TO ANY OTHER BUSINESS
+THAT MAY COME BEFORE THE ANNUAL MEETING.
+None of the matters to be acted on at the Annual Meeting give rise to any
+statutory right of a stockholder to dissent and obtain the appraisal of or
+payment for such stockholder's shares.
+-2-
+PROPOSAL ONE
+TO ELECT EIGHT DIRECTORS TO SERVE FOR ONE YEAR AND
+UNTIL THEIR SUCCESSORS HAVE BEEN DULY ELECTED AND QUALIFIED
+Under the Amended and Restated By-Laws of the Company (the "By-Laws"), the
+Board of Directors of the Company is required to be comprised of a minimum of
+one (1) director. Subject to the foregoing limitation, the number of directors
+may be fixed from time to time by action of the directors. The Company's board
+presently consists of eight (8) directors whose terms expire at the Annual
+Meeting.
+The Board has nominated eight (8) candidates to serve as directors. The
+names and biographical summaries of the eight (8) persons who have been
+nominated by the Board of Directors to stand for election at the Annual Meeting
+have been provided below for your information. The Board of Directors has
+proposed that these persons be elected at the Annual Meeting to serve until the
+next annual meeting of stockholders. Proxies will be voted for the election of
+the eight (8) nominees listed below as directors of the Company unless otherwise
+specified on the proxy. A plurality of the votes of shares of Common Stock
+present in person or represented by proxy at the Annual Meeting will be
+necessary to elect the directors listed below. If, for any reason, any of the
+nominees shall be unable or unwilling to serve, the proxies will be voted for a
+substitute nominee who will be designated by the Board of Directors at the
+Annual Meeting. Stockholders may abstain from voting by marking the appropriate
+boxes on the enclosed proxy. Abstentions shall be counted separately and shall
+be used for purposes of calculating whether a quorum is present at the meeting.
+Biographical Summaries of Nominees for the Board of Directors
+Charles A. Koppelman has been a director of the Company since June 1998 and
+Chairman of the Board since July 1, 2001. Previously Mr. Koppelman was acting
+Chairman of the Board from June 2000 to July 2001. Presently, Mr. Koppelman
+serves as Chairman of CAK Entertainment, Inc. From 1988 to 1997, Mr. Koppelman
+served first as Chairman and Chief Executive Officer of EMI Music Publishing and
+then as Chairman and Chief Executive Officer of EMI Records Group, North
+America.
+Jamieson A. Karson has been the Chief Executive Officer of the Company and
+Vice Chairman of the Board of Directors of the Company since July 1, 2001. Mr.
+Karson has been a director of the Company since January 2, 2001. Prior to
+joining the Company as Chief Executive Officer, Mr. Karson practiced law for
+over 17 years. He was a partner in the New York City law firm of Tannenbaum
+Helpern Syracuse & Hirshtritt LLP from January 1, 1997 through June 30, 2001,
+where he served on the firm's three person Finance Committee. He was a partner
+at the law firm of Karson McCormick from February 1992 through December 31,
+1996. Prior to that, Mr. Karson was an associate attorney at the law firm of
+Shea & Gould.
+Arvind Dharia has been the Chief Financial Officer of the Company since
+October 1992 and a director since December 1993. From December 1988 to September
+1992, Mr. Dharia was Assistant Controller of Millennium III Real Estate Corp.
+Gerald Mongeluzo has been a director of the Company since July 2001. Mr.
+Mongeluzo has been President of Adesso-Madden, Inc., a wholly owned subsidiary
+of the Company, since September 1995. Previously, Mr. Mongeluzo was the founder
+and President of Adesso Shoes, Inc., a buying agent of private label shoes. From
+1987 through 1991, Mr. Mongeluzo was the President of the Prima Barabaro
+Division of Cells Enterprise, Inc. Mr. Mongeluzo founded Prima Shoes, Inc., a
+buying agent of private label shoes, and served as its President from 1974 to
+1987.
+Marc S. Cooper has been a director of the Company since July 2001. Mr.
+Cooper has served as a Managing Director of Peter J. Solomon Company in its
+Mergers and Acquisitions Department since May 1999. Previously, Mr. Cooper
+worked at Barington Capital Group from March 1992 to May 1999, where he was a
+founding member and Vice Chairman overseeing its investment banking operations.
+Prior to his tenure with Barington Capital Group, Mr. Cooper spent three years
+as a partner of Scharf Brothers, a private merchant banking firm. Currently, Mr.
+Cooper serves as a director of Thinking Tools, Inc. and North Atlantic Trading
+Company, Inc.
+-3-
+John L. Madden has been a director of the Company since the Company's
+inception. Since April 1998, Mr. Madden has owned and managed a branch office of
+Tradeway Securities Group, Inc. in Florida. From May 1996 through December 1996,
+Mr. Madden formed JLM Consultants, Inc. which acted as a branch office of Merit
+Capital, Inc. for several broker-dealers. From May 1994 to May 1996, Mr. Madden
+served as Vice President of Investments for GKN Securities, Inc. From August
+1993 to April 1994, Mr. Madden was employed by Biltmore Securities, Inc. as
+Managing Director and registered sales representative. Mr. Madden is the brother
+of Steven Madden, the Company's former Chief Executive Officer and current
+Creative and Design Chief. See "Recent Developments."
+Peter Migliorini has been a director of the Company since October 1996. Mr.
+Migliorini has served as Sales Manager for Greschlers, Inc., a supply company
+located in Brooklyn, New York since 1994. From 1987 to 1994 Mr. Migliorini
+served as Director of Operations for Mackroyce Group. Mr. Migliorini has
+previously served in a number of capacities, ranging from Assistant Buyer to
+Chief Planner/Coordinator for several shoe companies including Meldisco Shoes,
+Perry Shoes, and Fasco Shoes.
+Heywood Wilansky has been a director of the Company since January 2, 2001.
+Since 2001, Mr. Wilansky has served as President and Chief Executive Officer of
+Strategic Management Resources, a management consulting firm for the wholesale
+and retail trade. Previously, Mr. Wilansky served as the President and Chief
+Executive Officer of Bon-Ton Stores, Inc, from August 1995 to July 2000 and a
+director of Bon-Ton Stores, Inc. from August 1995 to July 2000. Prior to that,
+he was employed by The May Department Stores Company for more than 19 years,
+last serving as President and Chief Executive Officer of the Foley's division
+from 1992 to 1995. Mr. Wilansky was a director of First Washington Realty Trust
+from 1994 to 2001.
+Recommendation of the Board of Directors
+The Board of Directors unanimously recommends a vote FOR the election of
+Messrs. Charles A. Koppelman, Jamieson A. Karson, Arvind Dharia, Gerald
+Mongeluzo, Marc Cooper, John L. Madden, Peter Migliorini and Heywood Wilansky.
+Unless otherwise instructed or unless authority to vote is withheld, the
+enclosed proxy will be voted FOR the election of the above listed nominees and
+AGAINST any other nominees.
+Director Compensation
+Directors who are also employees of the Company are not paid any fees or
+other remuneration for service on the Board or any of its Committees. Each
+non-employee director receives (i) an annual grant of options to purchase 10,000
+shares of Common Stock at an exercise price per share equal to two dollars
+($2.00) above the fair market value of the Common Stock on the date of grant and
+(ii) twenty thousand dollars ($20,000) in immediately available funds. In
+addition, non-employee directors are reimbursed by the Company for all expenses
+related to attending meetings.
+On July 18, 2000, the Company granted Mr. Koppelman 50,000 options at an
+exercise price of $7.00 per share as compensation for assuming the duties of
+Chairman of the Board of the Company pursuant to a letter agreement between the
+Company and Mr. Koppelman (the "Option Letter"). These options vested on July
+18, 2000 and will expire on July 18, 2005. The Option Letter provided that if
+Mr. Koppelman continued his service as acting Chairman of the Board, he was
+entitled to receive 75,000 options at an exercise price of $7.00 per share which
+options were issued on May 31, 2001. In addition, he was also entitled to
+receive 75,000 options on each of May 31, 2002, 2003 and 2004 at an exercise
+price per share equal to the closing bid price of the Company's common stock on
+the date of grant (the "Additional Options"). In connection with the execution
+of his current agreement with the Company, Mr. Koppelman surrendered all of the
+Additional Options. See "Agreement with the Chairman of the Board."
+Meetings and Committees of the Board of Directors
+The Board of Directors met six (6) times during the fiscal year ended
+December 31, 2001. The Board of Directors has standing Audit, Real Estate and
+Compensation Committees. The Board of Directors does not have a standing
+Nominating Committee.
+-4-
+Audit Committee
+During the year ended December 31, 2001, the Audit Committee of the Board
+of Directors consisted of directors Charles A. Koppelman, Peter Migliorini and
+Heywood Wilansky. In January 2002, the Board of Directors appointed Marc Cooper
+to the Audit Committee. At the first meeting of the Board of Directors following
+the Annual Meeting, Charles A. Koppelman will relinquish his membership on the
+Audit Committee. The Audit Committee is comprised of directors who are
+"independent" for purposes of The Nasdaq Stock Market listing standards. The
+Audit Committee is primarily responsible for reviewing the services performed by
+the Company's independent public accountants, evaluating the Company's
+accounting policies and its system of internal controls, and reviewing
+significant finance transactions. During 2001, the Audit Committee met two (2)
+times.
+The audit functions of the Audit Committee are focused on three areas:
+- the adequacy of the Company's internal controls and financial
+reporting process and the reliability of the Company's financial
+statements.
+- the independence and performance of the Company's independent public
+accountants.
+- the Company's compliance with legal and regulatory requirements.
+The Audit Committee meets with management periodically to consider the
+adequacy of the Company's internal controls and the objectivity of its financial
+reporting. The Audit Committee discusses these matters with the Company's
+independent public accountants and with appropriate Company financial personnel.
+Meetings are held with the independent public accountants who have unrestricted
+access to the Audit Committee. The Audit Committee also recommends to the Board
+the appointment of the independent public accountants and reviews periodically
+their performance and independence from management. In addition, the Audit
+Committee reviews the Company's financing plans and reports recommendations to
+the full Board of Directors for approval and to authorize action. The Board has
+adopted a written charter setting out the audit related functions the Audit
+Committee is to perform.
+Management has primary responsibility for the Company's financial
+statements and the overall reporting process, including the Company's system of
+internal controls. The independent public accountants audit the annual financial
+statements prepared by management, express an opinion as to whether those
+financial statements present fairly the financial position, results of
+operations and cash flows of the Company in conformity with generally accepted
+accounting principles and discuss with the Audit Committee any issues they
+believe should be raised with the Audit Committee.
+The following Audit Committee Report does not constitute soliciting
+material and shall not be deemed filed or incorporated by reference into any
+other Company filing under the Securities Act of 1933, as amended, or the
+Securities Exchange Act of 1934, as amended, except to the extent the Company
+specifically incorporates this Audit Committee Report by reference therein.
+-5-
+Audit Committee Report
+The Audit Committee reviewed the Company's audited financial statements for
+the fiscal year ended December 31, 2001 and met with both management and Richard
+A. Eisner & Company, LLP, the Company's independent public accountants, to
+discuss such audited financial statements. Management and the Company's
+independent public accountants have represented to the Audit Committee that the
+financial statements were prepared in accordance with generally accepted
+accounting principles. The Audit Committee has received from and discussed with
+Richard A. Eisner & Company, LLP the written disclosure and the letter regarding
+the independence of Richard A. Eisner & Company, LLP as required by Independence
+Standards Board Standard No. 1. The Audit Committee also discussed with Richard
+A. Eisner & Company, LLP any matters required to be discussed by Statement on
+Auditing Standards No. 61. Based on these reviews and discussions, the Audit
+Committee recommended to the Board that the Company's audited financial
+statements be included in the Company's Annual Report on Form 10-K for the
+fiscal year ended December 31, 2001.
+AUDIT COMMITTEE
+Charles A. Koppelman
+Peter Migliorini
+Marc Cooper
+Heywood Wilansky
+Compensation Committee
+The Compensation Committee of the Board of Directors consists of directors
+Charles A. Koppelman, John Madden and Peter Migliorini. The Compensation
+Committee is primarily responsible for approving salaries, bonuses and other
+compensation for the Company's Chief Executive Officer and named executive
+officers, reviewing management recommendations relating to new incentive
+compensation plans and changes to existing incentive compensation plans, and
+administering the Company's stock plans, including granting options and setting
+the terms thereof pursuant to such plans (all subject to approval by the Board
+of Directors). During 2001, the Compensation Committee met three (3) times.
+Real Estate Committee
+The Real Estate Committee of the Board of Directors consists of directors
+Jamieson A. Karson and Heywood Wilansky. The Real Estate Committee is primarily
+responsible for overseeing real estate transactions for the Company. In light of
+the Company's aggressive retail store expansion plan, the Real Estate Committee
+was formed to consider proposed real estate transactions for approval. During
+2001, the Real Estate Committee met four (4) times.
+Section 16(a) Beneficial Ownership Reporting Compliance
+Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
+that the Company's directors and executive officers, and persons who own more
+than ten percent (10%) of a registered class of the Company's equity securities,
+file with the Securities and Exchange Commission ("SEC") reports of initial
+ownership of the Company's common stock and subsequent changes in that ownership
+and furnish the Company with copies of all forms they file pursuant to Section
+16(a). To the Company's knowledge, based solely on its review of the copies of
+such reports furnished to the Company during the year ended December 31, 2001,
+all Section 16(a) filing requirements applicable to its officers, directors and
+greater than ten percent beneficial owners were complied with.
+-6-
+Recent Developments
+On June 20, 2000, Steven Madden, the Company's former Chairman and Chief
+Executive Officer, was indicted in the United States District Courts for the
+Southern District and Eastern District of New York. The indictments alleged that
+Mr. Madden engaged in securities fraud and money laundering activities. In
+addition, the Securities and Exchange Commission filed a complaint in the United
+States District Court for the Eastern District of New York alleging that Mr.
+Madden violated Section 17(a) of the Securities Exchange Act of 1934, as
+amended. On May 21, 2001, Steven Madden entered into a plea agreement with the
+U.S. Attorney's Office, pursuant to which he pled guilty to four of the federal
+charges filed against him. In addition, Mr. Madden reached a separate settlement
+agreement with the Securities and Exchange Commission regarding the allegations
+contained in its complaint. As a result, Mr. Madden resigned as the Company's
+Chief Executive Officer and as a member of the Company's Board of Directors
+effective July 1, 2001. Mr. Madden has agreed to serve as the Company's Creative
+and Design Chief, a non-executive position. On April 4, 2002 Mr. Madden was
+sentenced in the United States District Court for the Southern District of New
+York to forty one (41) months imprisonment in connection with two of the federal
+charges to which he pled guilty. It is expected that Mr. Madden will be
+sentenced in late April 2002 in the United States District Court for the Eastern
+District of New York in connection with the other charges to which he pled
