Commitments, Contingencies and Other

12 Months Ended

Dec. 31, 2020

Commitments and Contingencies Disclosure [Abstract]

[1] Legal Proceedings:

In the ordinary course of business, the Company has various pending cases involving contractual disputes, employee-related matters, distribution matters, product liability claims, trademark infringement and other matters. In the opinion of management, after consulting with legal counsel, the liabilities, if any, resulting from these legal proceedings should not have a material impact on the Company's financial condition, results of operations or cash flows. It is the policy of management to disclose the amount or range of reasonably possible losses in excess of recorded amounts.

[2] Employment agreements:

Edward R. Rosenfeld. On December 31, 2018, the Company entered into a new employment agreement with Edward R. Rosenfeld, the Chief Executive Officer and the Chairman of the Board of Directors of the Company, to replace an existing employment agreement that expired on that date. The agreement, which expires on December 31, 2021, provides for an annual salary of approximately $1,042 for the period from January 1, 2021 through December 31, 2021. In addition, pursuant to his new employment agreement, on December 31, 2018, Mr. Rosenfeld received a grant of 87,500 shares of the Company's common stock subject to certain restrictions and, on February 1, 2019, Mr. Rosenfeld received an additional grant of 87,500 shares of the Company's common stock also subject to certain

restrictions. The restricted shares received by Mr. Rosenfeld on December 31, 2018 and February 1, 2019 were issued under the Company's 2006 Stock Incentive Plan, as amended, and vest in equal annual installments over a five-year period that commenced on December 1, 2019 and February 1, 2020, respectively. On March 16, 2020, Mr. Rosenfeld received a grant of 108,030 shares of the Company’s common stock under the 2019 Incentive Compensation Plan, which vest in five equal annual installments of 21,606 shares commencing on March 1, 2021. Additional compensation and bonuses, if any, are at the sole discretion of the Company's Board of Directors.

Steven Madden. On January 3, 2012, the Company and its Creative and Design Chief, Steven Madden, entered into an amendment, dated as of December 31, 2011, to Mr. Madden’s existing employment agreement with the Company. The amended agreement, which extended the term of Mr. Madden's employment through December 31, 2023, provides for a base salary of approximately $7,026 per annum for the period between January 1, 2016 and December 31, 2023. Pursuant to the amended agreement, on February 8, 2012, Mr. Madden was granted 2,194,586 restricted shares of the Company’s common stock at the then market price of $18.23, which vest in equal annual installments over a seven-year period commencing on December 31, 2017 and, thereafter, on each December 31 through December 31, 2023, subject to Mr. Madden’s continued employment on each such vesting date. Also under the amended agreement, Mr. Madden received the right, exercisable on certain specified dates in fiscal year 2012 only, to elect to receive a grant of restricted stock for a number of shares of the Company’s common stock valued at $40,000 in consideration for certain specified reductions in his annual base salary in years subsequent to 2012. Mr. Madden exercised this right, and on July 3, 2012, he was granted 2,840,013 restricted shares of the Company's common stock at the then market price of $14.09, which shares vest in equal annual installments over a six-year period commencing on December 31, 2018. Further, in addition to the opportunity for cash bonuses at the sole discretion of the Board of Directors, Mr. Madden’s amended agreement entitles him to an annual life insurance premium payment as well as an annual stock option grant. The amended agreement also provided Mr. Madden the potential for an additional one-time stock option award for 1,125,000 shares of the Company’s common stock (the “EPS Option”) in the event that the Company achieves earnings per share on a fully-diluted basis equal to $1.33 as to any fiscal year ending December 31, 2015 or thereafter, which performance criteria was achieved for the fiscal year ended December 31, 2016. As such, on March 1, 2017, Mr. Madden was granted the EPS Option at an exercise price of $24.90 per share. The EPS Option vests in equal annual installments over a five-year period commencing on the first anniversary of the grant date. On March 25, 2019, the Company and Mr. Madden, entered into an amendment to Mr. Madden's existing employment agreement with the Company. The amended agreement extends the term of Mr. Madden's employment for three years through December 31, 2026. Pursuant to the amended agreement, on March 25, 2019 Mr. Madden was granted 200,000 restricted shares of the Company's common stock. The restricted stock award will vest in three nearly equal annual installments commencing on December 31, 2024.

On August 19, 2019, pursuant to his employment agreement with the Company, Mr. Madden was granted an option to purchase 225,000 shares of the Company's common stock at an exercise price of $30.14 per share, which option vested in four equal installments on November 19, 2019, February 19, 2020, May 19, 2020 and June 30, 2020.

