BKRS Bakers Footwear Grp. (MM)

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

SCHEDULE 14A
(Rule 14a-101)

SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No.      )

Filed by the Registrant þ
Filed by a Party other than the Registrant o

Check the appropriate box:

o		Preliminary Proxy Statement
o		Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
þ		Definitive Proxy Statement
o		Definitive Additional Materials
o		Soliciting Material Pursuant to §240.14a-12

BAKERS FOOTWEAR GROUP, INC.

(Name of Registrant as Specified in Its Charter)

N/A

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box)

þ		No Fee required.
o		Fee computed on table below per Exchange Act Rules 14a 6(i)(1) and 0-11.

	(1)		Title of each class of securities to which transaction applies:
	(2)		Aggregate number of securities to which transaction applies:
	(3)		Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11:
	(4)		Proposed maximum aggregate value of transaction:
	(5)		Total fee paid:

o		Fee paid previously with preliminary materials.
o		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 the date of its filing.

	(1)		Amount Previously Paid:
	(2)		Form, Schedule or Registration Statement No.:
	(3)		Filing Party:
	(4)		Date Filed:

 

BAKERS FOOTWEAR GROUP, INC.

2815 Scott Avenue
St. Louis, Missouri 63103

Phone (314) 621-0699

 

May 17, 2010

 

Dear Shareholder:

 

You are cordially invited to attend the Company’s Annual Meeting of Shareholders on Wednesday, June 16, 2010. We will hold the meeting at 11:00 a.m. at the Marriott Residence Inn, St. Louis Downtown, Meeting Room No. 3, 525 South Jefferson Avenue, St. Louis, Missouri 63103. In connection with the meeting, we enclose a notice of the meeting, a proxy statement and a proxy card. Detailed information relating to the Company’s activities and operating performance is contained in our 2009 Annual Report to Shareholders, which is also enclosed.

 

Whether or not you plan to attend the Annual Meeting of Shareholders, we encourage you to vote your shares. If your shares are held in the name of a bank, broker or other holder of record, you must present proof of your ownership, such as a bank or brokerage account statement, to be admitted to the meeting. All shareholders must also present a form of personal identification in order to be admitted to the meeting. You may vote by mail or in person at the meeting.

 

The Company will make available an alphabetical list of shareholders entitled to vote at the meeting for examination by any shareholder during ordinary business hours at the Company’s principal business offices located at 2815 Scott Avenue, St. Louis, Missouri 63103, from June 4, 2010, until the meeting.

 

On behalf of the entire board, we look forward to seeing you at the meeting.

 

Sincerely,

 

 

PETER A. EDISON
Chairman of the Board of Directors,
Chief Executive Officer and President

 

TABLE OF CONTENTS TO THE PROXY STATEMENT

 

BAKERS FOOTWEAR GROUP, INC.

2815 Scott Avenue
St. Louis, Missouri 63103
Phone (314) 621-0699

 

 

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
June 16, 2010

 

 

 

The Annual Meeting of Shareholders of Bakers Footwear Group, Inc. will be held at the Marriott Residence Inn, St. Louis Downtown, Meeting Room No. 3, 525 South Jefferson Avenue, St. Louis, Missouri, 63103, on Wednesday, June 16, 2010, at 11:00 a.m., Central Daylight Time, for the following purposes:

 

1. To elect as directors the five directors named in the attached proxy statement to serve until our next annual meeting;

 

2. To ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for fiscal year 2010; and

 

3. To transact such other business as may properly come before the meeting.

 

By Order of the Board of Directors,
BAKERS FOOTWEAR GROUP, INC.

 

CHARLES R. DANIEL, III
Secretary

 

St. Louis, Missouri

May 17, 2010

 

 

 

 

QUESTIONS AND ANSWERS

 

 

We will hold the annual meeting of shareholders on Wednesday, June 16, 2010, at 11:00 a.m., Central Daylight Time, at the Marriott Residence Inn, St. Louis Downtown, Meeting Room No. 3, 525 South Jefferson Avenue, St. Louis, Missouri 63103.

 

 

You are entitled to vote at the meeting if you owned shares as of the close of business on May 12, 2010, the record date for the meeting.

 

 

We are asking our shareholders to elect directors and to ratify the appointment of our independent registered public accounting firm.

 

 

Each share of our common stock is entitled to one vote with respect to each matter on which it is entitled to vote. A majority of shares entitled to vote on the subject matter and represented in person or by proxy at a meeting at which a quorum is present is required for the election of directors and all other items.

 

 

If your shares are held in street name by a bank or brokerage firm as your nominee, your bank or broker will send you a separate package describing the procedure for voting your shares. You should follow the instructions provided by your bank or brokerage firm.

 

 

If you sign, date and return your proxy and do not mark how you want to vote, your proxy will be counted as a vote “FOR” all of the nominees for directors and “FOR” the ratification of our independent registered public accounting firm.

 

 

If you mark your proxy “abstain” or “withhold authority,” your vote will have the same effect as a vote against the proposal or the election of the applicable director. If you do not instruct your broker how to vote, your broker may vote for you on “routine” proposals but not on “non-routine” proposals. The ratification of our auditor is considered routine, but the election of directors is non-routine. Therefore, if you do not vote on the election of directors or provide voting instructions, your broker will not be allowed to vote your shares. Broker non-votes with respect to a matter will not be considered as present and entitled to vote with respect to that matter and thus will have no effect on the vote for that matter.

 

 

Yes. You can revoke your proxy at any time before it is exercised by timely delivery of a properly executed, later-dated proxy, by a written revocation of your proxy sent to the Secretary of Bakers Footwear Group, Inc., or by voting at the meeting. The method by which you vote by a proxy will in no way limit your right to vote at the meeting if you decide to attend in person. If your shares are held in the name of a bank or brokerage firm, you must obtain a proxy, executed in your favor, from the bank or broker, to be able to vote at the meeting.

 

 

If your shares are held in the name of a bank, broker or other holder of record, you must present proof of your ownership, such as a bank or brokerage account statement, to be admitted to the meeting. All shareholders must also present a form of personal identification in order to be admitted to the meeting.

 

BAKERS FOOTWEAR GROUP, INC.
2815 Scott Avenue
St. Louis, Missouri 63103
Phone (314) 621-0699

 

The board of directors of Bakers Footwear Group, Inc. is soliciting proxies from its shareholders in connection with the Company’s Annual Meeting of Shareholders to be held on Wednesday, June 16, 2010, and at any and all adjournments thereof. The meeting will be held at 11:00 a.m. at the Marriott Residence Inn, St. Louis Downtown, Meeting Room No. 3, 525 South Jefferson Avenue, St. Louis, Missouri 63103.

 

If your shares are held in the name of a bank, broker or other holder of record, you must present proof of your ownership, such as a bank or brokerage account statement, to be admitted to the meeting. All shareholders, including record holders, must also present a form of personal identification in order to be admitted to the meeting.

 

We began sending to all shareholders of record this proxy statement and the accompanying form of proxy on or about May 17, 2010. We sent our 2009 Annual Report, including Form 10-K, excluding exhibits, to shareholders at the same time.

 

Shareholders Entitled To Vote

 

You are entitled to vote (in person or by proxy) at the annual meeting if you were a shareholder of record at the close of business on May 12, 2010. On May 12, 2010, 7,384,056 shares of our common stock, par value $0.0001 per share, were outstanding and entitled to vote and no shares of our preferred stock were outstanding. There is no cumulative voting with respect to the election of directors. Shareholders of record are entitled to one vote per share on all matters.

 

Proxies and Voting Procedures

 

Whether or not you expect to be present in person at the annual meeting, you are requested to complete, sign, date, and return the enclosed form of proxy. The shares represented thereby will be voted in accordance with your instructions. If you attend the meeting, you may vote by ballot. If you do not attend the meeting, your shares of common stock may be voted only when represented by a properly executed proxy. If you hold your shares in street name through a bank or broker, your broker or bank will send you a separate package describing the procedures and options for voting your shares.