+guilty, which sentence should run concurrently with the 41 month sentence. Under
+the settlement agreement with the Securities and Exchange Commission, Mr. Madden
+has agreed to not serve as an officer or director of a publicly traded company
+for 7 years.
+Neither the indictments nor the Securities and Exchange Commission
+complaint allege any wrongdoing by the Company or its other officers and
+directors. In connection with Steven Madden relinquishing his position as Chief
+Executive Officer of the Company, the Company entered into an amended employment
+agreement with Steven Madden and new agreements with Charles A. Koppelman and
+Jamieson A. Karson. See "Employment Agreements with Certain Executive Officers,"
+"Employment Agreement(s) with Other Employee(s)," and "Agreement with the
+Chairman of the Board."
+On March 14, 2001, the Company became aware that the Securities and
+Exchange Commission had issued a formal order of investigation with respect to
+trading in the Company's securities.
+On or about September 26, 2000, a purported shareholder derivative
+complaint was filed in the United States District Court for the Eastern District
+of New York, captioned Herrera v. Steven Madden and Steven Madden, Ltd., 00 CV
+5803 (JG). The Company is named as a nominal defendant in the action. The
+complaint seeks to recover alleged damages on behalf of the Company from Mr.
+Madden arising from his June 2000 indictment and to require him to disgorge
+certain profits, bonuses and stock option grants he received. On January 3,
+2001, plaintiff filed an Amended Shareholder's Derivative Complaint. On February
+2, 2001, both the Company and Mr. Madden filed motions to dismiss the Amended
+Complaint because of plaintiff's failure to make a pre-litigation demand upon
+the Company's board of directors. On October 1, 2001, plaintiff filed a Second
+Amended Complaint. On November 2, 2001, the Company filed a motion to dismiss
+this pleading on grounds that plaintiff had failed to make a pre-litigation
+demand upon the Company's board of directors. On February 7, 2002, the
+Magistrate Judge filed a Report recommending that the Company's motion to
+dismiss be denied. The Company filed its objections to the Report on March 4,
+2002. On March 22, 2002 the District Judge entered an order adopting the
+Magistrate Judge's report and recommendation in full. The defendants' responses
+to the Second Amended Complaint are due on April 19, 2002.
+On or about November 28, 2001, a purported shareholder derivative complaint
+was filed in the United States District Court for the Eastern District of New
+York, captioned Herrera v. Karson, et al., 00 CV 7868. Named as defendants
+therein are the Company (as nominal defendant) and certain of the Company's
+present and/or former directors. The complaint alleges that the individual
+defendants breached their fiduciary duties to the Company in connection with a
+decision by the Board of Directors of the Company to enter into an employment
+agreement with Mr. Steven Madden in or about May 2001. The complaint seeks
+declaratory and other equitable relief, as well as an unspecified amount of
+compensatory damages, costs and expenses. On or about February 1, 2002,
+plaintiff filed an Amended Shareholder Derivative Complaint (the "Amended
+Complaint"). The Amended Complaint contains substantially the same allegations
+and names the same defendants as the original complaint.
+-7-
+Directors and Executive Officers
+Certain information concerning the directors and executive officers of the
+Company is set forth below:
+Name Age Position(s) with the Company
+--------------------------------------- --------- ------------------------------------------------------
+Charles A. Koppelman 61 Chairman of the Board
+Jamieson A. Karson 44 Chief Executive Officer and Vice Chairman of the Board
+Arvind Dharia 52 Chief Financial Officer, Director and Secretary
+Richard Olicker 44 President and Chief Operating Officer
+Gerald Mongeluzo 61 President of Adesso-Madden, Inc., Director
+Mark Jankowski 41 President of Steve Madden Retail, Inc.
+Robert Schmertz 38 President of Steve Madden Womens Wholesale Division
+Joseph Masella 53 President of l.e.i. Footwear and Stevies, Inc.
+John L. Madden 54 Director
+Peter Migliorini 53 Director
+Heywood Wilansky 53 Director
+Marc Cooper 40 Director
+----------------------
+See "Biographical Summaries of Nominees for the Board of Directors" for
+biographical summaries of Messrs. Charles A. Koppelman, Jamieson A. Karson,
+Arvind Dharia, Gerald Mongeluzo, Marc Cooper, John L. Madden, Peter Migliorini
+and Heywood Wilansky.
+Richard Olicker has been Chief Operating Officer of the Company since
+January 3, 2001. In September 2001 Mr. Olicker was appointed President of the
+Company. Prior to joining the Company, Mr. Olicker spent more than 12 years at
+AeroGroup International, Inc., marketers of Aerosoles and What's What shoes. As
+cofounder of Aerosoles, Mr. Olicker served as President of the company's private
+label division and was responsible for managing all aspects of sourcing,
+production, pricing, sales, service, systems and finance. Mr. Olicker began his
+career in footwear in 1982 as the General Counsel and Licensing Director at El
+Greco Leather Products and later held an executive position with the apparel
+licensing firm New Retail Concepts, Inc.
+Mark Jankowski has been the President of Steve Madden Retail, Inc. since
+July 1, 2001. Previously, Mr. Jankowski had been the General Merchandise Manager
+of the Company from December 2000 to June 30, 2001. Prior to that, Mr. Jankowski
+had been the President of Steve Madden Retail, Inc. from February 1999 to
+December 2000 and the Company's Vice President of Product Development from 1995
+to 1999. From 1980 to 1995, Mr. Jankowski held several positions at Edison
+Brothers including Head of Buying.
+Robert Schmertz has been the President of Steve Madden Womens Wholesale
+Division since September 2001, the President of Shoe Biz, Inc., a wholly owned
+subsidiary of Steve Madden Retail Inc. since May 1998 and the President of Diva
+Acquisition Corp. since January 2001. Before joining the Company, Mr. Schmertz
+was President of Daniel Scott Inc. from November 1995 to May 1998. Previously,
+Mr. Schmertz was the East Coast Sales Manager for Impo International from
+January 1993 through November 1995. From April 1990 to December 1992, Mr.
+Schmertz served as a sales representative for Espirit de Corp. based in San
+Francisco, California.
+Joseph Masella has been President of Stevies, Inc. since April 2000 and the
+Company's l.e.i. Footwear Division since July 1998. Previously, he was Vice
+President-Sales of the Company's Adesso-Madden subsidiary since October 1995.
+From 1992 to 1995, Mr. Masella served as General Manager-Far East Division of US
+Shoe Co.
+-8-
+COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
+Summary Compensation Table
+The following table sets forth for each of the last three fiscal years
+ended December 31, 2001, December 31, 2000 and December 31, 1999 the
+remuneration paid by the Company to its Chief Executive Officer, the four most
+highly compensated executive officers (other than the Chief Executive Officer),
+and certain other persons for whom information is required to be disclosed:
+Summary Compensation Table
+Annual compensation Long-term compensation
+------------------------------------------ ---------------------------------------
+Restricted Other
+Awards Stock Awards annual
+Name and principal position Fiscal year Salary($) Bonus($) options(1) ($) compensation
+----------------------------- ----------- ------------- ------------ ---------- ------------ ------------
+Jamieson A. Karson, 2001 $187,500 $50,000 100,000 $188,000(3) $17,791(4)
+Chief Executive Officer(2) 2000 N/A N/A N/A N/A
+1999 N/A N/A N/A N/A
+Richard Olicker, 2001 $252,723 N/A 150,000 N/A
+President and 2000 N/A N/A N/A N/A
+Chief Operating Officer 1999 N/A N/A N/A N/A
+Arvind Dharia, 2001 $200,000 $50,000 40,000 N/A $92,857(5)
+Chief Financial Officer 2000 $171,769 $80,000 25,000 N/A $91,743(5)
+1999 $140,000 $39,367 25,000 N/A $88,606(5)
+Gerald Mongeluzo, 2001 $299,040 $93,623 -0- N/A
+President, Adesso- 2000 $257,653 $75,000 -0- N/A
+Madden, Inc. 1999 $249,769 $50,000 -0- N/A
+Mark Jankowski 2001 $292,789 $132,071 6,000 N/A $3,462(6)
+President, Steve Madden 2000 $261,538 $100,000 -0- N/A
+Retail, Inc. 1999 $202,769 $106,250 -0- N/A
+Steven Madden, 2001 $524,808 $587,203 -0- N/A $402,398(8)
+Creative and Design Chief(7) 2000 $300,000 $400,000 -0- N/A $311,437(8)
+1999 $275,000 $800,000 -0- N/A $318,641(8)
+Rhonda Brown(9) 2001 $276,884 $98,217 -0- N/A
+2000 $270,052 $581,150 190,575 N/A
+1999 $257,278 $537,920 -0- N/A
+----------------------
+(1) Options to purchase shares of Common Stock.
+(2) Mr. Karson has been the Chief Executive Officer of the Company since July
+1, 2001.
+(3) On July 10, 2001, Mr. Karson was issued 10,000 shares of restricted Common
+Stock, 25% of which will become unrestricted at the end of each of the four
+quarters following the date of issuance. The closing price of the Company's
+Common Stock on July 10, 2001 as reported by The Nasdaq Stock Market was
+$18.80. The value of these restricted shares of Common Stock as of December
+31, 2001 was $140,700 (based upon a closing price on December 31, 2001 of
+$14.07 per share as reported by The Nasdaq Stock Market). To the extent
+dividends are paid on the Common Stock, such dividends will be paid on
+these restricted shares.
+(4) Expenses paid on behalf of Mr. Karson pursuant to his employment agreement.
+(5) Life insurance premium and other expenses paid on behalf of Mr. Dharia.
+(6) Expenses paid on behalf of Mr. Jankowski pursuant to his employment
+agreement.
+(7) Mr. Madden resigned as Chief Executive Officer of the Company effective as
+of July 1, 2001. He currently holds the position of Creative and Design
+Chief of the Company, which is a non-executive position.
+(8) Life insurance premium and other expenses paid on behalf of Mr. Madden.
+(9) Ms. Brown resigned as President of the Company effective as of September
+21, 2001.
+-9-
+The following table sets forth certain information with respect to options
+granted during the last fiscal year to the persons named in the above Summary
+Compensation Table.
+Option/SAR Grants In Last Fiscal Year
+Number of Percent of Total Potential Realizable
+Securities Options/SARS Exercise Value at Assumed Annual
+Underlying Granted to or Base Rates of Stock Price
+Options/SARS Employees in Price Appreciation for Option
+Name Granted (#) Fiscal Year % ($/Sh) Expiration Date Term
+---------------------- ------------- ---------------- --------- --------------- ------------------------
+5% 10%
+--------- ----------
+Jamieson A. Karson 100,000 16.3% $18.80 7/10/06 $519,409 $1,147,759
+Richard Olicker 75,000 12.2% $8.00 1/02/11 $377,337 $956,245
+Richard Olicker 75,000 12.2% $9.12 9/24/11 $430,164 $1,090,120
+Arvind Dharia 40,000 6.5% $9.55 9/25/08 $97,195 $226,506
+Gerald Mongeluzo -0- N/A N/A N/A N/A N/A
+Mark Jankowski 5,000 0.1% $19.07 7/16/11 $299,826 $759,817
+Steven Madden -0- N/A N/A N/A N/A N/A
+Rhonda Brown -0- N/A N/A N/A N/A N/A
+The following table sets forth certain information with respect to options
+exercised during the last fiscal year by the persons named in the Summary
+Compensation Table, and with respect to unexercised options held by such persons
+at the end of the last fiscal year.
+Aggregate Option/SAR Exercises In Last Fiscal Year And
+Fiscal Year-End Option/SAR Values
+Shares Value Number of Securities Value of Unexercised in the
+Acquired on Realized Underlying Unexercised Money Options/SARs at
+Name Exercise (#) $ Options/SARS at FY-End (#) FY-End ($) (1)
+---------------------- ------------ ------------ ------------------------------ -----------------------------
+Exercisable Unexercisable Exercisable Unexercisable
+----------- ------------- ----------- -------------
+Jamieson A. Karson -0- N/A 25,000 75,000 -0- -0-
+Richard Olicker -0- N/A 75,000 75,000 $433,688 $390,563
+Arvind Dharia -0- N/A 112,000 30,000 722,340 135,600
+Gerald Mongeluzo 12,500 $144,375 50,000 -0- 191,000 -0-
+Mark Jankowski 80,000 $703,300 1,250 3,750 -0- -0-
+Steven Madden -0- N/A 1,051,189 -0- 11,503,895 -0-
+Rhonda Brown 373,386 $1,260,991 -0- -0- -0- -0-
+----------------------
+(1) Based upon a closing price on December 31, 2001 of $14.07 per share as
+reported by The Nasdaq Stock Market.
+-10-
+1999 Stock Plan
+As of March 15, 1999, the Board of Directors of the Company adopted the
+1999 Stock Plan (the "1999 Plan"), and on June 4, 1999 the Company's
+stockholders approved the adoption of the 1999 Plan. In May 2000, the Company's
+stockholders approved an amendment to the 1999 Plan increasing the number of
+shares of common stock subject to the plan from 400,000 to 975,000 shares. In
+July 2001, the Company's stockholders approved an amendment to the 1999 Plan
+increasing the number of shares of common stock subject to the plan from 975,000
+to 1,600,000 shares. As of the Record Date, options to purchase 1,565,000 shares
+of Common Stock have been granted pursuant to the 1999 Plan. The purpose of the
+1999 Plan is to provide a means whereby directors and selected employees,
+officers, agents, consultants, and independent contractors of the Company, may
+be granted incentive stock options and/or nonqualified stock options to purchase
+shares of common stock, in order to attract and retain the services or advice of
+such directors, employees, officers, agents, consultants, and independent
+contractors and to provide additional incentive for such persons to exert
+maximum efforts for the success of the Company by encouraging stock ownership in
+the Company. The 1999 Plan Proposal is expected to provide even greater
+flexibility to the Company's compensation methods, after giving due
+consideration to competitive conditions and the impact of federal tax laws. See
+Proposal Number 2--Amendment of the 1999 Stock Plan.
+Other Options
+In March 1995, the Company issued options to purchase 1,000,000 shares of
+its Common Stock to a company wholly owned by Steven Madden. The options were
+subsequently transferred to Steven Madden. The options which are fully
+exercisable, have an exercise price of $1.75 and an exercise period of 10 years.
+As of the Record Date, 500,000 of these options remain unexercised. Unearned
+compensation was recorded in the amount of $575,000 which represented the
+difference between the exercise price and the fair value of the stock on the
+date of grant and was classified as a component of stockholders equity. The
+unamortized portion was charged to operations in 1997 in connection with Steven
+Madden's then-existing amended employment agreement.
+Employment Agreements with Certain Executive Officers
+In May 2001, the Company entered into an employment agreement with Jamieson
+A. Karson pursuant to which Mr. Karson agreed to serve as the Company's Chief
+Executive Officer and Vice Chairman of the Board. The term of Mr. Karson's
+employment under the agreement is three (3) years commencing on July 1, 2001 and
+ending on June 30, 2004. The term will be automatically extended for successive
+one year periods unless the Company timely notifies Mr. Karson of its intention
+not to extend the term. In connection with the execution of his Employment
+Agreement, Mr. Karson surrendered 5,000 options which had been granted to him
+for his service as an outside director. The Company agreed to pay Mr. Karson an
+annual salary of $375,000 which base salary will be subject to a 10% annual
+increase on each July 1st of the term if the Company's net income for the four
+calendar quarters ending on the most recent June 30th is greater than the net
+income for the four calendar quarters ending on the preceding June 30th. In
+addition, the agreement provides that: (a) Mr. Karson receive a cash bonus equal
+to $100,000 for fiscal year 2001 pro-rated for the number of months he serves as
+Chief Executive Officer in 2001 and (b) for each succeeding fiscal year that
+occurs during the term of employment, Mr. Karson receive a cash bonus, in an
+amount determined by the Board, not less than four percent (4%) of the increase
+in the Company's EBITDA (earnings before interest, tax, depreciation and
+amortization) over the EBITDA of the prior fiscal year. On or about July 10,
+2001, Mr. Karson received options to purchase 100,000 shares of the Company's
+Common Stock at an exercise price equal to the closing market price on the date
+prior to the grant date as quoted on The Nasdaq Stock Market. These options will
+vest quarterly over the one year period following the date of grant and will be
+exercisable after vesting for a period of five (5) years from the date of grant.
+On or about July 10, 2001, the Company issued to Mr. Karson 10,000 shares of