On June 30, 2020, pursuant to his employment agreement with the Company, Mr. Madden was granted an option to purchase 225,000 shares of the Company's common stock at an exercise price of $24.83 per share, which option vests in four equal quarterly installments commencing on September 30, 2020 and ending on June 30, 2021.

Zine Mazouzi. On December 8, 2020, the Company named Zine Mazouzi its Chief Financial Officer, replacing Arvind Dharia, whose employment agreement ended December 31, 2020. The agreement, which went into effect on January 1, 2021, remains in effect through December 31, 2023. Mr. Mazouzi's agreement provides for an annual salary of $550 in 2021, $575 in 2022 and $600 in 2023. In addition, pursuant to his employment agreement, on January 4, 2021, Mr. Mazouzi was granted 29,155 restricted shares of the Company's common stock under the Company's 2019 Incentive Compensation Plan. The restricted shares vest in five equal annual installments commencing on January 4, 2022. The agreement provides to Mr. Mazouzi the opportunity for an annual performance-based bonus for the fiscal years ended December 31, 2021, 2022 and 2023.

Amelia Newton Varela. On December 27, 2019, the Company entered into a new employment agreement with Amelia Newton Varela, the Company’s President and a member its Board of Directors, to replace an existing employment agreement that expired on December 31, 2019. The agreement, which remains in effect through December 31, 2022,

provides for an annual salary of $725 in 2021 and $750 in 2022. In addition, pursuant to her new employment agreement, on January 2, 2020, Ms. Varela was granted 27,000 restricted shares of the Company's common stock under the Company's 2019 Incentive Compensation Plan. The restricted shares vest in five equal annual installments commencing on January 2, 2021. The agreement provides to Ms. Varela the opportunity for an annual performance-based bonus for the fiscal years ended December 31, 2020, 2021 and 2022.

The Company and Ms. Varela entered into an amendment to her employment agreement, dated February 25, 2021. The amendment set a cap on bonuses payable to Ms. Varela based on our financial performance in 2021 and 2022 of $450. In addition, the Company issued 26,350 restricted shares of common stock to Ms. Varela on March 1, 2021. All of the other terms and provisions of Ms. Varela's 2019 agreement remain in full force and effect.

Awadhesh Sinha. On December 27, 2019, the Company entered into a new employment agreement with Awadhesh Sinha, the Company's Chief Operating Officer, to replace an existing employment agreement that expired on December 31, 2019. The new agreement, which remains in effect through December 31, 2021, provides for an annual salary of $767 in 2021 and provides to Mr. Sinha the opportunity for annual cash and share-based incentive bonuses. In addition, pursuant to his new employment agreement, on January 2, 2020, Mr. Sinha received a grant of 11,598 shares of the Company's common stock subject to certain restrictions. The restricted shares received by Mr. Sinha were issued under the Company's 2019 Incentive Compensation Plan and vest in equal annual installments over a two-year period on each of December 15, 2020 and December 15, 2021.

The Company and Mr. Sinha entered into an amendment to his employment agreement, dated February 25, 2021. This amendment extends the term of Mr. Sinha’s employment with the Company through December 31, 2023. Under this amendment, Mr. Sinha will be required to devote not more than four days per week to his duties as Chief Operating Officer beginning on January 1, 2022, and on January 1, 2023, he will become a Senior Advisor to the Company and will be required to devote not more than two days per week to such executive-level duties as are reasonably assigned to him by our Chief Executive Officer. The amendment (i) provides that Mr. Sinha’s base compensation will be $500 for calendar year 2022 and $300 for calendar year 2023, (ii) his bonus based on our financial performance in 2021 will be capped at $450, (iii) his bonus based on our financial performance in 2022 will be capped at $200, and (iv) he will not be entitled to a performance bonus for 2023. All of the other terms and provisions of Mr. Sinha's 2019 agreement remain in full force and effect.

Karla Frieders. On May 11, 2020, the Company entered into a new employment agreement with Karla Frieders, the Company’s Chief Merchandising Officer, to replace an existing employment agreement which expired on April 30, 2020. The agreement, which remains in effect through April 30, 2023, provides to Ms. Frieders an annual salary of $590 for the period commencing on May 1, 2020 and ending on April 30, 2023 and an annual performance-based bonus for the fiscal years ending December 31, 2020, 2021 and 2022 in an amount to be determined at the discretion of the Company. In addition, pursuant to her new employment agreement, on May 11, 2020, Ms. Frieders received a grant of 32,758 shares of the Company's common stock subject to certain restrictions. The restricted shares received by Ms. Frieders were issued under the Company's 2019 Incentive Compensation Plan and vest in equal annual installments over a five-year period commencing on May 1, 2021 and ending on May 1, 2025.