 

You can revoke your proxy at any time before it is exercised by timely delivery of a properly executed, later-dated proxy, by delivering a written revocation of your proxy to our Secretary or by voting at the meeting. If your shares are held in the name of a bank or brokerage firm, you must obtain a proxy, executed in your favor, from the bank or broker, to be able to vote at the meeting.

 

Your properly completed proxy/voting instruction card will appoint Charles R. Daniel, III and David M. Klemm as proxy holders, or your representatives, to vote your shares in the manner directed therein by you. Mr. Daniel is the Executive Vice President, Chief Financial Officer, Controller, Treasurer and Secretary. Mr. Klemm is the Assistant Secretary. Your proxy permits you to direct the proxy holders to: (i) vote “for” or withhold your votes from particular nominees for director, and (ii) vote “for”, “against”, or “abstain” from the ratification of the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm for fiscal year 2010.

 

All shares entitled to vote and represented by properly completed proxies received prior to the meeting and not revoked will be voted at the meeting in accordance with your instructions. If you do not indicate how your shares are to be voted on a matter, the shares represented by your properly completed proxy will be voted “FOR” the nominees for director and “FOR” the ratification of the appointment of Ernst & Young LLP.

 

As far as the Company knows, the only matters to be brought before the annual meeting are those referred to in this proxy statement. As to any other matters presented at the annual meeting, the persons named as proxies may vote your shares in their discretion.

Required Vote

 

No business can be conducted at the annual meeting unless a majority of the outstanding shares entitled to vote are either present in person or represented by proxy at the meeting. Shares represented by a proxy which directs that the shares abstain from voting or that a vote be withheld on a matter, will be deemed to be represented for quorum purposes. Shares as to which voting instructions are given as to at least one matter will also be deemed to be so represented.

 

A majority of shares entitled to vote on the subject matter and represented in person or by proxy at a meeting at which a quorum is present is required for the election of directors and all other items. For this purpose, shares represented by a proxy which directs that the shares abstain from voting or that a vote be withheld on a matter shall be deemed to be represented at the meeting as to such matter. As a result, abstentions and votes withheld have the same effect as votes cast against a proposal. Brokers who hold shares for the accounts of their clients generally have discretionary authority to vote shares if specific instructions are not given with respect to the ratification of the appointment of our independent registered public accounting firm, but do not have discretionary authority to vote on the election of our directors. If a broker indicates on the proxy that it does not have discretionary authority as to certain shares to vote on a particular matter (a broker non-vote), those shares will not be considered as present and entitled to vote with respect to that matter and thus will have no effect on the vote for that matter. A proxy which states how shares will be voted in the absence of instructions by a shareholder as to any matter will be deemed to give voting instructions as to that matter.

 

Composition of Board of Directors

 

Under the Company’s restated articles of incorporation, the number of directors shall be fixed by or in the manner provided in the Company’s restated bylaws. Under the Company’s restated bylaws, generally the number of directors of the Company is fixed, and may be increased or decreased from time to time, by resolution of the board of directors. In accordance with the Company’s restated bylaws, our board of directors has fixed the number of directors at five. Our board of directors is currently comprised of Peter A. Edison, Andrew N. Baur, Timothy F. Finley, Harry E. Rich and Scott C. Schnuck, all with terms ending at the 2010 Annual Meeting of Shareholders. Under the Company’s restated bylaws, all directors are elected at each annual meeting of shareholders, to hold office until the expiration of their term or until their respective successors are elected and shall qualify. The board has nominated all five directors to be elected at the 2010 annual meeting to serve until the next annual meeting, or until a successor is elected and has qualified, or until his or her earlier death, resignation or removal. Each nominee is currently a director of the Company.

 

The ages, principal occupations, certain directorships held (including all directorships held within the past five years), specific experience, qualifications, attributes and skills that led to the conclusion that the nominee should serve as a director, and other information as of April 1, 2010 with respect to our nominees and directors are shown below. In addition to the information presented below regarding each nominee’s specific qualifications, the board of directors believes that each of our director nominees has demonstrated leadership skills, integrity, business acumen, and willingness and ability to devote adequate time to board duties. There are no family relationships between any of our directors and executive officers. Please see “— Director Nominations” below for additional information of the selection of directors.

 

Peter A. Edison, 54, our Chairman of the Board, Chief Executive Officer and President, has over 30 years of experience in the fashion and apparel industry. Between 1986 and 1997, Mr. Edison served as director and as an officer in various divisions of Edison Brothers Stores, Inc., including serving as the Director of Corporate Development for Edison Brothers, President of Edison Big & Tall, and as President of Chandlers/Sacha of London. He also served as Director of Marketing and Merchandise Controller, and in other capacities, for Edison Shoe Division. Mr. Edison received his M.B.A. in 1981 from Harvard Business School, and served as chairman of the board of directors of Dave & Busters, Inc. until February 2006. He has served as our Chairman of the Board and Chief Executive Officer since October 1997 and as President since September 15, 2007.

Mr. Edison’s qualifications to serve on the board include his decades of leadership experience in the fashion and apparel industry, as well as his in-depth knowledge of the Company, its history, and the retail industry, gained through his years of service to the Company, including leading our Company as Chief Executive Officer since 1997. Mr. Edison is able to provide leadership and strategic expertise to the board gained through his more than 20 years of experience as a director of public companies.

 

Andrew N. Baur, 65, a Director since February 2004, has served as a member of the board of directors of Marshall & Ilsley Corporation from October 2002 through April 2010 and served as Chairman of the Board of Southwest Bank of St. Louis, a wholly- owned subsidiary of Marshall & Ilsley Corporation, and formerly of Mississippi Valley Bancshares, Inc., since 1984. Mr. Baur previously served as Chairman of the Board and Chief Executive Officer of Mississippi Valley Bancshares, Inc., a bank holding company, which Marshall & Ilsley acquired in 2002. Mr. Baur is also a director of Wausau Paper Co.

 

Mr. Baur’s qualifications to serve on the board include leadership experience gained through his service as a chief executive officer and as a director of other public companies and expertise in corporate finance gained through his decades of experience in commercial banking and as a private equity investor.

 

Timothy F. Finley, 66, a Director since February 2004, was Chairman of the Board and Chief Executive Officer of Jos. A. Bank Clothiers, Inc., a clothing retailer, from 1990 until his retirement in 1999. Mr. Finley was also a director of Cole National Corporation until October 2004, and was a managing director of Alvarez & Marsal from August 2007 until October 2008.

 

Mr. Finley’s qualifications to serve on the board include his extensive leadership experience in the retail fashion industry and operational and strategic expertise gained through his service as Chairman of the Board and Chief Executive Officer of Jos. A. Bank Clothiers, Inc. In addition, through his service on the boards of other public companies in various other capacities, Mr. Finley is able to provide diverse and valuable financial and operational expertise to the board.

 

Harry E. Rich, 70, a Director since February 2004, was Chief Financial Officer of the St. Louis Public School System from November 2003 until he retired in November 2005. Mr. Rich served as Executive Vice President and Managing Director of Crown Capital Corporation, a boutique financial advisory firm, from 2001 until October 2003. Mr. Rich was also Executive Vice President, Chief Financial Officer and a director of Brown Shoe Co., a global footwear company, from 1983 until January 2000. He currently serves as the non-executive Chairman of the Board of RehabCare Group, Inc. and as the Chief Financial Officer of the Missouri Historical Society. He retired from the board of directors of Midwest Bank Centre, Inc. in September 2006.

 

Mr. Rich’s qualifications to serve on the board include his expertise of corporate finance and strategy in the retail footwear industry through his experience as Chief Financial Officer of Brown Shoe Co. and his more than 30 years of experience as an executive in the health care and consumer industries. In addition, through his years of service on the boards of public and private companies, Mr. Rich is able to provide diverse and valuable financial and operational expertise to the board.