+restricted common stock, 25% of which will become unrestricted at the end of
+each of the four quarters following the date of issuance. Subject to approval by
+the Company's stockholders of the Amendment of the Company's 1999 Stock Plan and
+subject to availability of shares under such plan or any other plan designated
+by the Board of Directors and approved by the Company's stockholders, on or
+about the date of the Company's annual meeting for each year of the term of the
+agreement (beginning in 2002), Mr. Karson is entitled to receive, annual options
+to purchase shares of the Company's Common Stock equal to the dollar amount of
+the annual bonus received by Mr. Karson for the previous fiscal year; provided,
+however, that no annual option shall be for greater than 100,000 shares. The
+annual options shall vest quarterly over the one year
+-11-
+period following the date of grant and shall be exercisable after vesting for a
+period of five (5) years from the date of grant at an exercise price equal to
+the closing price of the Company's Common Stock on the applicable date of grant,
+as quoted on The Nasdaq Stock Market (or such other market or exchange on which
+the Company's Common Stock is listed or traded). In addition, in the event of
+Mr. Karson's total disability or his death, the Company is obligated to continue
+to pay Mr. Karson (or Mr. Karson's estate) his base salary for the twelve (12)
+month period immediately subsequent to the date of such total disability or
+death. In the event Mr. Karson's employment agreement is terminated (or not
+extended) for any reason other than For Cause (as defined in the agreement) or
+due to his death or his total disability, the Company is obligated to pay Mr.
+Karson an amount equal to the product of (i) Mr. Karson's base salary plus the
+cash bonus which Mr. Karson was paid for the immediately preceding fiscal year
+multiplied by (ii) the greater of (A) the number of years remaining on the term
+of the agreement or (B) two. In the event that there is a "change of control"
+transaction terminating Mr. Karson's employment, all unvested options to
+purchase shares of the Company's Common Stock held by Mr. Karson will vest on
+the date of termination and Mr. Karson will be entitled to receive a lump sum
+cash payment equal to (a) the amount of compensation that is accrued and unpaid
+through the date of termination and (b) three (3) times the total compensation
+(base salary and cash bonus) received by Mr. Karson for the preceding 12 month
+period ending December 31. Mr. Karson's employment agreement contains other
+customary provisions, including provisions regarding confidentiality,
+solicitation and competition.
+In January 2001, the Company entered into a two (2) year employment
+agreement with Richard Olicker pursuant to which Mr. Olicker agreed to serve as
+the Company's Executive Vice President and Chief Operating Officer. The Company
+agreed to pay Mr. Olicker an annual base salary of $225,000 plus a 5% annual
+increase in the base salary. The agreement provides that Mr. Olicker receive
+options to purchase 75,000 shares of the Company's Common Stock at an exercise
+price equal to the closing bid price of the Company's Common Stock on January 2,
+2001, as quoted on The Nasdaq Stock Market. Mr. Olicker is entitled to receive a
+cash bonus equal to two percent (2%) of the amount by which the aggregate EBIT-D
+(earnings before the payment of interest or taxes or a deduction for
+depreciation) for the fiscal year ending on the most recent December 31st
+exceeds EBIT-D for the fiscal year ending on the preceding December 31st. The
+agreement also provides that Mr. Olicker receive a one time cash bonus of
+$125,000 in the event that the aggregate EBIT-D for any 4 consecutive fiscal
+quarters during the term of the agreement equals or exceeds $40,000,000. Mr.
+Olicker's employment agreement contains other customary provisions.
+In January 1998, the Company entered into an employment agreement with
+Arvind Dharia, pursuant to which Mr. Dharia agreed to serve as the Company's
+Chief Financial Officer, which agreement was amended as of June 29, 2001. The
+agreement will expire on December 31, 2005. However, the term of the agreement
+is subject to automatic extension for one (1) year unless either party
+terminates the agreement with ninety (90) days' prior notice. The Company agreed
+to pay Mr. Dharia an annual salary of $169,400 until September 30, 2001,
+$200,000 from October 1, 2001 through December 31, 2002, $220,000 from January
+1, 2003 through December 31, 2003, $234,000 from January 1, 2004 through
+December 31, 2004, and $240,000 from January 1, 2005 through December 31, 2005.
+Mr. Dharia received a $50,000 signing bonus upon execution of the amendment to
+the agreement on June 29, 2001. The agreement provides that Mr. Dharia receive
+options to purchase 40,000 shares of the Company's Common Stock on June 30 of
+each year during the term of the agreement (commencing June 30, 2001). The
+options are to vest quarterly over a period of one (1) year and are exercisable
+at an exercise price equal to the lesser of (i) the average closing bid price of
+the Company's Common Stock as quoted on The Nasdaq Stock Market or such other
+exchange on which the common stock shall be listed on the date of grant or (ii)
+if the date of grant is not June 30th, the average closing bid price of the
+Company's Common Stock as quoted on The Nasdaq Stock Market or such other
+exchange on which the common stock shall be listed on June 30th of the year in
+which the grant shall occur. In addition, the agreement provides that for each
+fiscal year that occurs during the term of employment (beginning with the fiscal
+year ended December 31, 2001), Mr. Dharia receive a cash bonus, in an amount
+equal to one and one-half percent (1.5%) of the increase in the Company's EBITDA
+(earnings before interest, tax, depreciation and amortization) over the EBITDA
+of the prior fiscal year, provided, however that in no event shall the annual
+cash bonus exceed Mr. Dharia's base salary for such fiscal year. Also, Mr.
+Dharia shall, at the end of a calendar quarter, receive a bonus of $50,000 if
+the Company has had sales of $300,000,000 or more for such calendar quarter and
+the immediately preceding three (3) calendar quarters, provided, however, that
+Mr. Dharia shall not receive this $50,000 bonus more than once in any given
+calendar year. In addition, during the term of the agreement, the Company is
+obligated to pay life insurance premiums on behalf of Mr. Dharia of
+approximately $80,000 per year. In the event of Mr. Dharia's total disability or
+death, the Company is obligated to pay Mr. Dharia or his estate an amount equal
+to
+-12-
+the appropriate salary for the twelve (12) month period immediately subsequent
+to the date of his total disability or death. In the event Mr. Dharia's
+employment agreement is terminated by the Company for any reason other than "for
+cause" or due to his "total disability", the Company is obligated to pay Mr.
+Dharia an amount equal to the product of (a) Mr. Dharia's base salary on the
+effective date of such termination plus the bonus paid or payable for the fiscal
+year ended on the December 31st immediately preceding the date of termination
+multiplied by (b) the number of years (and fractions of years) remaining in the
+term of the employment agreement. In addition, the Company will be obligated to
+continue to pay the life insurance premiums on behalf of Mr. Dharia provided for
+above. The payments due Mr. Dharia upon his termination for any reason other
+than "for cause" or due to his "total disability" will be payable in two
+installments: fifty percent (50%) on January 1 after the date of termination and
+the remaining fifty percent (50%) one year after. Further, in the event of a
+"change in control" of the Company, Mr. Dharia is entitled to terminate the
+employment agreement and to receive (i) accrued and unpaid compensation through
+the termination date, (ii) an amount equal to the balance of his base salary
+that would have been paid over the term of the employment agreement, (iii) the
+life insurance premium payments that would have been made on his behalf by the
+Company during the term of the employment agreement, and (iv) an amount equal to
+Mr. Dharia's bonus, if any, for the preceding 12-month period ending December
+31st, multiplied by the remaining years (including fractional years) remaining
+under the employment agreement, provided, however, that in no event will the
+amount payable in the event of a "change of control" be greater than three (3)
+times the total compensation received by Mr. Dharia for the preceding
+twelve-month period ending December 31st or less than one and one-half (1.5)
+times the total compensation so received by Mr. Dharia during such period. Mr.
+Dharia's employment agreement contains other customary provisions.
+Employment Agreement(s) with Other Employee(s)
+In May 2001, the Company entered into an employment agreement with Steven
+Madden, the Company's founder, pursuant to which Mr. Madden agreed to serve as
+the Company's Creative and Design Chief. The employment agreement amends and
+restates the prior employment agreement dated July 29, 1997 (and amended
+February 28, 2000). The term of Mr. Madden's employment under the agreement is
+ten (10) years commencing on July 1, 2001 and ending on June 30, 2011. The
+Company has agreed to pay Mr. Madden an annual base salary of $700,000, which
+the Board may increase, but not decrease, at any time. For each fiscal year
+during the term of the agreement, Mr. Madden is entitled to receive a cash bonus
+in an amount determined by the Board, but not less than 2% of the Company's
+EBITDA (earnings before interest, tax, depreciation and amortization for such
+year); provided however, that the Company is not required to pay such cash bonus
+for any fiscal year during which Mr. Madden is not actively engaged in the
+duties of Creative and Design Chief for at least six months. Subject to approval
+by the Company's stockholders of the Amendment of the Company's 1999 Stock Plan
+and subject to availability of shares under such plan or any other plan
+designated by the Board of Directors and approved by the Company's stockholders,
+on or about the date of the Company's annual meeting for each year of the term
+(beginning in 2002), Mr. Madden is eligible to receive, during the term of the
+agreement, annual options to purchase shares of the Company's common stock in an
+amount equal to not less than 150% of the largest aggregate amount of options
+granted to any other continuing full time employee of the Company over the 12
+month period up to and including the applicable grant date; provided that all
+annual options shall be subject to final approval of the Board. The annual
+options shall vest quarterly over the 1 year period following the date of grant
+and shall be exercisable after vesting for a period of 5 years from the grant
+date at an exercise price equal to the closing price of the Company's Common
+Stock on the grant date as quoted on The Nasdaq Stock Market (or such other
+market or exchange on which the Company's Common Stock is listed or traded). The
+Company is not required to grant an annual option if Mr. Madden is not actively
+engaged in the duties of Creative and Design Chief for at least six months out
+of the twelve months immediately preceding the grant date for such annual
+option. The Company also agreed to provide Mr. Madden with an annual $200,000
+non-accountable expense allowance which amount will be payable in equal monthly
+installments; provided however, that the Company will not be required to pay the
+non-accountable expense allowance for any month during which Mr. Madden is not
+actively engaged in the duties of Creative and Design Chief.
+In addition, in the event of Mr. Madden's total disability or death, the
+Company is obligated to continue to pay Mr. Madden (or Mr. Madden's estate) Mr.
+Madden's base salary for the twelve (12) month period immediately subsequent to
+the date of such total disability or death. In the event Mr. Madden's employment
+agreement is terminated for any reason other than "for cause" or due to his
+death or his total disability, the Company is obligated to pay Mr. Madden the
+balance of his base salary that would have been paid over the full term of the
+agreement if
+-13-
+the agreement had not been terminated, fifty percent (50%) upon termination and
+the remaining fifty percent (50%) in equal annual installments until June 30,
+2011. The indictment, plea agreement, sentencing and other matters described
+above under "Recent Developments" are not grounds for termination "for cause"
+under Mr. Madden's employment agreement. In the event there is a "change of
+control" transaction terminating Mr. Madden's employment, all unvested options
+to purchase shares of the Company's Common Stock held by Mr. Madden will vest on
+the date of termination and Mr. Madden will be entitled to receive a lump sum
+cash payment equal to (a) the amount of compensation that is accrued and unpaid
+through the date of termination and (b) three (3) times the total compensation
+(base salary, cash bonus and non-accountable expense allowance) received by Mr.
+Madden for the preceding 12 month period ending December 31.
+To the extent not previously assigned or consented to, except as provided
+below, (i) Mr. Madden sold, assigned and transferred to the Company the
+exclusive right and interest to his name and (ii) Mr. Madden consented to the
+use of his name as trademarks, service marks, corporate names and/or internet
+domain name addresses of the Company (the "Marks"). Mr. Madden also agreed to
+never challenge the Company's ownership of his name or the validity of the
+Company's ownership of the Marks or of any registration or application for
+registration thereof. Mr. Madden may however use his name for all non-commercial
+purposes and for use in connection with any business that is not in the design,
+manufacture, sale, marketing or distribution of (i) branded or designer
+footwear, apparel, accessories and other products in the categories of products
+sold by, or under license from, the Company or any of its affiliates, (ii)
+jewelry and other giftware, (iii) cosmetics, fragrances and other health and
+beauty care items, (iv) housewares, furniture, home furnishings and related
+products and (v) other products related to fashion, cosmetics or lifestyle (any
+of such activities being a "competitive business"). Further, Mr. Madden agreed
+to not directly or indirectly (i) engage in any competitive business in any
+relationship or capacity, (ii) solicit any customers of the Company, or (iii)
+solicit or employ any employee or agent to the Company, until the later of (a)
+June 30, 2011 or (b) the date which is twelve (12) months after the date on
+which Mr. Madden is no longer employed by the Company, or until twelve months
+after the date of termination should Mr. Madden be terminated in connection with
+a change of control. Mr. Madden's Employment Agreement contains other customary
+provisions.
+Agreement with the Chairman of the Board
+In May 2001, the Company entered into an agreement with Charles A.
+Koppelman pursuant to which Mr. Koppelman agreed to serve as the Company's
+Executive Chairman of the Board. The term of the agreement is two (2) years
+commencing on July 1, 2001 and ending on June 30, 2003. The Company agreed to
+pay Mr. Koppelman an annual base salary of $125,000. The Company also agreed to
+provide Mr. Koppelman with an annual $125,000 non-accountable expense allowance.
+Pursuant to the agreement, on or about July 10, 2001 Mr. Koppelman received
+options to purchase 100,000 shares of the Company's Common Stock at an exercise
+price equal to the closing market price on the date prior to the grant date, as
+quoted on The Nasdaq Stock Market. These options will vest quarterly over the
+one year period following the date of grant and will be exercisable after
+vesting for a period of five (5) years from the date of grant. On or about July
+10, 2001, the Company issued to Mr. Koppelman 10,000 shares of restricted common
+stock, 25% of which will become unrestricted at the end of each of the four
+quarters following the date of issuance. As of May 31, 2001, Mr. Koppelman
+received fully-vested options to purchase 75,000 shares of the Company's Common
+Stock, which are exercisable for a period of five (5) years from the date of
+grant at an exercise price of $7.00. These options were granted pursuant to an
+outstanding letter agreement between the Company and Mr. Koppelman (the "Option
+Letter"). Mr. Koppelman surrendered the remaining 225,000 options to be granted
+to him pursuant to the Option Letter in connection with the execution of his