[3] Letters of credit:

At December 31, 2020, the Company had $188 open letters of credit for the purchase of inventory.

[4] License agreements:

In January 2018, the Company entered into a license agreement with Nine West Development LLC, subsequently acquired by WHP Global, for the right to manufacture, market and sell women's fashion footwear and handbags under the Anne Klein®, AK Sport®, AK Anne Klein Sport® and the Lion Head Design® trademarks. The agreement, unless extended, expires on June 30, 2023. The agreement requires that the Company pay the licensor a royalty equal to a percentage of net sales and a minimum royalty in the event that specified net sales targets are not achieved.

On February 9, 2011, the Company entered into a license agreement with Basic Properties America Inc. and BasicNet S.p.A, under which the Company has the right to use the Superga® trademark in connection with the sale and marketing of women's footwear. The agreement requires the Company to pay the licensor a royalty equal to a percentage of net sales and a minimum royalty in the event that specified net sales targets are not achieved. The agreement was amended on April 11, 2013 to extend the term of the agreement through December 31, 2022.

Future minimum royalty payments under all of the Company's license agreements are $8,350 for 2021 and $11,875 for 2022 through 2023. Royalty expenses are included in the “cost of goods” section of the Company's Consolidated Statements of (Loss)/Income.

[5] Concentrations:

The Company maintains cash and cash equivalents with various major financial institutions, which at times are in excess of the amount insured.

During the year ended December 31, 2020, the Company did not purchase more than 10% of its merchandise from any single supplier. Total product purchases from vendors located in China for the year ended December 31, 2020 were 78%.

During the year ended December 31, 2019, the Company did not purchase more than 10% of its merchandise from any single supplier. Total product purchases from vendors located in China for the year ended December 31, 2019 were 88%.

During the year ended December 31, 2018, the Company did not purchase more than 10% of its merchandise from any single supplier. Total product purchases from vendors located in China for the year ended December 31, 2018 were approximately 94%.

For the year ended December 31, 2020, sales to Walmart Inc. represented approximately 13.9% of total revenue. At December 31, 2020, Walmart Inc. represented 19.0% of total accounts receivable, Target Corporation represented 14.9% of total accounts receivable, Ross Stores, Inc. represented 11.8% of total accounts receivable, The TJX Companies, Inc. represented 11.7% of total accounts receivable and Nordstrom, Inc. represented 10.3% of total accounts receivable. The Company did not have any other customers who accounted for more than 10% of total revenue or any other customers who accounted for more than 10% of total accounts receivable.

At December 31, 2019, sales to Walmart Inc. represented approximately 11.9% of total revenue. At December 31, 2019, Walmart Inc. represented 17.9% of total accounts receivable, Target Corporation represented 13.6% of total accounts receivable and Nordstrom, Inc. represented 10.6% of total accounts receivable. The Company did not have any other customers who accounted for more than 10% of total revenue or any other customers who accounted for more than 10% of total accounts receivable.

At December 31, 2018, sales to Walmart Inc. represented approximately 17.6% of total accounts receivable, Target Corporation represented 13.8% of total accounts receivable and Nordstrom, Inc. represented 10.6% of total accounts receivable. The Company did not have any other customers who accounted for more than 10% of total net revenue or any other customers who accounted for more than 10% of total accounts receivable.

Purchases are made primarily in United States dollars.

[6] Valuation and qualifying accounts:

The following is a summary of markdown and chargeback allowances, allowance for doubtful accounts related to accounts receivable and deferred tax asset valuation allowance:


	Balance at Beginning of Year		Additions		Deductions		Balance at End of Year
Year ended December 31, 2020
Markdown and chargeback allowances	$	34,207	$	30,508	$	45,883	$	18,832
Allowance for doubtful accounts	11,066		1,405		3,528		8,943
Deferred tax asset valuation allowance	2,230		2,738		—		4,968
Total	$	47,503	$	34,651	$	49,411	$	32,743
Year ended December 31, 2019
Markdown and chargeback allowances	$	31,357	$	90,031	$	87,181	$	34,207
Allowance for doubtful accounts	10,849		679		462		11,066
Deferred tax asset valuation allowance	649		1,581		—		2,230
Total	$	42,855	$	92,291	$	87,643	$	47,503
Year ended December 31, 2018
Markdown and chargeback allowances	$	26,213	$	86,463	$	81,319	$	31,357
Allowance for doubtful accounts	616		10,887		654		10,849
Deferred tax asset valuation allowance	—		649		—		649
Total	$	26,829	$	97,999	$	81,973	$	42,855

Legal Matters and Contingencies [Text Block]

[1] Legal Proceedings: