Item 5.02. Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain
Officers.
On December 27, 2019, Steven Madden, Ltd. (the "Company") entered into a new
employment agreement with Amelia Newton Varela (the "Varela Employment
Agreement") pursuant to which Ms. Varela will continue to serve as the President
of the Company. The Varela Employment Agreement, the full text of which is filed
as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated herein by
reference, replaces Ms. Varela's prior employment agreement, which expired by
its terms on December 31, 2019.
The term of the Varela Employment Agreement commenced on January 1, 2020 and
will continue for a term of three years through December 31, 2022, unless sooner
terminated in accordance with the terms thereof. Pursuant to the terms of the
Varela Employment Agreement, Ms. Varela will receive an annual base salary
during the term of $700,000 for the calendar year 2020, $725,000 for the
calendar year 2021, and $750,000 for the calendar year 2022 and an annual
automobile allowance of $15,000 in each year of the term. In addition, on
January 2, 2020, pursuant to the Varela Employment Agreement, Ms. Varela was
granted 27,000 restricted shares of the Company's common stock, with a par value
of $0.0001 per share, which will vest in five equal annual installments on each
anniversary of the date of grant, commencing on January 2, 2020.
In addition, the terms of the Varela Employment Agreement entitle Ms. Varela to
an annual performance-based cash bonus for each of the fiscal years ended
December 31, 2020, 2021 and 2022 in an amount equal to 2% of the increase, if
any, in the Company's total earnings before interest and taxes ("EBIT") for each
such year over the Company's total EBIT for the immediately preceding year, less
any deductions required to be withheld by applicable laws and regulations. EBIT
attributable to any business acquired by the Company after January 1, 2020, will
not be included in the calculation for the purpose of determining Ms. Varela's
annual bonus. Ms. Varela's annual bonus, if any, will be paid to her on or about
March 15 of the year immediately following the year in which it was earned.
Pursuant to the terms of the Varela Employment Agreement, the Company may
terminate Ms. Varela's employment for Cause (as defined in the Varela Employment
Agreement), in which event Ms. Varela would be entitled to receive only her
accrued and unpaid base salary through the date of termination. In the event Ms.
Varela's employment is terminated by the Company without Cause, Ms. Varela would
be entitled to receive payment of her annual base salary, payable at regular
payroll intervals, from the date of termination of employment through the
remainder of the term plus any performance-based cash bonus that has accrued but
not yet been paid. In addition, if Ms. Varela's employment is terminated by the
Company without Cause during the period commencing 30 days prior to a Change of
Control (as defined in the Varela Employment Agreement) and ending 180 days
after such Change of Control, Ms. Varela would be entitled to receive a cash
payment within ten days of the date of her termination or resignation of
employment in an amount equal to two and one-half times (i) the annual base
salary to which she was entitled as of the date of termination of employment
plus (ii) the average cash bonus that she received for the preceding three years
ending on the last previous December 31; provided, however, that Ms. Varela's
severance payment will be reduced to the maximum amount that is deductible to
the Company under Section 280G of the Internal Revenue Code if the reduction
would provide Ms. Varela the best after-tax result.
The foregoing description of the Varela Employment Agreement does not purport to
be complete and is qualified in its entirety by reference to the full text of
such agreement filed as Exhibit 10.1 to this Current Report on Form 8-K, which
is incorporated herein by reference.
On December 27, 2019, the Company also entered into an employment agreement with
Awadhesh Sinha, the Company's Chief Operating Officer (the "Sinha Employment
Agreement") pursuant to which Mr. Sinha will continue to serve as Chief
Operating Officer of the Company. The Sinha Employment Agreement, the full text
of which is filed as Exhibit 10.2 to this Current Report on Form 8-K and is
incorporated herein by reference, replaces Mr. Sinha's prior employment
agreement, the initial term of which expired on December 31, 2019.