+agreement. Pursuant to the terms of the agreement, Mr. Koppelman is also
+entitled to receive annual options to purchase 100,000 shares of the Company's
+Common Stock on the date of the Company's annual meeting held in each of 2002,
+2003, and 2004. Twenty five percent (25%) of each annual option will vest at the
+end of each of the four full calendar quarters after the applicable grant date.
+The annual options shall be exercisable after vesting for a period of five (5)
+years from the date of grant at an exercise price equal to the lesser of (a) the
+closing market price on the applicable grant date, as quoted on The Nasdaq Stock
+Market (or such other market or exchange on which the Company's Common Stock is
+listed or traded) or (b) $13.50. In the event that Mr. Koppelman ceases to be
+either an employee or director of the Company, any annual option not yet granted
+shall be forfeited as of the date of termination; provided however, that if the
+agreement shall have been terminated (or not extended) by the Company other than
+For Cause (as defined in the agreement) or by Mr. Koppelman with Good Reason (as
+defined in the agreement) any annual options which were granted prior to such
+termination shall be deemed granted as of the date prior to the date of such
+termination. The agreement also provides that in the event there is a "change of
+control" of
+-14-
+the Company, (i) all unvested options granted to Mr. Koppelman prior to such
+"change of control" shall immediately vest (ii) if Mr. Koppelman is an employee
+or director of the Company at the time of such "change of control", any annual
+options which have not been granted prior to such change of control shall
+immediately be granted and vest, and (iii) the exercise price of all unexercised
+options shall be reduced to $7.00. Mr. Koppelman's agreement contains other
+customary provisions, including provisions regarding confidentiality,
+solicitation and competition.
+Certain Relationships and Related Transactions
+In July 2001, the Company entered into a consulting agreement with Peter J.
+Solomon & Company, a financial advisory firm of which Marc Cooper, one of the
+Company's directors, is a managing director. The agreement provides for a fee of
+$150,000 over the one year term of the agreement which expires in June 2002. The
+firm is to provide financial advisory and investment banking services to the
+Company.
+Compensation Committee Report On Executive Compensation
+The Compensation Committee is responsible for reviewing and approving the
+Company's compensation policies and the compensation paid to its executive
+officers, including the Chief Executive Officer and the other named executive
+officers. The Compensation Committee is comprised of Charles A. Koppelman, Peter
+Migliorini and John Madden. Each member of the Compensation Committee was a
+non-employee directors of the Company during 2001, however, Mr. Koppelman
+received a salary and certain other benefits for serving as the Chairman of the
+Board of Directors (see "Agreement with the Chairman of the Board").
+The Compensation Committee's goal is to develop executive compensation
+policies and practices that are consistent with and linked to the Company's long
+term goal of maximizing stockholder value. The program is designed to facilitate
+the long-term success and growth of the Company through the attraction,
+motivation, and retention of outstanding executives.
+The objectives of the Company's executive compensation programs are to: (i)
+attract and retain the highest quality executives, (ii) inspire and motivate
+executive officers to increase Company performance, (iii) align executive
+officers' financial interest with those of the Company's long-term investors,
+and (iv) reward executive officers for exceptional individual contributions to
+the achievement of the Company's objectives.
+Executive compensation consists of three components: base salary, annual
+incentive bonuses and long-term incentive awards (stock options). Each
+compensation component is offered to executives in varying combinations,
+structured in each case, to meet varying business objectives and to provide a
+level of total compensation comparable to similarly situated public companies.
+The total compensation of Jamieson A. Karson, the Company's Chief Executive
+Officer, is determined pursuant to his employment agreement with the Company.
+Mr. Karson was appointed Chief Executive Officer effective as of July 1, 2001.
+Under his employment agreement, Mr. Karson received a one-time grant of 10,000
+shares of restricted stock and a one-time grant of options to purchase 100,000
+shares of the Company's common stock. Mr. Karson's compensation for the six
+months he served as Chief Executive Officer in 2001 consisted of $187,500 in
+base salary payments and a $50,000 bonus, which bonus was fully paid by March
+2002. Mr. Karson is also entitled to receive options to purchase 50,000 shares
+of common stock for his service as Chief Executive Officer in 2001. The
+Compensation Committee believes that Mr. Karson's compensation should be heavily
+weighted towards enhancing stockholder value, and accordingly, Mr. Karson's
+employment agreement provides that a significant portion of his future
+compensation will be based upon the Company's overall performance. See
+"Employment Agreements with Certain Executive Officers."
+The Company has negotiated employment agreements with respect to base
+salary, annual incentive awards and stock option awards for each of the
+Company's named executive officers based upon the Company's performance and the
+individual performance of such named executives.
+The Internal Revenue Code of 1986 prohibits the Company from taking a tax
+deduction in any year for compensation paid the persons who would be named
+executive officers in that year in excess of $1 million unless such compensation
+is "performance-based compensation." The Company did not pay in 2001 any officer
+-15-
+compensation which will be subject to the $1 million deduction limitation. The
+Compensation Committee will take into consideration the $1 million deduction
+limitation when structuring future compensation packages for the Company's
+executive officers and, if appropriate and in the best interests of the Company,
+will conform such packages to permit the Company to take a deduction for the
+full amount of all compensation.
+Compensation Committee Interlocks and Insider Participation
+The Compensation Committee makes all compensation decisions. During 2001,
+the following directors served on the Compensation Committee: Charles A.
+Koppelman, John Madden and Peter Migliorini. During the fiscal year 2001, no
+interlocking relationship existed between the Company's Board of Directors or
+Compensation Committee and the board of directors or compensation committee of
+any other company.
+COMPENSATION COMMITTEE
+Charles A. Koppelman
+John Madden
+Peter Migliorini
+-16-
+STOCK PERFORMANCE GRAPH
+The following graph compares the yearly percentage change in the cumulative
+total stockholder return on the Common Stock during the period beginning on
+December 31, 1996 and ending on December 31, 2001 with the cumulative total
+return on the Russell 2000 Index and the Standard & Poor's Footwear Index. The
+comparison assumes that $100 was invested on December 31, 1996 in the Company's
+Common Stock and in the foregoing indices and assumes the reinvestment of
+dividends.
+[Graph Appears Here]
+12/31/96 12/31/97 12/31/98 12/31/99 12/31/00 12/31/01
+-------- -------- -------- -------- -------- --------
+Steven Madden, Ltd. 100.00 147.55 165.85 371.94 148.78 274.37
+Russell 2000 Index 100.00 120.69 116.53 139.40 133.53 134.72
+S&P Footwear Index 100.00 66.90 64.80 76.23 91.31 91.62
+-17-
+SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
+OWNERS AND MANAGEMENT
+The following table sets forth information as of the Record Date with
+respect to the beneficial ownership of the outstanding shares of the Company's
+Common Stock by (i) each person known by the Company to beneficially own five
+percent or more of the outstanding shares; (ii) the directors and the persons
+named in the Summary Compensation Table; and (iii) the Company's officers and
+directors as a group. A person is deemed to be a beneficial owner of any
+securities of which that person has the right to acquire beneficial ownership
+within sixty (60) days. See "Compensation of Directors and Executive Officers."
+Name and Address of Amount and Nature of Percentage (%)
+Beneficial Owner(1) Beneficial Ownership(2) of Class(2)
+------------------------------------------------- ----------------------- --------------
+Charles A. Koppelman 185,000 (3) 1.47%
+Jamieson A. Karson 85,000 (4) *
+Arvind Dharia 122,000 (5) *
+Gerald Mongeluzo 50,000 (6) *
+Richard Olicker 113,700 (7) *
+Mark Jankowski 3,750(8) *
+Marc Cooper 7,500 (9) *
+John Madden 20,000 (10) *
+Peter Migliorini 20,000 (11) *
+Heywood Wilansky 20,000 (12) *
+Rhonda Brown (13) -0- N/A
+Steven Madden (14) 1,865,189 (15) 13.86%
+BOCAP Corp. 1,865,189 (16) 13.86%
+T. Rowe Price Associates, Inc. (17) 820,500 6.61%
+T. Rowe Price Small-Cap Value Fund, Inc. (18) 650,000 5.24%
+Liberty Wanger Asset Management, L.P. (19) 1,061,900(20) 8.56%
+WAM Acquisition GP, Inc. (21) 1,061,900(22) 8.56%
+Benson Associates, LLC (23) 640,400 5.16%
+Kennedy Capital Management, Inc. (24) 713,800 5.75%
+Directors and Officers as a Group (13 persons) 715,675(25) 5.46%
+----------------------
+* indicates beneficial ownership of less than 1%.
+(1) Unless otherwise indicated, the address of each beneficial owner is c/o
+Steven Madden, Ltd., 52-16 Barnett Avenue, Long Island City, New York
+11104.
+(2) Beneficial ownership as reported in the table above has been determined in
+accordance with Item 403 of Regulation S-K of the Securities Act of 1933
+and Rule 13(d)-3 of the Securities Exchange Act, and based upon 12,407,716
+shares of Common Stock outstanding (excluding treasury shares) as of the
+Record Date.
+(3) Includes (i) 175,000 shares of Common Stock issuable upon the exercise of
+options held by Mr. Koppelman, (ii) 7,500 shares of Common Stock held by
+Mr. Koppelman and (iii) 2,500 shares of restricted Common Stock held by Mr.
+Koppelman.
+(4) Includes (i) 75,000 shares of Common Stock issuable upon the exercise of
+options held by Mr. Karson and (ii) 7,500 shares of Common Stock held by
+Mr. Karson's wife and (iii) 2,500 shares of restricted Common Stock held by
+Mr. Karson's wife.
+(5) Includes 122,000 shares of Common Stock issuable upon the exercise of
+options held by Mr. Dharia.
+(6) Includes 50,000 shares of Common Stock issuable upon the exercise of
+options held by Mr. Mongeluzo.
+(7) Includes 112,500 shares of Common Stock issuable upon the exercise of
+options held by Mr. Olicker.
+(8) Includes 3,750 shares of Common Stock issuable upon the exercise of options
+held by Mr. Jankowski.
+(9) Includes 7,500 shares of Common Stock issuable upon the exercise of options
+held by Mr. Cooper.
+(10) Includes 20,000 shares of Common Stock issuable upon the exercise of
+options held by Mr. J. Madden.
+(11) Includes 20,000 shares issuable upon the exercise of options held by Mr.
+Migliorini.
+(12) Includes 20,000 shares of Common Stock issuable upon the exercise of
+options held by Mr. Wilansky.
+-18-
+(13) Ms. Brown resigned as President of the Company effective as of September
+21, 2001.
+(14) Mr. Madden resigned as Chief Executive Officer of the Company effective as
+of July 1, 2001. He currently holds the position of Creative and Design
+Chief of the Company, which is a non-executive position.
+(15) Includes (i) 809,000 shares of Common Stock held by BOCAP, a corporation
+wholly-owned by Mr. S. Madden, (ii) 1,051,189 shares of Common Stock
+issuable upon the exercise of options held by Mr. Madden.
+(16) Includes (i) 1,051,189 shares of Common Stock issuable upon the exercise of
+options held by Mr. Madden and (ii) 5,000 shares of Common Stock held by
+Mr. Madden.
+(17) Based upon a Schedule 13G filed with the Securities and Exchange Commission
+on February 11, 2002. The address for such stockholder is 100 E. Pratt
+Street, Baltimore, MD 21202.
+(18) Based upon a Schedule 13G filed with the Securities and Exchange Commission
+on February 11, 2002. The address for such stockholder is 100 E. Pratt
+Street, Baltimore, MD 21202.
+(19) Based upon a Schedule 13G filed with the Securities and Exchange Commission
+on February 12, 2002. The address for such stockholder is 227 West Monroe
+Street, Suite 3000, Chicago, IL 60606.
+(20) Includes 1,061,900 shares beneficially owned by WAM Acquisition GP, Inc.
+(21) Based upon a Schedule 13G filed with the Securities and Exchange Commission
+on February 12, 2002. The address for such stockholder is 227 West Monroe
+Street, Suite 3000, Chicago, IL 60606.
+(22) Includes 1,061,900 shares beneficially owned by Liberty Wagner Asset
+Management, L.P.
+(23) Based upon a Schedule 13G filed with the Securities and Exchange Commission
+on February 13, 2002. The address for such stockholder is 111 S.W. Fifth
+Avenue, Suite 2130, Portland, OR 97204.
+(24) Based upon a Schedule 13G/A filed with the Securities and Exchange
+Commission on February 14, 2002. The address for such stockholder is 10829
+Olive Blvd., St. Louis, MO 63141.
+(25) Includes 695,675 shares issuable upon the exercise of options.
+-19-
+PROPOSAL TWO
+AMENDMENT OF THE 1999 STOCK PLAN
+At the 1999 Annual Meeting of Stockholders, the Company's stockholders
+approved the adoption of the Company's 1999 Stock Plan (the "1999 Plan"). The
+1999 Plan originally authorized up to 400,000 shares of Company common stock for
+grants of non-qualified and incentive stock options. In May 2000, the Company's
+stockholders approved an amendment to the 1999 Plan increasing the number of
+shares of common stock subject to the plan from 400,000 to 975,000 shares. In
+July 2001, the Company's stockholders approved an amendment to the 1999 Plan
+increasing the number of shares of common stock subject to the plan from 975,000
+to 1,600,000 shares. The Board of Directors has amended the 1999 Plan, subject
+to stockholder approval, to authorize 680,000 additional shares for future
+awards (the "1999 Plan Proposal"). The affirmative vote of the holders of a
+majority of the total votes cast on the 1999 Plan Proposal is needed to approve
+the 1999 Plan Proposal.
+Because of the limited number of remaining shares that may be granted under
+the 1999 Plan, the Board of Directors believes it is appropriate and necessary
+at this time to authorize additional shares for future awards. Authorization of
+these additional shares will allow grants to employees, consultants and
+directors in furtherance of the Company's goal of continuing to achieve
+significant gains in stockholder value and operating results.
+The Company intends to continue awarding options in order to attract and
+retain the services or advice of such directors, employees, officers, agents,
+consultants, and independent contractors and to provide additional incentive for
+such persons to exert maximum efforts for the success of the Company and its
+affiliates. The following is a summary of the principal features of the 1999
+Plan. The summary is qualified in its entirety by reference to the complete text
+of the 1999 Plan, as proposed to be amended. The proposed amendment to the 1999
+Plan is set forth as Annex A to this Proxy Statement.
+Description of the 1999 Plan
+The maximum number of shares of Common Stock with respect to which awards
+may be presently granted pursuant to the 1999 Plan is 1,600,000 shares. The 1999
+Plan Proposal would authorize the use of up to an additional 680,000 shares of
+the Company's common stock for a total of 2,280,000 shares being available for
+issuance under the 1999 Plan. Shares issuable under the 1999 Plan may be either
+treasury shares or authorized but unissued shares. The number of shares
+available for issuance will be subject to adjustment to prevent dilution in the
+event of stock splits, stock dividends or other changes in the capitalization of
+the Company.
+Subject to compliance with Rule 16b-3 of the Securities Exchange Act of
+1934 (the "Exchange Act"), the Plan shall be administered by the Board of
+Directors of the Company (the "Board") or, in the event the Board shall appoint
+and/or authorize a committee, such as the Compensation Committee, of two or more
+members of the Board to administer the Plan, by such committee (the "Plan
+Administrator"). Except for the terms and conditions explicitly set forth in the
+Plan, the Plan Administrator shall have the authority, in its discretion, to
+determine all matters relating to the options to be granted under the Plan,
+including, without limitation, selection of whether an option will be an
+incentive stock option or a nonqualified stock option, selection of the
+individuals to be granted options, the number of shares to be subject to each
+option, the exercise price per share, the timing of grants and all other terms
+and conditions of the options.
+Options granted under the 1999 Plan may be "incentive stock options"
+("Incentive Options") within the meaning of Section 422 of the Internal Revenue
+Code (the "Code") or stock options which are not incentive stock options
+("Non-Incentive Options" and, collectively with Incentive Options, hereinafter
+referred to as "Options"). Each Option may be exercised in whole or in part;
+provided, that only whole shares may be issued pursuant to the exercise of any
+Option. Subject to any other terms and conditions herein, the Plan Administrator
+may provide that an Option may not be exercised in whole or in part for a stated
+period or periods of time during which such Option is outstanding; provided,
+that the Plan Administrator may rescind, modify, or waive any such limitation
+(including by the acceleration of the vesting schedule upon a change in control
+of the Company) at any time and from time to time after the grant date thereof.
+During an optionee's lifetime, any incentive stock options granted under the
+Plan are personal to such optionee and are exercisable solely by such optionee.
+-20-
+The Plan Administrator can determine at the time the Option is granted in
+the case of Incentive Options, or at any time before exercise in the case of
+Non-Incentive Options, that additional forms of payment will be permitted. To
+the extent permitted by the Plan Administrator and applicable laws and
+regulations (including, without limitation, federal tax and securities laws and
+regulations and state corporate law), an Option may be exercised by:
+(a) delivery of shares of Common Stock of the Company held by an
+optionee having a fair market value equal to the exercise price, such fair
+market value to be determined in good faith by the Plan Administrator;
+(b) delivery of a properly executed notice of exercise, together with
+irrevocable instructions to a broker, all in accordance with the regulations of
+the Federal Reserve Board, to promptly deliver to the Company the amount of sale
+or loan proceeds to pay the exercise price and any federal, state, or local
+withholding tax obligations that may arise in connection with the exercise; or
+(c) delivery of a properly executed notice of exercise, together with
+instructions to the Company to withhold from the shares of Common Stock that
+would otherwise be issued upon exercise that number of shares of Common Stock
+having a fair market value equal to the Option exercise price.
+Upon a Change in Control of the Company, any award carrying a right to
+exercise that was not previously exercisable shall become fully exercisable, the
+restrictions, deferral limitations and forfeiture conditions applicable to any
+other award granted shall lapse and any performance conditions imposed with
+respect to awards shall be deemed to be fully achieved.
+Options granted under the 1999 Plan may not be transferred, pledged,
+mortgaged, hypothecated or otherwise encumbered other than by will or under the
+laws of descent and distribution, except that the Plan Administrator may permit
+transfers of awards for estate planning purposes if, and to the extent, such
+transfers do not cause a participant who is then subject to Section 16 of the
+Exchange Act to lose the benefit of the exemption under Rule 16b-3 for such
+transactions.
+For federal income tax purposes, the grant to an optionee of a
+Non-Incentive Option will not constitute a taxable event to the optionee or to
+the Company. Upon exercise of a Non-Incentive Option (or, in certain cases, a
+later tax recognition date), the optionee will recognize compensation income
+taxable as ordinary income, measured by the excess of the fair market value of
+the Common Stock purchased on the exercise date (or later tax recognition date)
+over the amount paid by the optionee for such Common Stock, and will be subject
+to tax withholding. The Company may claim a deduction for the amount of such
+compensation. The optionee will have a tax basis in the Common Stock purchased
+equal to the amount paid plus the amount of ordinary income recognized upon
+exercise of the Non-Incentive Option. Upon the subsequent sale of the Common
+Stock received upon exercise of the Non-Incentive Option, an optionee will
+recognize capital gain or loss equal to the difference between the amount
+realized on such sale and his or her tax basis in the Common Stock, which may be
+long-term capital gain or loss if the optionee holds the Common Stock for more
+than one year from the exercise date.
+For federal income tax purposes, neither the grant nor the exercise of an
+Incentive Option will constitute a taxable event to the optionee or to the
+Company, assuming the Incentive Option qualifies as an "incentive stock option"
+under Code ss.422. If an optionee does not dispose of the Common Stock acquired
+upon exercise of an Incentive Option during the statutory holding period, any
+gain or loss upon subsequent sale of the Common Stock will be long-term capital
+gain or loss, assuming the shares represent a capital asset in the optionee's
+hands. The statutory holding period is the later of two years from the date the
+Incentive Option is granted or one year from the date the Common Stock is
+transferred to the optionee pursuant to the exercise of the Incentive Option. If
+the statutory holding period requirements are satisfied, the Company may not
+claim any federal income tax deduction upon either the exercise of the Incentive
+Option or the subsequent sale of the Common Stock received upon exercise
+thereof. If the statutory holding period requirement is not satisfied, the
+optionee will recognize compensation income taxable as ordinary income on the
+date the Common Stock is sold (or later tax recognition date) in an amount equal
+to the lesser of (i) the fair market value of the Common Stock on that date less
+the amount paid by the optionee for such Common Stock, or (ii) the amount
+realized on the disposition of the Common Stock less the amount paid by the
+optionee for such Common Stock; the Company may then claim a deduction for the
+amount of such compensation income.
+-21-
+The federal income tax consequences summarized hereinabove are based upon
+current law and are subject to change.
+The Board may amend, alter, suspend, discontinue or terminate the 1999 Plan
+at any time, except that any such action shall be subject to stockholder
+approval at the annual meeting next following such Board action if such
+stockholder approval is required by federal or state law or regulation or the
+rules of any exchange or automated quotation system on which the Common Stock
+may then be listed or quoted, or if the Board of Directors otherwise determines
+to submit such action for stockholder approval. In addition, no amendment,
+alteration, suspension, discontinuation or termination to the 1999 Plan may
+materially impair the rights of any participant with respect to any Option
+granted before amendment without such participant's consent. Unless terminated
+earlier by action of the Board of Directors, the 1999 Plan shall terminate ten
+(10) years after adoption by the stockholders.
+Recommendation of the Board of Directors
+The Board of Directors unanimously recommends a vote FOR approval of the
+1999 Plan Proposal. Unless marked to the contrary, proxies received from
+Stockholders will be voted in favor of the 1999 Plan Proposal.
+-22-
+PROPOSAL THREE
+RATIFICATION OF THE SELECTION OF THE FIRM OF RICHARD A. EISNER & COMPANY, LLP
+AS INDEPENDENT PUBLIC ACCOUNTANTS FOR THE COMPANY
+The Board of Directors upon recommendation of the members of the Audit
+Committee, concluded that the continued engagement of Richard A. Eisner &
+Company, LLP as the Company's independent public accountants for the 2002 fiscal
+year was in the best interests of the Company. The affirmative vote of the
+holders of a majority of the total votes cast on this proposal is needed to
+ratify the selection of the firm of Richard A. Eisner & Company, LLP as
+independent public accountants for the Company. Representatives of Richard A.
+Eisner & Company, LLP are expected to be present at the Annual Meeting to
+respond to questions and to make a statement should they so desire.
+Audit Fees
+For the year ended December 31, 2001, the Company incurred professional
+fees to its independent public accountants in the amount of $130,000 related to
+auditing services.
+Financial Information Systems Design and Implementation Fees
+For the year ended December 31, 2001, there were no fees billed by the
+Company's independent public accountants for professional services rendered for
+information technology services relating to financial information systems design
+and implementation.
+All Other Fees
+For the year ended December 31, 2001, the Company incurred professional
+fees to its independent public accountants in the amount of $84,000 related to
+all other services.
+The Audit Committee has considered whether the non-audit services provided
+by the Company's independent public accountants during the year ended December
+31, 2001 were compatible with the independent public accountants' independence
+and has concluded that Richard A. Eisner & Company, LLP has maintained its
+independence.
+Recommendation of the Board of Directors
+The Board of Directors unanimously recommends a vote FOR the ratification
+of the selection of Richard A. Eisner & Company, LLP as independent public
+accountants for the Company. Unless marked to the contrary, proxies received
+from stockholders will be voted in favor of the ratification of the selection of
+Richard A. Eisner & Company LLP as independent public accountants for the
+Company for fiscal year 2002.
+-23-
+STOCKHOLDER PROPOSALS AND SUBMISSIONS
+FOR THE COMPANY'S 2003 ANNUAL MEETING
+In accordance with rules promulgated by the Securities and Exchange
+Commission, any stockholder who wishes to submit a proposal for inclusion in the
+proxy material to be distributed by the Company in connection with the 2003
+Annual Meeting must do so no later than December 18, 2002.
+In addition, in accordance with Article I, Section 7(f) of the Company's
+Amended & Restated By-Laws, in order to be properly brought before the 2003
+Annual Meeting, a matter must be (i) specified in the notice of such meeting
+given by or at the direction of the Board of Directors (or any duly authorized
+committed thereof), (ii) otherwise properly brought before such meeting by or at
+the direction of the Board of Directors (or any duly authorized committed
+thereof) or (iii) specified in a written notice given by a stockholder of record
+on the date of the giving of the notice and on the record date for such meeting,
+which notice conforms to the requirements of Article I, Section 7(f) of the
+Amended & Restated By-Laws and is delivered to, or mailed and received at, the
+Company's principal executive offices not less than 120 days nor more than 150
+days prior to the first anniversary of the date of the Company's 2002 Annual
+Meeting. Accordingly, any written notice given by or on behalf of a stockholder
+pursuant to the foregoing clause (iii) in connection with the 2003 Annual
+Meeting must be received no later than January 17, 2003.
+WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE ANNUAL MEETING, PLEASE SIGN
+AND RETURN THE ENCLOSED PROXY PROMPTLY. YOUR VOTE IS IMPORTANT. IF YOU ARE A
+STOCKHOLDER OF RECORD AND ATTEND THE ANNUAL MEETING AND WISH TO VOTE IN PERSON,
+YOU MAY WITHDRAW YOUR PROXY AT ANY TIME PRIOR TO THE VOTE.
+STEVEN MADDEN, LTD.
+April 19, 2002 By: /s/ JAMIESON A. KARSON
+---------------------------------
+Jamieson A. Karson
+Chief Executive Officer
+ANNEX A
+STEVEN MADDEN, LTD.
+1999 STOCK PLAN
+This Steven Madden, Ltd. 1999 Stock Plan (the "1999 Plan") is hereby
+amended as follows:
+1. Section 3 of the 1999 Plan is amended by deleting Section 3 in its
+entirety and replacing it with the following:
+SECTION 3. STOCK SUBJECT TO THE PLAN. The stock subject to this Plan
+shall be the Common Stock, presently authorized but unissued or subsequently
+acquired by the Company. Subject to adjustment as provided in Section 7 hereof,
+the aggregate amount of Common Stock to be delivered upon the exercise of all
+options granted under the Plan shall not exceed in the aggregate 2,280,000
+shares as such Common Stock was constituted on the effective date of the Plan.
+If any option granted under the Plan shall expire, be surrendered, exchanged for
+another option, canceled, or terminated for any reason without having been
+exercised in full, the unpurchased shares subject thereto shall thereupon again
+be available for purposes of the Plan, including for replacement options which
+may be granted in exchange for such surrendered, canceled, or terminated
+options.
+2. Except as expressly amended hereby, the provisions of the Plan are and
+shall remain in full force and effect. 3. This Amendment shall be effective
+immediately upon approval by the Company's Board of Directors and stockholders
+of the Company.
+Adopted by the Board of Directors
+as of the 8th day of April, 2002
+Approved by the Stockholders
+this ___ day of May, 2002
+STEVEN MADDEN, LTD. PROXY
+STEVEN MADDEN, LTD.
+THIS PROXY IS BEING SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
+PLEASE CLEARLY INDICATE A RESPONSE BY CHECKING ONE OF THE BOXES ([FOR] [WITHHOLD
+AUTHORITY] [AGAINST] OR [ABSTAIN]) NEXT TO EACH OF THE THREE (3) PROPOSALS
+The undersigned hereby appoint(s) Charles A. Koppelman as a proxy (the
+"Proxy") for the undersigned, with the power of substitution and resubstitution
+to vote any and all shares of capital stock of Steven Madden, Ltd. (the
+"Company") which the undersigned would be entitled to vote as fully as the
+undersigned could do if personally present at the Annual Meeting of the Company,
+to be held on May 17, 2002, at 10:00 A.M. local time, and at any adjournments
+thereof, hereby revoking any prior proxies to vote said stock, upon the
+following items more fully described in the notice of and proxy statement for
+the Annual Meeting (receipt of which is hereby acknowledged):
+THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ITEMS NO. 1, 2 AND 3.
+1) ELECTION OF DIRECTORS
+---------------------
+VOTE
+[ ] FOR ALL nominees listed below EXCEPT as marked to the contrary below
+[ ] WITHHOLD AUTHORITY to vote for ALL nominees listed below (INSTRUCTION:
+To withhold authority to vote for any individual nominee strike a line
+through the nominee's name below.)
+[ ] ABSTAIN
+Charles A. Koppelman, Jamieson A. Karson, Arvind Dharia, Gerald Mongeluzo, Marc
+Cooper, John L. Madden, Peter Migliorini and Heywood Wilansky
+2) AMENDMENT OF THE 1999 STOCK PLAN
+--------------------------------
+[ ] FOR the Amendment of the 1999 Stock Plan
+[ ] AGAINST
+[ ] ABSTAIN
+3) RATIFICATION OF THE SELECTION OF RICHARD A. EISNER & COMPANY, LLP. AS
+INDEPENDENT PUBLIC ACCOUNTANTS FOR THE COMPANY FOR FISCAL YEAR 2002.
+---------------------------------------------------------------------
+[ ] FOR the ratification of the selection of Richard A. Eisner & Company,
+LLP.
+[ ] AGAINST
+[ ] ABSTAIN
+THIS PROXY WILL BE VOTED AS SPECIFIED ABOVE; UNLESS OTHERWISE INDICATED,
+THIS PROXY WILL BE VOTED (1) FOR THE ELECTION OF THE EIGHT (8) NOMINEES NAMED IN
+ITEM 1, (2) FOR THE AMENDMENT OF THE 1999 STOCK PLAN IN ITEM 2, (3) FOR THE
+RATIFICATION OF THE SELECTION OF RICHARD A. EISNER & CO., LLP AS INDEPENDENT
+PUBLIC ACCOUNTANTS FOR THE COMPANY FOR FISCAL YEAR 2002 IN ITEM 3 AND (4) IN THE
+DISCRETION OF THE PROXY ON ANY OTHER MATTER THAT MAY PROPERLY COME BEFORE THE
+MEETING.
+In his discretion, Charles A. Koppelman (or his substitute(s)) is
+authorized to vote upon such other business as may properly come before the
+meeting.
+Please mark, sign date and return this Proxy promptly using the
+accompanying postage pre-paid envelope. THIS PROXY IS SOLICITED ON BEHALF OF THE
+BOARD OF DIRECTORS OF STEVEN MADDEN, LTD.
+Dated: _____________________
+-------------------------------------
+Signature
+-------------------------------------
+Signature if jointly owned:
+-------------------------------------
+Print name:
+Please sign exactly as the name appears on your stock certificate. When
+shares of capital stock are held by joint tenants, both should sign. When
+signing as attorney, executor, administrator, trustee, guardian, or corporate
+officer, please include full title as such. If the shares of capital stock are
+owned by a corporation, sign in the full corporate name by an authorized
+officer. If the shares of capital stock are owned by a partnership, sign in the
+name of the partnership by an authorized officer.
+PLEASE MARK, DATE, SIGN AND RETURN THIS PROXY PROMPTLY
+IN THE ENCLOSED ENVELOPE

raw/proxies/0000913241/0001019056-02-000300/proxy_rpt.txt

@@ -0,0 +1,15 @@
+Certain Relationships and Related Transactions
+In July 2001, the Company entered into a consulting agreement with Peter J.
+Solomon & Company, a financial advisory firm of which Marc Cooper, one of the
+Company's directors, is a managing director. The agreement provides for a fee of
+$150,000 over the one year term of the agreement which expires in June 2002. The
+firm is to provide financial advisory and investment banking services to the
+Company.
+Compensation Committee Report On Executive Compensation
+The Compensation Committee is responsible for reviewing and approving the
+Company's compensation policies and the compensation paid to its executive
+officers, including the Chief Executive Officer and the other named executive
+officers. The Compensation Committee is comprised of Charles A. Koppelman, Peter
+Migliorini and John Madden. Each member of the Compensation Committee was a
+non-employee directors of the Company during 2001, however, Mr. Koppelman
+received a salary and certain other benefits for serving as the Chairman of the

raw/proxies/0000913241/0001019056-03-000352/proxy_rpt.txt

@@ -0,0 +1,8 @@
+Certain Relationships and Related Transactions
+In July 2001, the Company entered into a consulting agreement with Peter J.
+Solomon & Company, a financial advisory firm of which Marc Cooper, one of the
+Company's directors, is a managing director. Under this agreement, the firm
+provided financial advisory and investment banking services to the Company.
+Pursuant to this agreement, the Company paid fees to Peter J. Solomon & Company
+in the amount of $75,000 during 2001 and $150,000 during 2002.
+-16-

raw/proxies/0000913241/0001019056-04-000597/proxy_rpt.txt

@@ -0,0 +1,42 @@
+Certain Relationships and Related Transactions
+In July 2001, the Company entered into a consulting agreement with
+Peter J. Solomon & Company, a financial advisory firm of which Marc Cooper, one
+of the Company's directors, is a managing director. Under this agreement, the
+firm provided financial advisory and investment banking services to the Company.
+Pursuant to this agreement, the Company paid fees to Peter J. Solomon & Company
+in the amount of $75,000 during 2001 and $150,000 during 2002. During 2003, the
+Company paid $32,866 to Peter J. Solomon & Company for research and other
+expenses. This agreement was amended in March 2004. Under the amended agreement,
+the Company will pay fees to Peter J. Solomon & Company in the amount of
+$200,000 during 2004.
+The Company and Jeffrey Birnbaum, one of the Company's directors, have
+entered into an agreement whereby Mr. Birnbaum provides design consultation
+services to the Company. Pursuant to this agreement, Mr. Birnbaum received a fee
+of $200,000 from the Company in 2003.
+The Company paid John Madden, one of the Company's directors, $15,000
+in 2003 for investment consulting advice provided by Mr. Madden to the Company
+in 2002. In addition, in January 2004 the Company entered into an agreement with
+JLM Consultants, a company wholly-owned by Mr. Madden, whereby JLM Consultants
+will provide consulting services with respect to the development of
+international sales of the Company. Pursuant to this agreement, JLM Consultants
+will receive a monthly fee of $16,000.
+The Company had an agreement with Charles Koppelman, its Chairman,
+which expired on June 30, 2003. See "Agreement with the Chairman of the Board."
+The Company has an agreement with Steven Madden, a beneficial holder of
+more than 10% of the Company's outstanding shares of common stock. See
+"Agreement with Steven Madden."
+Compensation Committee Report On Executive Compensation
+The Compensation Committee is responsible for reviewing and approving
+the Company's compensation policies and the compensation paid to its executive
+officers, including the Chief Executive Officer and the other named executive
+officers. During 2003, the Compensation Committee was comprised of directors
+Peter Migliorini (chairman) and Roger Gladstone. Each member of the Compensation
+Committee was a non-employee director of the Company during 2003.
+The Compensation Committee's goal is to develop executive compensation
+policies and practices that are consistent with and linked to the Company's long
+term goal of maximizing stockholder value. The program is designed to facilitate
+the long-term success and growth of the Company through the attraction,
+motivation, and retention of outstanding executives.
+-21-
+The objectives of the Company's executive compensation programs are to:
+(i) attract and retain the highest quality executives, (ii) inspire and motivate

raw/proxies/0000913241/0001019056-06-000476/proxy_rpt.txt

@@ -0,0 +1,58 @@
+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,
+one of the Company's directors, is a managing director. Under this agreement,
+the firm provided financial advisory and investment banking services to the
+Company. This agreement was amended in March 2004. The amended agreement expired
+on March 31, 2005, but pursuant to its terms has been automatically renewed
+until such time that the Company terminates it. Pursuant to this agreement, the
+Company paid fees and expenses to Peter J. Solomon & Company of $161,000,
+$33,000 and $150,000 for 2004, 2003 and 2002 respectively. Under the amended
+agreement, the Company paid fees to Peter J. Solomon & Company in the amount of
+$161,000 during 2004 and $50,000 plus expenses incurred during 2005. In
+addition, the Company retained Peter J. Solomon & Company as an advisor in
+connection with the Company's acquisition of all the capital stock of each of
+Daniel M. Friedman & Associates, Inc. and DMF International, Ltd. In February
+2006, the Company paid Peter J. Solomon & Company an advisory fee in the amount
+equal to $412,000 for services and expenses provided in connection with such
+acquisition.
+In October 2002, the Company entered into an agreement with Jeffrey
+Birnbaum, one of the Company's directors. Under this agreement, Mr. Birnbaum
+provided consulting services with respect to the designing and manufacturing of
+shoes and general consulting services to the Company, pursuant to which, Mr.
+Birnbaum received a fee of $200,000 in 2005. In addition, Mr. Birnbaum received
+fees for service to the Company as a director in the amount of $50,000 in 2005.
+Mr. Birnbaum has been a partner and the Product Development Manager of Dolphin
+Shoe Company since August 1982. Dolphin Shoe Company is one of the Company's
+domestic suppliers.
+In January 2004, the Company entered into an agreement with John Madden
+and JLM Consultants, a company wholly-owned by John Madden, one of the Company's
+directors, which was amended in 2005. Under this agreement, Mr. Madden provided
+consulting services with respect to the development of international sales of
+-19-
+the Company. Under the agreement, in 2005, JLM Consultants received a monthly
+draw with recourse in the amount of $20,000 against sales commissions earned by
+Mr. Madden. Mr. Madden also received a $1,000 per month travel allowance and
+$1,700 per month toward health insurance premiums. Pursuant to this agreement,
+JLM Consultants received a total of $232,000 in 2005. In addition, in 2005 Mr.
+Madden received fees for service to the Company as a director in the amount of
+$50,000 and use of the Company's leased corporate apartment, a benefit valued at
+$40,253. This agreement expired on December 31, 2005 but the parties have
+continued the consulting arrangement under the same terms of the expired
+agreement.
+In January 2006, the Company entered into a consulting agreement with
+Joseph Masella, which amended and restated a consulting agreement between the
+Company, Mr. Masella and T.J.M Sales Corporation. Mr. Masella is the president
+of T.J.M Sales Corporation. Under the amended and restated agreement, Mr.
+Masella receives commissions on certain sales of Adesso Madden, Inc., the
+Company and SM New York and T.J.M. Sales Corporation receives a biweekly draw in
+the amount of $20,000 against these commissions. See "Employment and Consulting
+Agreements with Certain Executive Officers." Mr. Masella, either directly or
+through T.J.M. Sales Corporation, received commissions in the amount of
+$1,545,391 in 2005.
+In March 2004, the Company entered into a commission agreement between
+the Steven Madden Mens Wholesale Division and Hev Sales, Inc. Mr. Andrew Shames
+is the President of Hev Sales Inc. Under the agreement, Hev Sales serves as
+sales organization for the Steven Madden Mens Wholesale Division and receives an
+annual guaranteed commission of $450,000. Hev Sales, Inc. received commissions
+in the amount of $450,008 in 2005.

raw/proxies/0000913241/0001019056-07-000409/proxy_rpt.txt

@@ -0,0 +1,138 @@
+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,
+one of the Company's directors, is a managing director. Under this agreement,
+the firm provides 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 has been automatically renewed
+until such time that the Company terminates it. The Company terminated the
+agreement on July 11, 2006. During 2006, the Company retained Peter J. Solomon &
+Company as an advisor in connection with the Company's acquisition of all the
+capital stock of each of Daniel M. Friedman & Associates, Inc. and DMF
+International, Ltd. In February 2006, the Company paid Peter J. Solomon &
+Company an advisory fee in the amount equal to $412,000 for services provided
+and expenses incurred in connection with such acquisition. No other fees were
+paid to Peter J. Solomon & Company in 2006.
+In October 2002, the Company entered into an agreement with Jeffrey
+Birnbaum, one of the Company's directors. Under this agreement, Mr. Birnbaum
+provides consulting services with respect to the designing and manufacturing of
+shoes and general consulting services to the Company, pursuant to which, Mr.
+Birnbaum received a fee of $200,000 in 2006. Mr. Birnbaum has been a partner and
+the Product Development Manager of Dolphin Footwear Company since August 1982.
+Dolphin Footwear Company is one of the Company's largest domestic and foreign
+suppliers. In 2006, the Company paid Dolphin Footwear Company and Ming Well,
+Dolphin's Hong Kong affiliate, approximately $77.7 million for the purchase of
+goods.
+24
+In January 2004, the Company entered into an agreement with John Madden
+and JLM Consultants, a company wholly-owned by John Madden, one of the Company's
+directors, 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 the parties have
+continued the consulting arrangement under the terms of the expired agreement.
+Under the agreement, JLM Consultants receives a commission equal to 4% on
+International Sales (as defined in the Agreement) up to $6.0 million and 3% on
+International Sales in excess of $6.0 million. The agreement provides for a
+monthly draw in the amount of $20,000 with recourse against such commissions, as
+well as a $1,000 per month travel allowance and $1,700 per month toward health
+insurance premiums. Pursuant to this arrangement, JLM Consultants received a
+total of $478,865 in 2006.
+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 Company's Creative and Design Chief. The term of Mr. Madden's 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 Company's 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 $2,000,000.00 (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, a grant in
+excess of 150% of the options grant to such other continuing full-time employee
+shall require shareholder approval. The agreement provides for, in the event of
+Mr. Madden's death, the payment to Mr. Madden's estate of his base salary for
+the 12-month period immediately subsequent to the date of Mr. Madden's death. In
+the event that Mr. Madden's employment agreement is terminated due to Mr.
+Madden's total disability (as defined in the agreement), "for cause" (as defined
+in the agreement) or due to Mr. Madden's resignation, the Company is obligated
+to pay Mr. Madden the amount of compensation that is accrued and unpaid through
+the date of termination. In the event Mr. Madden's employment agreement is
+terminated for any reason (other than "for cause" or due to his death or total
+disability or due to Mr. Madden's 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. Madden's employment agreement contains other customary provisions,
+including provisions regarding expenses reimbursement, confidentiality,
+solicitation and competition. For the fiscal year ending December 31, 2006, Mr.
+Madden
+25
+earned (i) $600,000 in base salary, (ii) $200,000 in non-accountable expense
+allowance, (iii) a bonus of $1,700,060 representing 2% of the Company's earnings
+before interest, tax, depreciation and amortization (iv) a bonus of $2,526,868
+earned based on 2.5% of the Company's new business and (v) a bonus of $92,462
+based on 10% of Royalty/Licensing income over $2,000,000. In addition, Mr.
+Madden was awarded 30,000 shares of restricted stock with a market value of
+$1,081,800 on the date of the award which vests one fourth per year over a four
+year period and 135,000 shares of restricted stock with a market value of
+$3,800,250 on the date of the award which vests one-fifth per year over a five
+year period.
+REVIEW, APPROVAL OR RATIFICATION OF TRANSACTIONS WITH RELATED PERSONS
+The Company's Conduct Code and "Employee Handbook" prohibit all
+conflicts of interest. Under the Conduct Code, conflicts of interest occur when
+private or family interests interfere in any way, or even appear to interfere,
+with the interests of the Company. The Company's prohibition on conflicts of
+interest under the Conduct Code includes any related person transaction.
+Related person transactions must be approved by the Board, or by a
+committee of the Board consisting solely of independent directors, who will
+approve the transaction only if they determine that it is in the best interests
+of the Company. In considering the transaction, the Board or committee will
+consider all relevant factors, including as applicable (i) the Company's
+business rationale for entering into the transaction; (ii) the alternatives to
+entering into a related person transaction; (iii) whether the transaction is on
+terms comparable to those available to third parties or, in the case of
+employment relationships, to employees generally; (iv) the potential for the
+transaction to lead to an actual or apparent conflict of interest and any
+safeguards imposed to prevent such actual or apparent conflicts; and (v) the
+overall fairness of the transaction to the Company.
+The Company has multiple processes for reporting conflicts of
+interests, including related person transactions. Under the Conduct Code, all
+employees are required to report any actual or apparent conflict of interest, or
+potential conflict of interest, to management. The chief financial officer
+quarterly distributes a questionnaire to the Company's 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.
+26

raw/proxies/0000913241/0001019056-08-000564/proxy_rpt.txt

@@ -0,0 +1,75 @@
+“--Certain Relationships and Related Transactions.”); (ii) $353,400 from a sale of Common
+Stock; and (iii) a $750 dividend paid on restricted stock. 
+(5) 
+On February
+25, 2008, Mr. Cooper resigned from his position as a director of the Company. 
+(6) 
+The grant
+date fair value of such stock award computed in accordance with FAS 123R was
+$24,488. At December 31, 2007, the aggregate number of shares of
+restricted stock outstanding was 750, and Mr. Cooper had no stock options outstanding. 
+(7) 
+Represents $66,663 in consulting fees paid
+during 2007 to Peter J. Solomon & Company, a financial advisory firm of
+which Mr. Cooper is a Managing Director. See “--Certain Relationships and
+Related Transactions.” 
+(8) 
+On September
+7, 2007, Mr. Kahn resigned from his position as a director of the Company. 
+(9) 
+The grant
+date fair value of such stock award computed in accordance with FAS 123R was
+$48,975. At December 31, 2007, Mr. Kahn had no restricted stock outstanding, and
+no stock options outstanding. 
+(10) 
+Represents (i) $54,425
+from a sale of Common Stock; and (ii) a $1,500 dividend paid on restricted
+stock. 
+(11) 
+The grant
+date fair value of such stock award computed in accordance with FAS 123R was
+$24,488. At December 31, 2007, the aggregate number of shares of
+restricted stock outstanding was 750, and the aggregate number of stock
+options outstanding was 40,000. 
+(12) 
+Represents (i) $631,266
+in fees, travel and insurance allowance paid to JLM Consultants, a company
+wholly owned by Mr. Madden, in connection with consulting services for the
+development of the Company’s international business; (ii) $58,424 for the use of a
+corporate apartment; and (iii) a $750
+dividend paid on restricted stock. See “--Certain Relationships and
+Related Transactions.” 
+(13) 
+The grant
+date fair value of such stock award computed in accordance with FAS 123R was
+$48,975. At December 31, 2007, the aggregate number of shares of
+restricted stock outstanding was 1,500, and the aggregate number of stock
+options outstanding was 15,000. 
+20 
+(14) 
+The grant
+date fair value of such stock award computed in accordance with FAS 123R was
+$48,975. At December 31, 2007, the aggregate number of shares of
+restricted stock outstanding was 1,500, and Mr. Randall had no stock options outstanding. 
+(15) 
+The grant
+date fair value of such stock award computed in accordance with FAS 123R was
+$48,975. At December 31, 2007, the aggregate number of shares of
+restricted stock outstanding was 1,500, and the aggregate number of stock
+options outstanding was 30,000. 
+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 2007,
+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) $40,000. In 2007, 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 $15,000 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. 
+CERTAIN

raw/proxies/0000913241/0001019056-09-000432/proxy_rpt.txt

@@ -0,0 +1,149 @@
+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 Company’s
+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 Company’s Creative
+and Design Chief. The term of Mr. Madden’s 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
+Company’s 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. Madden’s death, for the payment to Mr. Madden’s estate of his base
+salary for the 12-month period immediately subsequent to the date of Mr.
+Madden’s death. In the 
+-34- 
+event that Mr. Madden’s employment agreement is terminated due to Mr.
+Madden’s total disability (as defined in the agreement), “for cause” (as
+defined in the agreement) or due to Mr. Madden’s resignation, the Company is
+obligated to pay Mr. Madden the amount of compensation that is accrued and
+unpaid through the date of termination. In the event Mr. Madden’s employment
+agreement is terminated for any reason (other than “for cause” or due to his
+death or total disability or due to Mr. Madden’s 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. Madden’s 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 Company’s earnings before interest, tax,
+depreciation and amortization, (iv) a bonus of $3,340,525 earned based on 2.5%
+of the Company’s 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 Company’s
+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 Company’s 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 Company’s 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