 

Scott C. Schnuck, 60, a Director since February 2004, is one of eight owners of Schnuck Markets, Inc., his family’s supermarket business. Mr. Schnuck joined his family’s business in September 1975 and became President and Chief Executive Officer in January 2006 and Chairman in November 2006. He served as President and Chief Operating Officer from June 1991 until January 2006. Prior to these positions, Mr. Schnuck served as Senior Vice President of Supermarkets and as Vice President of Marketing. Mr. Schnuck is also a director of Schnuck Markets, Inc. In addition to his positions with Schnuck Markets, Inc., Mr. Schnuck has served as Vice President of various real estate partnerships and as the past Chairman of the Missouri Botanical Garden, Junior Achievement of Mississippi Valley, the Regional Commerce and Growth Association and the St. Louis Sports Commission. Mr. Schnuck has also served as Treasurer of St. Louis Children’s Hospital.

 

Mr. Shnuck’s qualifications to serve on the board include his demonstrated leadership and knowledge of marketing, operational, and strategic issues facing retail businesses gained through his experience as a chief executive officer of a leading regional supermarket chain.

Corporate Governance and Director Independence

 

Our board of directors undertakes a review of director independence annually. These determinations have been made based on information provided by each of the directors regarding relationships and possible conflicts of interest between a director, his or her affiliates or members of his or her family and the Company. Management and our board of directors consults with our legal counsel to ensure that determinations are consistent with Federal securities laws and the rules of the Nasdaq Stock Market. This review includes an annual questionnaire that directors are required to complete that contains a number of questions designed to ascertain the facts necessary to determine independence, as well as facts regarding any related party transactions. Based on this review, our board of directors has determined that each of Messrs. Baur, Finley, Rich and Schnuck are independent under the rules of the Nasdaq Stock Market. Mr. Edison is an officer of the Company and thus is not independent under those rules. As a result, our board currently has a majority of independent directors under the rules of the Nasdaq Stock Market.

 

In addition to the matters discussed under “Certain Relationships and Related Person Transactions,” in making its determination, our board of directors considered Mr. Baur’s service as a director and as a non-executive officer employee of Marshall & Ilsley Corporation and as non-executive Chairman of Southwest Bank of St. Louis, a subsidiary of Marshall & Ilsley. Southwest Bank was a ten percent participant in our revolving credit facility with Bank of America, N.A. until April 9, 2009. We recognized an aggregate of $147,432 (10% of which is $14,743) in fees and interest for fiscal year 2009 through April 9, 2009 under our credit facility. Our board of directors determined that Mr. Baur does not have a direct or indirect material interest in this relationship, that it would not interfere with his exercise of independent judgment and that it does not disqualify Mr. Baur from a determination of independence under the rules of the Nasdaq Stock Market, including those applicable to audit committee membership.

 

Our board of directors also considered the fact that Mr. Baur, an entity affiliated with Mr. Baur, and Mr. Schnuck are holders of our $1 million, $500,000, and $500,000, respectively, of our 9.5% subordinated convertible debentures that were issued on June 26, 2007. See “— Related Party Transactions and Relationships” below. Our board of directors reviewed the terms and conditions of the debenture transaction, a subsequent consent pursuant to that transaction, the impact on the conversion price of the debentures of other transactions, and an amendment to the debenture documents, and determined that it would not interfere with Mr. Baur’s or Mr. Schnuck’s exercise of independent judgment and that it does not disqualify either Mr. Baur or Mr. Schnuck from a determination of independence under the rules of the Nasdaq Stock Market, including those applicable to audit committee membership.

 

Our board of directors has determined that our independent directors will have regularly scheduled meetings at which only the independent directors are present. Our board of directors has also adopted a code of business conduct and established an audit committee, compensation committee and a nominating and corporate governance committee and has adopted charters for each of these committees. We believe that the composition of these committees meets the criteria for independence under, and the functioning of these committees complies with, the applicable requirements of, the Sarbanes-Oxley Act of 2002, the rules of the Nasdaq Stock Market and Securities and Exchange Commission (“SEC”) rules and regulations.

 

Board Leadership Structure and Role in Risk Oversight

 

The board of directors has determined that the appropriate leadership structure for the board at this time is for Mr. Edison, our President and Chief Executive Officer, to serve as Chairman of the Board. The independent directors believe that our President and Chief Executive Officer’s in-depth knowledge of, and management responsibility for, our business and the competitive challenges we face, as well as his 20 years of experience as a director at various public companies, make him the best-qualified director to serve as Chairman. Our bylaws currently require that the Chief Executive Officer serve as Chairman of the Board. Although we have not designated a “lead director,” our Chairman works closely with the chairs of each of our committees on a variety of matters and our other directors, all of whom are independent, regularly meet in executive sessions.

 

Our board of directors is responsible for consideration and oversight of risks facing the Company. In order to ensure that material risks are identified and managed appropriately, the Board and its committees regularly review material financial and other risks with management. The Audit Committee reviews and discusses with management

the company’s processes and policies with respect to risk assessment and risk management. The Audit Committee also discusses major areas of financial risks with our independent registered accounting firm. In addition, the company’s risk oversight process involves the board receiving information from management on a variety of matters, including operations, finance, regulatory, and strategy, as well as information regarding any material risks associated with each matter. The full board, or the appropriate board committee, receives this information through updates from the appropriate members of management to enable it to understand and monitor the company’s risk management practices. Information brought to the attention of one of the committees can then be shared with management or the full board, as appropriate.

 

Board Meetings and Committees

 

Our board of directors met five times and took one action by unanimous written consent in fiscal year 2009. During fiscal year 2009, all incumbent directors attended 75% or more of the aggregate meetings of the board and of the board committees on which they served during the period they held office. All incumbent directors attended the 2009 Annual Meeting of Shareholders. Our board’s policy is that each member of the board should attend each annual meeting of the corporation, unless the director is unable to attend for good cause.

 

Audit Committee.   Our audit committee consists of Harry E. Rich, Andrew N. Baur and Timothy F. Finley, all of whom qualify as “independent directors” and as audit committee members under the Nasdaq Stock Market rules. Mr. Rich serves as chairman of the audit committee and has been determined to be an audit committee financial expert as defined in Item 407 of Regulation S-K. Our board of directors has also determined that each of our audit committee members is financially sophisticated as set forth in Rule 5605(c)(2)(A) of the Nasdaq Stock Market. Our audit committee is directly responsible for appointing and reviewing fee arrangements with our independent registered public accounting firm, and approving any non-audit services by our independent registered public accounting firm. Our audit committee reviews and monitors our internal accounting procedures and reviews the scope and results of the annual audit and other services provided by our independent registered public accounting firm. Our audit committee meets with our independent registered public accounting firm and discusses our internal financial controls and any review of financial disagreements with management and major areas of financial risk. Our audit committee has the authority to engage independent counsel and other advisors as it deems necessary to carry out its duties. Our audit committee is also responsible for overseeing our compliance with certain legal and regulatory requirements and for reviewing potential conflict of interest situations, including transactions with related parties. In addition, our audit committee is responsible for establishing procedures for handling any complaints we receive regarding accounting, internal controls, or auditing matters, as well as any confidential, anonymous submissions by any of our employees regarding concerns about questionable accounting or auditing matters. Our audit committee met five times and took one action by unanimous written consent during fiscal year 2009. We do not have a corporate web site. As a result, none of our charters are available on a corporate web site. Our written audit committee charter is attached as Appendix A to this proxy statement.

 

Compensation Committee.   Our compensation committee consists of Andrew N. Baur, Timothy F. Finley and Scott C. Schnuck each of whom qualify as “independent directors” under the Nasdaq Stock Market rules and as “outside directors” under the Internal Revenue Code of 1986. Mr. Baur is chairman of the compensation committee. The committee meets regularly, or as the committee may from time to time determine as appropriate. Our compensation committee met two times and took one action by unanimous written consent in fiscal year 2009. Our written compensation committee charter is attached as Appendix B to this proxy statement.

 

Our compensation committee’s purpose is to assist the board of directors in fulfilling the board’s oversight responsibilities with regard to compensation of the Company’s management. Our compensation committee has the authority to determine, or recommend for determination to the entire board of directors, the compensation arrangements for our executive officers, including salaries, annual bonus compensation, equity awards and benefits. Annually, the committee reviews each element of executive compensation. The committee has the authority to evaluate the performance and compensation of our executive officers in light of our corporate goals and objectives and supervises the administration of our employee benefit and compensation plans, including our Cash Bonus Plan, our 2003 Stock Option Plan and our 2005 Incentive Compensation Plan. In overseeing those plans, our compensation committee can delegate its authority to management for day-to-day administration and interpretation of the plans, including selection of participants, determination of award levels within plan parameters and approval

of award documents, except that the committee generally may not delegate its authority with respect to the compensation of our executive officers. The compensation committee also makes recommendations to our board of directors concerning the adoption of any other compensation plans in which management is eligible to participate, including the granting of stock options or other benefits under those plans.

 

Our compensation committee has the authority to engage independent advisors, including compensation consultants. Neither the Company nor the committee engaged a compensation consultant for fiscal year 2009. Previously, the committee engaged Towers Perrin (now Towers Watson), a nationally recognized independent consulting firm, as our compensation consultant. The consultant had previously provided assistance to the committee in evaluating our executive compensation programs and in setting executive officer compensation. The committee has worked with the consultant in analyzing our compensation practices, reviewing survey data and in structuring our long-term equity-based compensation arrangements and our goals and measurements with respect to those arrangements for our executive officers and other key employees. The committee used survey data and advice of the consultant to consider whether our compensation programs are competitive in the footwear and retail industries. In fiscal year 2006 the committee designed an approach to long-term compensation for senior management. The consultant reports directly to the committee and does not perform any services for management. The consultant periodically participates in committee meetings and advises the committee with respect to compensation trends and best practices, plan design, and the reasonableness of individual compensation awards. The consultant also periodically studies and advises our corporate governance and nominating committee on appropriate short- and long-term compensation for our non-management directors.

 

Our compensation committee also consults with our management, who may attend compensation committee meetings by invitation, regarding our compensation policies and practices. Each year the committee considers our Chief Executive Officer’s recommendations regarding compensation for our other executive officers for the fiscal year in light of our goals, objectives, budget and performance. The committee discusses the recommendations, and assumptions underlying those recommendations, with management each year in light of those goals, objectives and performance and exercises its judgment about each executive officer. Individual executive officers are not present when the committee reviews the performance of that officer or votes on or deliberates with respect to that individual’s compensation.

 

Please see “Executive Compensation” for additional information on the compensation committee’s processes and procedures for the consideration and determination of executive compensation.

 

The annual retainer paid to our non-management directors is established by our board of directors upon the recommendation of our directors and our nominating and corporate governance committee.

 

Nominating and Corporate Governance Committee.   Our nominating and corporate governance committee consists of Scott C. Schnuck, Andrew N. Baur and Harry E. Rich each of whom qualify as “independent directors” under the Nasdaq Stock Market rules. Mr. Schnuck serves as chairman of the nominating and corporate governance committee. Our board of directors has adopted a nominating and corporate governance committee charter and a director nomination policy which addresses the nominations process and other related matters as may be required by Federal law. In accordance with the committee’s charter, the committee is responsible for making recommendations to our board of directors concerning nominations to the board, including nominations to fill a vacancy (including a vacancy created by an increase in the board of directors). This committee is also charged with shaping corporate governance policies and codes of ethical and legal conduct, and monitoring compliance with such policies. Our nominating and corporate governance committee met one time and took no action by unanimous written consent during fiscal year 2009. Our written nominating and corporate governance committee charter was attached as Appendix A to our proxy statement for the 2009 Annual Meeting of Shareholders which has been filed with the SEC.

 

Director Nominations

 

Previously, our board of directors adopted a policy on director nominations. The nominating and corporate governance committee will consider candidates submitted from a variety of sources when reviewing candidates to fill vacancies on the board of directors, including recommendations by members of the board of directors, Company management, third party search firms and shareholders that submit recommendations in accordance with our

prescribed procedures. The committee will seek to identify, evaluate and recruit the best available candidates, and will endeavor to evaluate qualified shareholder nominees on the same basis as those submitted by board members. Minimum qualifications and standards for director nominees include, among other criteria as determined by the board, senior management experience in business, government and/or other relevant organizations. Important experience would include retail experience and board membership with major organizations. Beyond these experiences and skill criteria, the committee will seek a diversity of viewpoints in order to better understand and anticipate changes in the environment (business, governmental and social) in which we operate. We do not have a formal policy regarding diversity, but the board is committed to a diverse membership. In selecting nominees, the board does not discriminate on the basis of race, color, national origin, gender, religion, disability, or sexual orientation. After the committee evaluates relevant factors relating to each candidate it will determine whether one or more candidates warrants further investigation. If the process yields one or more desirable candidates, the committee will further evaluate those candidates, including considering the candidates’ qualifications, the Company’s needs, the candidates’ interest, any interviews and appropriate background checks. Both the board of directors and the committee assess the effectiveness of the Company’s corporate governance policies, including the Company’s policies surrounding diversity of skills, through a self-evaluation process.

 

Any shareholder wishing to submit a candidate for consideration should send the following information to the Corporate Secretary, Bakers Footwear Group, Inc., 2815 Scott Avenue, St. Louis, Missouri 63103:

 

 

Our Corporate Secretary will promptly forward such materials to the committee chair and our Chairman of the Board. Our Corporate Secretary will also maintain copies of such materials for future reference by the committee when filling board positions. Shareholders may submit potential director candidates at any time pursuant to these procedures. The committee will consider such candidates if a vacancy arises and at such other appropriate times. Notwithstanding the foregoing, the committee is not obligated to review any candidate for which the required information is not provided by the time set forth in our restated bylaws for the nomination of director candidates by a shareholder that is not approved by the committee or the board. Separate procedures apply, as provided in our restated bylaws, if a shareholder wishes to submit at an annual meeting a director candidate that is not approved by the committee or board. Please see “General Information — Shareholder Proposals.” There have been no material changes to these procedures since they were first adopted in February 2004.

 

Code of Business Conduct

 

We have adopted a Code of Business Conduct (the “Code of Ethics”) that applies to our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, as well as directors, officers and employees of the Company. The Code of Ethics requires, among other things, that our senior officers avoid conflicts of interest, comply with all laws and other legal requirements, conduct business in an honest and ethical manner and otherwise act with integrity and in our best interest. Under the terms of the Code of Ethics, senior officers are encouraged to report any conduct that they believe in good faith to be

an actual or apparent violation of the code. The Code of Ethics has been filed as Exhibit 14.1 to our Annual Report on Form 10-K for fiscal year 2009 as filed with the SEC.

 

Shareholder Communications Policy

 

Our board of directors has adopted a policy to provide a process for security holders to send written communications to our board. Any security holder wishing to send communications to our board should send the written communication and the following information to our Corporate Secretary, Bakers Footwear Group, Inc., 2815 Scott Avenue, St. Louis, Missouri 63103:

 

 

Compensation of Directors

 

Currently, our non-management directors receive an annual retainer of $15,000, plus $1,000 per meeting attended ($1,500 for the chair of the audit committee for meetings of the audit committee), including committee meetings and meetings of the independent directors. Chairs of each of the audit, compensation and nominating and corporate governance committees also receive an additional $3,000 annually. On March 12, 2009, each of the Company’s non-management directors was granted non-qualified stock options relating to 5,000 shares of common stock at an exercise price of $0.32 per share, which was equal to or greater than the market price on the date of the grant. On April 20, 2010, each of the Company’s non-management directors was granted non-qualified stock options relating to 10,000 shares of common stock at an exercise price of $2.50 per share, which was greater than or equal to the market price on the date of the grant. Both grants vest in five equal annual installments beginning on the anniversary dates of the grants. For additional information on the exercise terms of our stock options, see “Employment Agreements and Termination of Employment — Stock Options.” We are also obligated to indemnify our directors against certain expenses in certain circumstances under Missouri law and our charter documents.

 

The following table sets forth information regarding the compensation earned or awarded to each of our non-management directors who served on our board of directors for the fiscal year ended January 30, 2010.

