Prison pays off..

July 22, 2005

Like gangsta rappers and Martha Stewart, a stint in prison actually seems to have boosted the value of teen-shoe king Steve Madden, the creative and design chief at his namesake company, Steve Madden (SHOO). Madden, who served 41 months at a federal prison in Florida for a stock fraud scheme and insider trading, was released this past spring and then spent some time at a halfway house in the Bronx.

In an exhibit that was filed with an 8-K on Wednesday, the company details Madden’s most recent employment contract, which is a substantial improvement over the contract signed back in May 2001, when Madden stepped down as Chairman and CEO at SHOO after settling with the SEC and being barred from serving as an officer or director for the next seven years.

Under the new 10-year contract, Madden’s salary drops $100K, but the list of other goodies is long including a “non-accountable expense allowance” (whatever that means) of $200K a year, and a generous bonus of at least 2.5% of revenues for any new business that the company starts and “not less than 10%” of all new licensing revenue above $2 million. The details about exactly what comprises a new business are a bit complicated and include Madden’s ability to challenge the definition of a new business with a third party. But all in all, it’s a pretty generous contract.

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