raw/proxies/0000913241/0001019056-10-000447/proxy_rpt.txt

@@ -0,0 +1,12 @@
+Certain Relationships and Related Party Transactions 
+In January 2004, the Company entered into an agreement with John L. Madden, one of the Company’s directors, and JLM Consultants, a company wholly-owned by John L. Madden. Under this agreement, which was amended in 2005, Mr. Madden agreed to provide consulting services to the Company with respect to the development of international sales of the Company. This agreement expired by its terms on December 31, 2005, but Mr. Madden continues to provide consulting services and the Company continues to make payments to JLM Consultants consistent with those that would have been required under the expired consulting agreement. In accordance with the foregoing, for the 2009 Fiscal Year, JLM Consultants received the following from the Company: (a) a commission equal to 2.5% on international sales, (b) a monthly draw in the amount of $25,000 with recourse against such commissions, (c) a $1,000 per month travel allowance and (d) $2,812 per month toward health insurance premiums for health insurance coverage for John L. Madden. Pursuant to this arrangement, JLM Consultants received a total of $759,180 from the Company in the 2009 Fiscal Year. 
+12 
+Effective as of July 1, 2005, the Company amended and restated its employment agreement with Steven Madden, pursuant to which Mr. Madden agreed to serve as the Company’s Creative and Design Chief. The term of Mr. Madden’s employment under his employment agreement commenced on July 1, 2005 and, in accordance with a December 14, 2009 amendment thereto, will end on December 31, 2019. 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. Mr. Madden also receives an annual $200,000 non-accountable expense allowance. The agreement provides for an annual cash bonus in an amount determined by the Board of Directors, which will be at least 2% of the Company’s EBITDA (the “Annual Bonus”). Additionally, the Company agreed to 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, but which is at least (i) 2.5% of new business gross direct revenues plus (ii) 10% of all license or other fee income above $2,000,000 (the “New Business Bonus”). In addition, Mr. Madden is eligible to receive annually, on or about the date of the Company’s annual meeting of stockholders, an option grant (the “Annual Option”) to purchase a number of shares of Common Stock, with such number to be equal to not less than 100% of the largest aggregate number of shares of Common Stock available upon the exercise of an option or options granted to any other continuing full-time employee of the Company during the preceding twelve-month period; provided, however, that a grant to Mr. Madden in excess of 150% of the number of shares of Common Stock available upon the exercise of an option or options granted to such other continuing full-time employee shall require stockholder approval. Any Annual Option received by Mr. Madden will vest quarterly over a one-year period following the grant date and will be exercisable, at a price equal to the closing price of the Company’s Common Stock on the grant date, for a period of five years following the date of the grant. In the event of Mr. Madden’s death, the agreement provides for the payment to Mr. Madden’s estate of his base salary for the 12-month period immediately subsequent to the date of Mr. Madden’s death. In the event that Mr. Madden’s employment agreement is terminated due to Mr. Madden’s total disability (as defined in the agreement), “for cause” (as defined in the agreement) or due to Mr. Madden’s resignation, the Company is obligated to pay Mr. Madden the amount of compensation that is accrued and unpaid through the date of termination. In the event Mr. Madden’s employment agreement is terminated for any reason (other than “for cause” or due to his death, total disability or resignation), the Company is obligated to pay Mr. Madden, in installments, the balance of his base salary that would have been paid by the Company under the agreement for the full term of the agreement. If, during the period commencing 120 days prior to a “change of control” (as defined in the employment agreement) transaction and ending on the first anniversary of a change of control transaction, Mr. Madden’s employment is terminated by the Company other than for cause or by the resignation of Mr. Madden for “good reason” (as defined in the employment agreement), or if Mr. Madden resigns for good reason or without good reason within 30 days following a change of control transaction, all unvested options to purchase shares of Common Stock held by Mr. Madden will vest on the date of termination or resignation and Mr. Madden will be entitled to receive a lump sum cash payment equal to (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. Madden’s employment agreement contains other customary provisions, including provisions regarding expense reimbursement, confidentiality, solicitation and competition. For Fiscal Year 2009, Mr. Madden earned (i) $664,470 in base salary; (ii) $200,000 in non-accountable expense allowance; (iii) a bonus of $1,752,665, representing 2% of the Company’s earnings before interest, tax, depreciation and amortization; (iv) a bonus of $3,995,600, earned based on 2.5% of the Company’s new business; and (v) a bonus of $100,101, based on 10% of Royalty/Licensing income over $2,000,000. 
+On June 25, 2007, the Company made a loan to Steven Madden, its Creative and Design Chief and a principal stockholder of the Company, in the amount of $3,000,000, in order for Mr. Madden to exercise an option, which was due to expire, and hold the underlying Common Stock. Mr. Madden executed a promissory note in favor of the Company, which is secured by a pledge of 510,000 shares of the Company’s Common Stock beneficially owned by Mr. Madden. There have been successive amendments to the note, the most recent of which occurred on April 6, 2009, at which time the note was amended and restated to (i) extend the maturity 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) reflect the rate of interest as 8% per annum for the period from June 25, 2007 until April 6, 2010, and 6% per annum for the period from April 7, 2010 until the Maturity Date. As of December 31, 2009, interest in the amount of $568,000 has accrued on the note. Mr. Madden is the brother of John L. Madden, who has been a director of the Company since the Company’s inception in 1990. 
+Review, Approval or Ratification of Transactions with Related Persons 
+The Company’s written Conduct Code and Employee Handbook prohibit all conflicts of interest. Under the Conduct Code, conflicts of interest occur when private or family interests interfere in any way, or even appear to interfere, with the interests of the Company. The Company’s prohibition on conflicts of interest under the Conduct Code includes any related person transaction. 
+13 
+Related person transactions must be approved by the Board, or by a committee of the Board consisting solely of independent directors, who will approve the transaction only if they determine that it is in the best interests of the Company. In considering the transaction, the Board or committee will consider all relevant factors, including as applicable (i) the Company’s business rationale for entering into the transaction; (ii) the alternatives to entering into a related person transaction; (iii) whether the transaction is on terms comparable to those available to third parties or, in the case of employment relationships, to employees generally; (iv) the potential for the transaction to lead to an actual or apparent conflict of interest and any safeguards imposed to prevent such actual or apparent conflicts; and (v) the overall fairness of the transaction to the Company. 
+The Company has multiple processes for reporting conflicts of interests, including related person transactions. Under the Conduct Code, all employees are required to report any actual or apparent conflict of interest, or potential conflict of interest, to management. The Chief Financial Officer distributes a questionnaire to the Company’s executive officers and management personnel on a quarterly basis and distributes a questionnaire to the members of the Board of Directors on an annual basis requesting certain information regarding, among other things, their immediate family members, employment and beneficial ownership interests, which information is then reviewed for any conflicts of interest under the Conduct Code. 
+The Board of Directors, the Audit Committee and the Disclosure Committee, which is comprised of management personnel, discuss the related party transactions, specifically, and in connection with the regular review processes attendant to the Company’s periodic filings, including related party transaction disclosures. 
+If a director is a party to or in some manner involved in a transaction involving the Company, he 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.

raw/proxies/0000913241/0001019056-11-000407/proxy_rpt.txt

@@ -0,0 +1,17 @@
+Certain Relationships and Related Party Transactions 
+In January 2004, the Company entered into an agreement with John L. Madden, one of the Company’s directors, and JLM Consultants, a company wholly-owned by John L. Madden. Under this agreement, which was amended in 2005, Mr. Madden agreed to provide consulting services to the Company with respect to the development of international sales of the Company. This agreement expired by its terms on December 31, 2005, but Mr. Madden continues to provide consulting services and the Company continues to make payments to JLM Consultants consistent with those that would have been required under the expired consulting agreement. In accordance with the foregoing, for the 2010 Fiscal Year, JLM Consultants received the following from the Company: (a) a commission equal to 2.5% on international sales, (b) a monthly draw in the amount of $25,000 with recourse against such commissions, (c) a $1,000 per month travel allowance and (d) $2,812 per month toward health insurance premiums for health insurance coverage for John L. Madden. Pursuant to this arrangement, JLM Consultants received a total of $1,005,540 from the Company in the 2010 Fiscal Year. 
+12 
+Effective as of July 1, 2005, the Company amended and restated its employment agreement with Steven Madden, pursuant to which Mr. Madden agreed to serve as the Company’s Creative and Design Chief. The term of Mr. Madden’s employment under his employment agreement commenced on July 1, 2005 and, in accordance with a December 14, 2009 amendment thereto, will end on December 31, 2019. 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. Mr. Madden also receives an annual $200,000 non-accountable expense allowance. The agreement provides for an annual cash bonus in an amount determined by the Board of Directors, which will be at least 2% of the Company’s EBITDA (the “Annual Bonus”). Additionally, the Company agreed to 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, but which is at least (i) 2.5% of new business gross direct revenues plus (ii) 10% of all license or other fee income above $2,000,000 (the “New Business Bonus”). 
+Mr. Madden is also eligible to receive annually, on or about the date of the Company’s annual meeting of stockholders, an option grant (the “Annual Option”) to purchase a number of shares of Common Stock, with such number to be equal to not less than 100% of the largest aggregate number of shares of Common Stock available upon the exercise of an option or options granted to any other continuing full-time employee of the Company during the preceding twelve-month period; provided, however, that a grant to Mr. Madden in excess of 150% of the number of shares of Common Stock available upon the exercise of an option or options granted to such other continuing full-time employee shall require stockholder approval. Any Annual Option received by Mr. Madden will vest quarterly over a one-year period following the grant date and will be exercisable, at a price equal to the closing price of the Company’s Common Stock on the grant date, for a period of five years following the date of the grant. In the event of Mr. Madden’s death, the agreement provides for the payment to Mr. Madden’s estate of his base salary for the 12-month period immediately subsequent to the date of Mr. Madden’s death. 
+In the event that Mr. Madden’s employment agreement is terminated due to Mr. Madden’s total disability (as defined in the agreement), “for cause” (as defined in the agreement) or due to Mr. Madden’s resignation, the Company is obligated to pay Mr. Madden the amount of compensation that is accrued and unpaid through the date of termination. In the event Mr. Madden’s employment agreement is terminated for any reason (other than “for cause” or due to his death, total disability or resignation), the Company is obligated to pay Mr. Madden, in installments, the balance of his base salary that would have been paid by the Company under the agreement for the full term of the agreement. If, during the period commencing 120 days prior to a “change of control” (as defined in the employment agreement) transaction and ending on the first anniversary of a change of control transaction, Mr. Madden’s employment is terminated by the Company other than for cause or by the resignation of Mr. Madden for “good reason” (as defined in the employment agreement), or if Mr. Madden resigns for good reason or without good reason within 30 days following a change of control transaction, all unvested options to purchase shares of Common Stock held by Mr. Madden will vest on the date of termination or resignation and Mr. Madden will be entitled to receive a lump sum cash payment equal to (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. Madden’s employment agreement contains other customary provisions, including provisions regarding expense reimbursement, confidentiality, solicitation and competition. 
+13 
+For 2010 Fiscal Year, Mr. Madden earned (i) $686,940 in base salary; (ii) $200,000 in non-accountable expense allowance; (iii) a bonus of $2,608,819, representing 2% of the Company’s earnings before interest, tax, depreciation and amortization; (iv) a bonus of $5,627,484, earned based on 2.5% of the Company’s new business; and (v) a bonus of $368,088, based on 10% of Royalty/Licensing income over $2,000,000. As an Annual Option, on May 28, 2010, Mr. Madden received an option to purchase 75,000 shares of Common Stock, pursuant to the Company’s 2006 Stock Incentive Plan, as amended (the “2006 Plan”), at an exercise price of $34.49 per share. The option vests in equal installments of 18,750 shares on each of August 28, 2010, November 28, 2010, February 28, 2011 and May 28, 2011. 
+On January 11, 2010, Mr. Madden received a grant of 54,600 shares of the Company’s Common Stock, subject to certain restrictions (such number of shares is adjusted for an April 30, 2010 three-for-two stock split effected as a stock dividend), under the Company’s 2006 Plan. The restricted Common Stock will vest on the third anniversary of the grant date, January 11, 2013. 
+On June 25, 2007, the Company made a loan to Steven Madden, its Creative and Design Chief and a principal stockholder of the Company, in the amount of $3,000,000, in order for Mr. Madden to exercise a stock option, which was due to expire, and hold the underlying Common Stock. Mr. Madden executed a promissory note in favor of the Company, which is secured by a pledge of 210,000 shares of the Company’s Common Stock beneficially owned by Mr. Madden. There have been successive amendments to the note, the most recent of which occurred on April 6, 2009, at which time the note was amended and restated to (i) extend the maturity 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) reflect the rate of interest as 8% per annum for the period from June 25, 2007 until April 6, 2010, and 6% per annum for the period from April 7, 2010 until the Maturity Date. As of December 31, 2010, interest in the amount of $849,186 has accrued on the note. Mr. Madden is the brother of John L. Madden, who has been a director of the Company since the Company’s inception in 1990. 
+Review, Approval or Ratification of Transactions with Related Persons 
+The Company’s written Conduct Code and Employee Handbook prohibit all conflicts of interest. Under the Conduct Code, conflicts of interest occur when private or family interests interfere in any way, or even appear to interfere, with the interests of the Company. The Company’s prohibition on conflicts of interest under the Conduct Code includes any related person transaction. 
+Related person transactions must be approved by the Board, or by a committee of the Board consisting solely of independent directors, who will approve the transaction only if they determine that it is in the best interests of the Company. In considering the transaction, the Board or committee will consider all relevant factors, including, as applicable, (i) the Company’s business rationale for entering into the transaction; (ii) the alternatives to entering into a related person transaction; (iii) whether the transaction is on terms comparable to those available to third parties or, in the case of employment relationships, to employees generally; (iv) the potential for the transaction to lead to an actual or apparent conflict of interest and any safeguards imposed to prevent such actual or apparent conflicts; and (v) the overall fairness of the transaction to the Company. 
+The Company has multiple processes for reporting conflicts of interests, including related person transactions. Under the Conduct Code, all employees are required to report any actual or apparent conflict of interest, or potential conflict of interest, to management. The Chief Financial Officer distributes a questionnaire to the Company’s executive officers and management personnel on a quarterly basis and distributes a questionnaire to the members of the Board of Directors on an annual basis requesting certain information regarding, among other things, their immediate family members, employment and beneficial ownership interests, which information is then reviewed for any conflicts of interest under the Conduct Code. 
+The Board of Directors, the Audit Committee and the Disclosure Committee, which is comprised of management personnel, discuss the related party transactions, specifically, and in connection with the regular review processes attendant to the Company’s periodic filings, including related party transaction disclosures. 
+14 
+If a director is a party to or in some manner involved in a transaction involving the Company, 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.