 

 

 

 

Compensation Committee Interlocks and Insider Participation

 

Andrew N. Baur, Timothy F. Finley and Scott C. Schnuck served on our compensation committee during fiscal year 2009. None of the members of the compensation committee had interlocking or other relationships with other boards or with the Company during fiscal year 2009 that require disclosure under Item 404 or 407(e)(4) of Regulation S-K other than the disclosure in “— Related Party Transactions and Relationships” below regarding our $4 million in aggregate principal amount of subordinated convertible debentures.

Certain Relationships and Related Person Transactions

 

Review, Approval or Ratification of Related Person Transactions

 

We review all relationships and transactions in which the Company and our directors, executive officers or their immediate family members participate to determine whether such persons have a direct or indirect material interest in such transactions or relationships. In addition, our code of business conduct generally prohibits our officers, directors and employees from engaging in activities that involve, or even appear to involve, a conflict between their personal interest and the interests of the Company. Our code of business conduct encourages our employees to report to us an actual or apparent conflict of interest.

 

Our audit committee, with the assistance of legal counsel, reviews all related party transactions involving the Company and any of the Company’s principal shareholders or members of our board of directors or senior management or any immediate family member of any of the foregoing. A general statement of this policy is set forth in our audit committee charter, which is attached as Appendix A to this proxy statement. However, the audit committee does not have detailed written policies and procedures for reviewing related party transactions. Rather, all facts and circumstances surrounding each related party transaction may be considered. If the audit committee determines that any such related party transaction creates a conflict of interest situation or would require disclosure under Item 404 of Regulation S-K, as promulgated by the SEC, the transaction must be approved by the committee prior to the Company entering into such transaction or ratified thereafter. The chair of the committee is delegated the authority to approve such transactions on behalf of the full committee, provided that such approval is thereafter reviewed by the committee. Transactions or relationships previously approved by the committee or in existence prior to the formation of the committee do not require approval or ratification.

 

Related Party Transactions and Relationships

 

Rights Relating to 2004 Initial Public Offering.   In connection with our initial public offering in fiscal year 2004, we sold to the representatives of the underwriters, including Ryan Beck (now an affiliate of Stifel Nicolaus) and their designees warrants to purchase 216,000 shares of common stock which were exercisable until February 10, 2009 at an exercise price equal to $12.7875 per share. These warrants were not exercised and have expired. Certain other demand and piggyback registration rights also expired on February 10, 2009, and February 10, 2010, respectively. We also granted to Ryan Beck, for a five-year period ending February 3, 2009, the right to designate for election to our board of directors, and to solicit proxies in support of, one person. Ryan Beck did not exercise this right prior to its expiration.

 

Rights Relating to 2005 Private Placement.   In connection with our 2005 private placement of common stock and warrants, we issued warrants to purchase a total of 375,000 shares of common stock, subject to anti-dilution and other adjustments, to a group of accredited investors and Ryan Beck, our placement agent. The warrants had an exercise price of $10.18 per share, contained cashless exercise and call provisions and expired on April 8, 2010. In connection with this transaction, we entered into a registration rights agreement which included the potential for payments of liquidated damages in certain circumstances relating to the timing and effectiveness of the registration statement. As required, we filed the registration statement at our expense and the SEC declared the registration statement effective within the required time periods, and our potential liability for liquidated damages ended on April 8, 2008. The placement agent received fees of $700,000, warrants to purchase 125,000 share of common stock

and registration rights. The transaction documents provided for certain ongoing obligations to the investors, including furnishing certain information and indemnifying the investors and the placement agent for certain liabilities. The placement agent was also entitled to other fees in connection with certain other related securities sales.

 

Subordinated Convertible Debentures.   On June 26, 2007, we issued $4 million in aggregate principal amount of subordinated convertible debentures (the “Debentures”) and received net proceeds of approximately $3.6 million. Among the investors in the Debentures are Scott Schnuck ($500,000) and a trust affiliated with Andrew Baur ($1,000,000), who are members of our board of directors, a trust affiliated with Bernard Edison ($500,000), who is an advisory director, and Mississippi Valley Capital, LLC ($500,000), an entity affiliated with Mr. Baur. Mr. Baur is one of the two managers of Mississippi Valley Capital, LLC, a manager-managed limited liability company, and Mr. Baur’s adult children are three of the four members. Bernard Edison is also the father of Peter A. Edison, our Chairman, Chief Executive Officer and President.

 

The Debentures are non-amortizing and bear interest at a rate of 9.5% per annum, payable semi-annually on each June 30 and December 31, and mature on June 30, 2012. In fiscal year 2009, we paid a total of $385,278 in interest and expenses of the Debenture holders in connection with the transaction. As of May 1, 2010, for fiscal year 2010 we paid a total of $0 in interest and expenses of the Debenture holders in connection with the transaction. The Debentures were convertible into shares of common stock at any time based on the initial conversion price of $9.00 per share. As discussed below in “— Subordinated Secured Term Loan”, as of May 1, 2010 the Debentures are convertible into shares of our common stock at a conversion price of $8.31 per share. The conversion price is subject to anti-dilution and other adjustments. If we distribute any assets (other than ordinary cash dividends), then generally each holder is entitled to receive a like amount of such distributed property. In the event of a merger, consolidation, sale of substantially all of our assets, or reclassification or compulsory share exchange, then upon any subsequent conversion each holder will have the right to either the same property as it would have otherwise been entitled or cash in an amount equal to 100% principal amount of the Debenture, plus interest and any other amounts owed.

 

The Debentures also contain a weighted average conversion price adjustment generally for future issuances, at prices less than the then current conversion price, of common stock or securities convertible into, or options to purchase, shares of common stock, excluding generally currently outstanding options, warrants or performance shares and any future issuances or deemed issuances pursuant to any properly authorized equity compensation plans. In accordance with rules of the Nasdaq Stock Market, the Debentures contain limitations on the number of shares issuable pursuant to the Debentures regardless of how low the conversion price may be, including limitations generally requiring that the conversion price not be less than $8.10 per share for Debentures issued to advisory directors, corporate directors or the entity affiliated with Mr. Baur, that we do not issue common stock amounting to more than 19.99% of our common stock in the transaction or such that following conversion, the total number of shares beneficially owned by each holder does not exceed 19.999% of our common stock. These limitations may be removed with shareholder approval.

 

The Debentures generally provide for customary events of default, which could result in acceleration of all amounts owed, including default in required payments, failure to pay when due, or the acceleration of, other monetary obligations for indebtedness (broadly defined) in excess of $1 million (subject to certain exceptions), failure to observe or perform covenants or agreements contained in the transaction documents, including covenants relating to using the net proceeds, maintaining legal existence, prohibiting the sale of material assets outside of the ordinary course, prohibiting cash dividends and distributions, share repurchases, and certain payments to our officers and directors. In April 2010, the debenture documents were amended to remove a de-listing from the Nasdaq Stock Market as an event of default. We generally have the right, but not the obligation, to redeem the unpaid principal balance of the Debentures at any time prior to conversion if the closing price of our common stock (as adjusted for stock dividends, subdivisions or combinations) is equal to or above $16.00 per share for each of 20 consecutive trading days and certain other conditions are met. We have also agreed to provide certain piggyback and demand registration rights, until two years after the Debentures cease to be outstanding, to the holders under the Securities Act of 1933 relating to the shares of common stock issuable upon conversion of the Debentures.

 

In connection with their review and approval of the transaction, our audit committee engaged, and agreed to indemnify and to pay expenses and to pay financial advisory fees of approximately $175,000 to Stifel Nicolaus, as

financial advisor. In the past, Ryan Beck, has performed investment banking services for us from time to time, received compensation and Ryan Beck and affiliates of Ryan Beck own our securities. Ryan Beck is also a party to other agreements with us and, as described above, had the right to designate an observer to attend meetings of our board of directors.

 

Subordinated Secured Term Loan.   On February 4, 2008 we consummated, a $7.5 million subordinated secured term loan with Private Equity Management Group, Inc. (“PEM”), as arranger and administrative agent on behalf of the lender, and an affiliate of PEM, as the lender (the “Lender”). The term loan matures on February 1, 2011. Originally, interest and principal installments were required to be repaid over 36 months at an interest rate of 15% per annum.

 

As of May 1, 2010, the face value of the principal amount under the term loan is $2,291,667. During fiscal year 2009, we paid PEM a total of $2,750,000 in principal and $678,715 in interest under the term loan. As of May 1, 2010, for fiscal year 2010 we have paid PEM a total of $687,500 in principal and $103,125 in interest under the term loan. We have broad obligations to indemnify, and pay the fees and expenses of PEM and the Lender in connection with, among other things, the enforcement, performance and administration of the term loan and the other loan documents.

 

Originally, the loan agreement contained financial covenants requiring us to maintain specified levels of tangible net worth and adjusted EBITDA (as defined in the agreement) each fiscal quarter. We have amended the loan agreement four times (May 2008, April 2009, September 2009 and March 2010) to modify these covenants in order to remain in compliance. The March 2010 amendment completely eliminated these covenants for the remainder of the term loan. As consideration for the initial loan and the May 2008 amendment thereto, PEM received 400,000 shares of our common stock, an advisory fee of $300,000 and PEM’s costs and expenses. As consideration for the April 2009 and September 2009 amendments, we paid fees totaling $265,000 and issued an additional 250,000 shares of our common stock. We did not pay any fees in connection with the March 2010 amendment.

 

As a result of the issuance of a total of 650,000 shares of our stock to PEM, the conversion price of the Debentures adjusted from $9.00 to $8.31. Based on the new conversion price of $8.31, the Debentures are convertible into an aggregate of 481,347 shares of our common stock, after eliminating fractional shares.

 

The term loan is secured by substantially all of our assets. The term loan is subordinate to our loan with Bank of America, N.A. (the “Bank”), our senior lender, but it is senior to our Debentures. Holders of the Debentures consented to the transaction and executed a subordination agreement in favor of the Lender.

 

We are permitted to prepay the term loan, subject to prepayment penalties. We are also required to make prepayments, subject to the senior subordination agreement in favor of the Bank, on the term loan in certain circumstances, including generally if we sell property and assets outside the ordinary course of business, and upon receipt of certain extraordinary cash proceeds and upon sales of securities.

 

The loan agreement still contains a financial covenant which sets an annual limit of $1 million for capital expenditures. We are also subject to certain other restrictive covenants, including covenants that restrict our ability to use the proceeds of the term loan, to incur additional indebtedness, to pre-pay other indebtedness, to dispose of assets, to effect certain corporate transactions, including specified mergers and sales of all or substantially all of our assets, to change the nature of our business, to pay dividends (other than in the form of common stock dividends), as well as covenants that limit transactions with affiliates and prohibit a change of control. For this purpose, a change of control is generally defined as, among other things, a person or entity acquiring beneficial ownership of more than 50% of our common stock, specified changes to our Board of Directors, sale of all or substantially all of our assets or certain recapitalizations. We also made customary representations and warranties and affirmative covenants, including provisions relating to providing reports, inspections and appraisal, and maintenance of property and collateral.

 

Upon the occurrence of an event of default under the term loan, the Lender will be entitled to acceleration of the debt plus all accrued and unpaid interest, subject to the senior subordination agreement in favor of the Bank, with the interest rate increasing to 17.5% per annum. The term loan generally provides for customary events of default, including default in the payment of principal or interest or other required payments, failure to observe or perform covenants or agreements contained in the transaction documents (excluding the registration rights agreement (described below)), materially breaching our senior credit facility or the terms of the Debentures,

generally failure to pay when due debt obligations (broadly defined, subject to certain exceptions) in excess of $1 million, specified events of bankruptcy or specified judgments against us.

 

We also entered into a registration rights agreement with PEM in respect of the 400,000 shares described above, including the potential payments of liquidated damages in certain circumstances in relating to the timing and effectiveness of the registration statement. As required, we filed the registration statement at our expense and the SEC declared the registration statement effective within the required time periods, and our potential liability for liquidated damages ended on February 1, 2010. We also have certain other ongoing obligations, including providing PEM specified notices and certain information, indemnifying PEM for certain liabilities and using reasonable best efforts to timely file all required filings with the SEC and make and keep current public information about us. We did not grant PEM any registration rights with respect to the 250,000 shares of our common stock issued in connection with the second amendment to the term loan.

 

Election of Directors (Proxy Item No. 1)

 

The shareholders are being asked to elect as directors on our board of directors Messrs. Peter A. Edison, Andrew N. Baur, Timothy F. Finley, Harry E. Rich and Scott C. Schnuck to terms ending with the next annual meeting, or until a successor is elected and qualified, or until his or her earlier death, resignation or removal. Each nominee is currently a director of the Company. For more information regarding the nominees for director, see “Information Regarding Board of Directors and Committees” above. Proxies cannot be voted for a greater number of persons than the number of nominees named.

 

The board does not contemplate that any of the nominees will be unable to stand for election, but should any nominee become unable to serve or for good cause will not serve, all proxies (except proxies marked to the contrary) will be voted for the election of a substitute nominee as our board may recommend.

 

THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” ALL OF THE
NOMINEES FOR DIRECTOR.

 

 

Ratification of Independent Registered Public Accounting Firm (Proxy Item No. 2)

 

Our audit committee, pursuant to its charter, has appointed Ernst & Young LLP as the Company’s independent registered public accounting firm to examine the financial statements of the Company for our 2010 fiscal year.

 

While the audit committee is responsible for the appointment, compensation, retention, termination and oversight of the independent registered public accounting firm, the audit committee and our board are requesting, as a matter of policy, that the shareholders ratify the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm. The audit committee is not required to take any action as a result of the outcome of the vote on this proposal. However, if the shareholders do not ratify the appointment, the audit committee may investigate the reasons for shareholder rejection and may consider whether to retain Ernst & Young LLP or to appoint another independent registered public accounting firm. Furthermore, even if the appointment is ratified, the audit committee in their discretion may direct the appointment of a different independent registered public accounting firm at any time during the year if they determine that such a change would be in the best interests of the Company and its shareholders.

 

A formal statement by representatives of Ernst & Young LLP is not planned for the annual meeting. However, Ernst & Young LLP representatives are expected to be present at the meeting and available to respond to appropriate questions. For a detailed listing of the fees paid by us to Ernst & Young LLP for professional services in fiscal year 2009, see “Principal Accountant Fees and Services.”

THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE RATIFICATION
OF THE APPOINTMENT OF ERNST & YOUNG LLP AS THE COMPANY’S
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR FISCAL YEAR 2010.

 

 

Report of the Audit Committee

 

The audit committee oversees the Company’s financial reporting process on behalf of the board of directors. Management is primarily responsible for the financial statements and reporting process including the systems of internal controls, while the independent registered public accounting firm is responsible for performing an independent audit of the Company’s financial statements in accordance with the auditing standards of the Public Company Accounting Oversight Board (United States), and expressing an opinion on the conformity of those financial statements with U.S. generally accepted accounting principles.

 

In this context, the committee has met and held discussions with management and Ernst & Young LLP, the Company’s independent registered public accounting firm. The committee discussed with the Company’s independent registered public accounting firm the overall scopes and plans for its audit. The committee has met with representatives of the independent registered public accounting firm, with and without management present, and discussed the results of their examinations, their evaluations of the Company’s internal controls, and the overall quality of the Company’s financial reporting. Management represented to the committee that the Company’s financial statements were prepared in accordance with U.S. generally accepted accounting principles. The committee has reviewed and discussed the financial statements with management and the independent registered public accounting firm, including their judgments as to the quality, not just the acceptability, of the Company’s accounting principles and such other matters as are required to be discussed with the committee under the auditing standards of the Public Company Accounting Oversight Board.

 

We have reviewed and discussed with Ernst & Young LLP the matters required to be discussed pursuant to Statement on Auditing Standards No. 61, as amended or supplemented (AICPA, Professional Standards, Vol. 1, AU Section 380). We have received from Ernst & Young LLP the written disclosures and letter required by the applicable requirements of the Public Company Accounting Oversight Board regarding communications with the Audit Committee with respect to independence. We have discussed with Ernst & Young LLP matters relating to its independence, including a review of both audit and non-audit fees, and considered the compatibility of non-audit services with such independence.

 

In reliance on the reviews and discussions referred to above, the committee recommended to the board of directors (and the board has approved) that the audited financial statements be included in the Annual Report on Form 10-K for the fiscal year ended January 30, 2010 for filing with the Securities and Exchange Commission. The committee has retained Ernst & Young LLP as the Company’s independent registered public accounting firm for fiscal year 2010.

 

The members of the committee are not professionally engaged in the practice of auditing or accounting. Members of the audit committee rely without independent verification on the information provided to them and on the representations made by management and the advice and assurances of the independent registered public accounting firm. While the committee has the responsibilities and powers set forth in its charter, it is not the duty of the committee to plan or conduct audits or to determine that the Company’s financial statements are complete and accurate and are in accordance with U.S. generally accepted accounting principles. This is the responsibility of management and the independent registered public accounting firm. Nor is it the duty of the committee to conduct investigations or to assure compliance with laws and regulations and the Company’s business conduct policies. Accordingly, the oversight provided by the committee should not be considered as providing an independent basis for determining that management has established and maintained appropriate internal controls, that the financial statements have been prepared in accordance with U.S. generally accepted accounting principles, or that the audit of

the Company’s financial statements by the independent registered public accounting firm has been carried out in accordance with auditing standards of the Public Company Accounting Oversight Board.

 

AUDIT COMMITTEE

 

Harry E. Rich, Chair
Andrew N. Baur
Timothy F. Finley

 

We have incurred the following fees for professional services rendered by Ernst & Young LLP, our independent registered public accounting firm, for services rendered in fiscal year 2008 and fiscal year 2009:

 

 

As described in the audit committee charter, it is the audit committee’s policy and procedure to review and consider and ultimately pre-approve, where appropriate, all audit and non-audit engagement services to be performed by the independent registered public accounting firm. The audit committee’s pre-approval policy is attached to the audit committee charter which is attached as Appendix A to this proxy statement. Generally, each year the audit committee reviews and approves the audit services and the estimated audit fees for the following year, with projections updated quarterly and the committee pre-approving any amounts exceeding original estimates. Annually, and otherwise as necessary, the committee reviews and approves all non-audit services and the estimated fees for such services for the current fiscal year. Recurring services are generally approved by category. Non-recurring services are generally approved by category as are individual projects exceeding a certain amount. Should an engagement need pre-approval before the next audit committee meeting, authority to grant approval is delegated to the audit committee chairman. The audit committee approved all of Ernst & Young LLP’s services for the periods referred to in the table above.

 

The following table sets forth certain information, as of April 1, 2010, except as set forth below, concerning the beneficial ownership of our common stock for:

 

 

Except as otherwise indicated below, each of the entities or persons named in the table has sole voting and investment power with respect to all shares of common stock beneficially owned by him, her or it.

 

 

 

 

 

 

The following provides compensation information pursuant to the scaled disclosure rules applicable to “smaller reporting companies” under SEC rules and may contain statements regarding future individual and Company performance targets and goals. These targets and goals are disclosed in the limited context of the Company’s compensation programs and should not be understood to be statements of management’s expectations or estimates of results or other guidance. We specifically caution investors not to apply these statements to other contexts.

 

Overview

 

The compensation committee sets the compensation of the Company’s executive officers. The Company’s executive compensation programs are intended to align executive compensation with our business objectives and individual performance and to enable us to attract, retain and reward executive officers who contribute to our long-term success. Generally, the committee considers and evaluates the Company’s performance and goals, our Chief Executive Officer’s recommendations and financial performance measures and other factors. Generally, as employees advance to higher levels an increasing proportion of their pay is intended to be linked to performance over the long-term, including equity compensation.

 

The compensation of Peter Edison, our Chief Executive Officer, and the Company’s other executive officers identified in our Summary Compensation Table in this proxy statement, who we refer to as the “named executive officers,” consists of a combination of base salary, bonuses and equity-based compensation. Executive officers and all salaried employees also receive a benefits package. Pursuant to employment agreements, the named executive officers are also entitled to certain compensation on a termination of employment.

 

Compensation of Named Executive Officers

 

The Company incurred net losses in fiscal years 2007, 2008 and 2009. In light of these losses, in the first quarter of fiscal years 2008, 2009 and 2010, the Committee limited increases in salaries in favor of bonuses, including equity awards, based on performance measures and individual merit.

 

Cash Bonuses.   For fiscal year 2009, the Company entered into cash bonus arrangements with the executive officers consistent with our Cash Bonus Plan. In 2009, the Committee established performance objectives based on a percentage of the officer’s cumulative salary with the performance objective based on the Company’s adjusted EBITDA, which was generally defined in the same manner as was for purposes of a financial covenant in the Company’s $7.5 million subordinated secured term loan, during the bonus period. For fiscal year 2009, for any bonus to have been paid adjusted EBITDA must have been at least $8.8 million, in the case of Mr. Edison, and at least $8.0 million, in the case of the other officers. Maximum bonuses were payable if adjusted EBITDA was $14.1 million or more. The size of these potential bonuses ranged between 12.5% and 99.17% of cumulative salary, in the case of Mr. Edison, and between 7.50% and 75% of cumulative salary, in the case of the other officers, depending on the level of adjusted EBITDA. The Committee also approved potential subjective bonuses for each named executive officer based on an amount equal to 12.5% of the officer’s cumulative (base) salary upon (i) the achievement of qualitative and other criteria relating to that officer’s duties, as communicated to that officer, including goals based on the budget, brand and organizational improvements and financial flexibility in the case of Mr. Edison, and similar goals for each of the other named executive officers based on that officer’s position, and (ii) the Company’s adjusted EBITDA for the bonus period being at least $8.0 million. No amounts were earned or paid with respect to any of these bonus arrangements.

 

For fiscal year 2010, the Company entered into cash bonus arrangements with the executive officers similar to the 2009 cash bonus arrangements. In 2010, the Committee established performance objectives based on a percentage of the officer’s cumulative salary with the performance objective based on the Company’s pre-tax profit during the bonus period. For fiscal year 2010, for any such bonus to be paid, pre-tax profit must be at least $1. Maximum bonuses are payable if pre-tax profit is $4,000,000 or more. The size of the potential bonuses depend on the level of pre-tax profit, and range between 35.00% and 99.17% of cumulative salary in the case of Mr. Edison, and between 30.00% and 75.00% of cumulative salary in the case of the other officers The Committee also approved potential subjective bonuses for each named executive officer bonus equal to 12.5% of each officer’s cumulative

salary payable if (i) the officer achieves certain qualitative and other criteria relating to that officer’s duties, as communicated separately to each officer, and (ii) the Company earns a pre-tax profit of at least $1.

 

Equity Awards .   In the past we have employed three types of equity-based awards: performance shares and restricted stock granted under our 2005 Incentive Compensation Plan and stock options granted under our 2003 Stock Option Plan. The amount of the awards and allocation was based on the Committee’s analysis and other factors, including an estimate of the value of the awards. In 2006 and 2007, the Committee determined to de-emphasize stock options in favor of performance share awards based on sales and return on average assets over a three year period. In 2008 and 2009 and the spring of 2010, the Committee determined to grant stock options, and for 2009, restricted stock, to its named executive officers and certain other employees. No additional performance shares have been issued after 2007.