The term of the Sinha Employment Agreement commenced on January 1, 2020 and will
continue for a term of two years through December 31, 2021, unless sooner
terminated in accordance with the terms thereof. Pursuant to the terms of the
Sinha Employment Agreement, Mr. Sinha will receive an annual base salary during
the term of $745,000 for the calendar year 2020, and $702,000 for the calendar
year 2021 and an annual automobile allowance of $22,500 in each year of the
term. In addition, the Company will pay term life insurance premiums on Mr.
Sinha's behalf in the amount of approximately $11,000 per year less deductions
required to be withheld by applicable laws and regulations. Also, pursuant to
the terms of the Sinha Employment Agreement, on January 2, 2020, Mr. Sinha was
granted 11,598 restricted shares of the Company's common stock, with a par value
of $0.0001 per share, which will vest in two equal installments on December 15,
2020 and December 15, 2021.
In addition, the terms of the Sinha Employment Agreement entitle Mr. Sinha to an
annual performance-based bonus for each of the fiscal years ended December 31,
2020 and 2021 in an amount equal to 2% of the increase in the Company's earnings
before interest, taxes, depreciation, and amortization ("EBITDA") for each such
year over the Company's EBITDA for the immediately preceding year, EBITDA of the
Company that is attributable to any business acquired by the Company after
January 1, 2020 will not be included for the purpose of determining Mr. Sinha's
bonus until the next fiscal quarter following the date of the business
acquisition; provided that the Company's prior year EBITDA will be adjusted to
include EBITDA attributable to the acquired business for the comparable quarters
in the prior year on a pro forma basis assuming the Company had owned the
acquired business.
The Company will have the right, upon a determination of the Company's Board of
Directors, to claw back any bonus or incentive-based compensation that was based
on either (i) materially inaccurate financial statements or any other materially
inaccurate performance metric criteria or (ii) financial statements or
performance metrics that subsequently are restated or revised based upon the
advice and recommendation of the Company's auditors. The clawback period will be
limited to three years after the incentive compensation is paid or awarded,
unless the clawback is based on Mr. Sinha's fraud or intentional misconduct.
The Company may terminate Mr. Sinha's employment for Cause (as defined in the
Sinha Employment Agreement) in which event Mr. Sinha would be entitled to
receive only his accrued and unpaid compensation through the date of
termination. The Sinha Employment Agreement provides that in the event Mr.
Sinha's employment is terminated by the Company without Cause or by the
resignation of Mr. Sinha for Good Reason (as defined in the Sinha Employment
Agreement), Mr. Sinha would be entitled to receive payment of his annual base
salary, payable at regular payroll intervals, from the date of termination of
employment through the longer of (i) the remainder of the term or (ii) six
months. In addition, if Mr. Sinha's employment is terminated by the Company
without Cause or by the resignation of Mr. Sinha for Good Reason during the
period commencing 120 days prior to a Change of Control (as defined in the Sinha
Employment Agreement) and ending 90 days after a Change of Control, Mr. Sinha
would be entitled to receive a cash payment within ten days of the date of his
termination or resignation of employment in an amount equal to two and one-half
times (i) the annual base salary to which he was entitled as of the date of
termination of employment plus (ii) the average cash bonus that he received for
the preceding three years ending on the last previous December 31; provided,
however, that Mr. Sinha's severance payment will be reduced to the maximum
amount that is deductible to the Company under Section 280G of the Internal
Revenue Code if the reduction would provide Mr. Sinha the best after-tax result.
The foregoing description of the Sinha Employment Agreement does not purport to
be complete and is qualified in its entirety by reference to the full text of
the Sinha Employment Agreement filed as Exhibit 10.2 to this Current Report on
Form 8-K, which is incorporated herein by reference.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits:
Exhibit Description
10.1 Employment Agreement, dated as of January 1, 2020, between the Company
and Amelia Newton Varela.
10.2 Employment Agreement, dated as of January 1, 2020, between the Company
and Awadhesh Sinha.
104 Cover Page Interactive Data File-the cover page XBRL tags are embedded
within the Inline XBRL document.
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