 

Performance Share Awards .   The minimum performance objectives for the performance share awards granted in 2006 and 2007 covering the three-year performance period ended January 31, 2009 and January 30, 2010, respectively, were not met, resulting in no payouts under these awards. An award of performance shares represents the right of the participant to receive shares of our common stock (or equivalent value) if specified performance objectives are achieved. No dividends or voting rights apply to the awards during the performance period. For fiscal year 2007, the committee set the performance objectives based on our compound annual growth rate in sales (“CAGR”) and our return on average assets (“ROAA”), both as defined in the awards. The committee chose these performance measures because they reflected the Company’s long-term goals of sales growth and the efficient use of Company resources while maximizing profitability. For the fiscal year 2007 awards, each named executive officer would have received the applicable target award if both the Company’s CAGR equaled or exceeded 10% and the Company’s ROAA equaled or exceeded 4.5% over the three fiscal year performance period from 2007 through 2009. Participants would have been entitled to awards ranging between the threshold award, which was equal to 20% of the target award, and a maximum award of up to 200% of the target award determined by multiplying the percentages set forth in a matrix, calculated in the discretion of the committee, by the target award. Payment of any performance award was subject to the achievement of the minimum performance objectives (2.5% CAGR and 3.0% ROAA). No more than the maximum award could be paid to any participant pursuant to the award. Generally, the performance awards did not vest until the end of the performance period, assuming continued employment. Because these awards lapsed with no payout, they are not referred to in the compensation tables below.

 

Stock Options .   There were no stock option awards in fiscal 2009. However, during fiscal year 2009, each of the named executive officers voluntarily surrendered, for no current or future consideration, prior stock options awards with exercise prices ranging from $7.75 to $20.06. The number of awards for each named executive officer are set forth in the Outstanding Equity Awards at Fiscal Year-End table below. In addition, on April 20, 2010 the committee awarded additional stock options to the named executive officers with an exercise price of $2.50 per share, with vesting over a five year period.

 

Restricted Stock .   On March 12, 2009, restricted stock was granted to the named executive officers in the following amounts: Mr. Edison — 18,000 shares; Mr. Tusman — 18,000 shares; and Mr. VanderPluym — 15,000 shares. These awards and restricted stock previously granted to the named executive officers on October 3, 2007 is shown in the Outstanding Equity Awards At Fiscal Year-End table.

Summary Compensation Table

 

The following table sets forth certain information with respect to the compensation paid or awarded by us to our Chief Executive Officer, Peter Edison, and our two most highly compensated other executive officers (the “named executive officers”) for the last two fiscal years.

 

 

 

 

Outstanding Equity Awards at Fiscal Year-End

 

The following table provides information on the holdings of unexercised or unvested stock options and restricted stock awards held by our named executive officers as of the end of fiscal year 2009.

 

 

 

 

Employment Agreements and Termination of Employment

 

Each of our executive officers serve at the pleasure of our board of directors. We have entered into employment agreements with each of our named executive officers which contain provisions requiring us to make payments upon certain termination events. In addition, participants in our equity compensation plans may be entitled to accelerated vesting of their awards in certain circumstances. Participants in our Cash Bonus Plan or our discretionary cash bonuses that terminate employment with us for any reason are not entitled to receive any bonus under the plan for such year.

 

The information below describes certain compensation that may become payable as a result of the events described below. These benefits are in addition to benefits available generally to salaried employees, including distributions under our 401(k) plan, described below, and accrued benefits under our plans and arrangements, including vacation pay or other accrued benefits under our medical and dental insurance plans, which are not generally described. Equity awards for our named executive officers as of January 30, 2010 are set forth under “Outstanding Equity Awards at Fiscal Year-End” above.

 

Employment Agreements .   Mr. Edison’s agreement has a term of three years, commencing on February 10, 2004, with an additional year added on each anniversary of that date. Mr. Tusman’s agreement was entered into in September 2002 for an initial term of two years, renewable automatically for additional two-year terms. Mr. VanderPluym’s agreement was originally entered into in December 2003 and amended and restated in August

2006, has a term of one year, and is renewable automatically for additional one-year terms in August of each year. The terms renew automatically unless notice of non-extension is provided by either party.

 

As compensation for services, each named executive officer receives an annual base salary, generally subject to minimum amounts, as determined, or recommended to our board of directors for determination, by our compensation committee, which were last increased in March 2006 (September 2007 for Mr. VanderPluym) as follows: P. Edison, $350,000, S. Tusman, $265,000 and J. VanderPluym, $270,000. Each of these named executive officers is also entitled to participate in bonus plans and other benefit plans, including our Cash Bonus Plan and any other cash bonus arrangements. As required by the agreements, we have purchased a long-term disability insurance policy for the benefit of Mr. Edison and we pay the annual premium on a life insurance policy for the benefit of Mr. Tusman.

 

The agreements also include confidentiality provisions applicable during the term or thereafter and non-competition provisions that generally end one year after termination. Such provisions generally apply regardless of the reason for termination or if the Company breaches the agreement. Mr. Edison’s agreement generally prohibits competition and the solicitation of our employees for two years, subject to certain limitations.

 

The agreements may be immediately terminated by us for cause (as defined in the agreements, which in the case of Mr. VanderPluym includes the elimination of his position). The agreements for Messrs. Edison and Tusman may also be terminated by us or the employee, without cause, upon 90 days notice by either party. Each agreement also terminates in the event of death or disability (as defined in each agreement). In the case of Mr. VanderPluym, in the event of a change of control the agreement may also be terminated, without cause, upon 30 days notice.

 

Each of the agreements contain provisions that may require us to make additional payments in certain termination events. In the event of termination by us for cause, death, or in the case of Messrs. Edison and Tusman, voluntary termination by the employee, generally each employee is entitled only to any accrued salary and benefits.

 

In the event of disability, Messrs. Edison and VanderPluym are generally entitled only to their accrued salary and benefits, except that Mr. Edison would be entitled to the proceeds of his disability policy.

 

None of the agreements require payments solely as a result of a change of control. The agreements also provide for the following payments:

 

 

 

Stock Options .   Our named executive officers hold non-qualified stock options under our 2003 Stock Option Plan. Generally, all stock options must be exercised before an option holder’s termination of employment. However, (i) if termination occurs with our consent, the compensation committee may permit an optionee to exercise any currently exercisable options within three months of termination; (ii) if termination occurs as the result of a specified divestiture, currently exercisable options may be exercised within three months of termination; (iii) if termination is due to disability, the optionee may exercise any options exercisable at termination within one year after termination; (iv) upon a termination by retirement (at age 72 for directors and Mr. Edison and 65 for others) or death, all of the optionee’s options may be exercised immediately and will remain exercisable for up to one year; and (v) upon a change of control (as defined below) all options become exercisable. Generally, no option may be exercised after ten years from the date on which the option was granted.

 

The options generally are non-transferable. The compensation committee has significant discretion to prescribe, amend and rescind rules relating to the plan. The exercise price may be paid by cash, our common stock or any combination of the foregoing in the discretion of the committee, subject to limitations set forth in the plan. Exercisability is also conditioned on the Company maintaining an effective registration statement relating to the common stock underlying the options.

 

Performance Shares .   Each of our named executive officers was granted performance shares under our 2005 Incentive Compensation Plan in fiscal years 2006 and 2007. An award of performance shares represents the right to receive shares of common stock (or equivalent value in the compensation committee’s discretion) if specified performance objectives are achieved. Performance shares granted in fiscal years 2006 and 2007 lapsed without the minimum performance objectives being met. For information regarding the performance objectives applicable to the performance awards held by our executive officers as of January 30, 2010, see “— Compensation of Named Executive Officers — Performance Share Awards” above.

 

In order to be entitled to receive any payment in respect of performance share awards under our 2005 Incentive Compensation Plan, a participant must have been in the employ of the Company on the expiration of the relevant performance period and must have been continuously in the employ of the Company from the time of the performance share award except for leaves of absence which may be approved by our compensation committee. However, the compensation committee could have made a full, pro-rata, or no share distribution as it may determine, to a participant whose employment terminates on account of death, disability, retirement or otherwise prior to the time the participant is entitled to receive distribution in respect of performance share awards. In the event of a change of control (as defined below), participants then holding such awards are entitled to receive the performance shares (or equivalent value), free of any conditions and as if the specified performance periods had elapsed and the performance objectives had been fully achieved. Payout of performance shares awards must occur within two and one-half months after the end of the calendar year in which the performance period ends. The committee has plenary authority to interpret the plan and to prescribe, amend and rescind rules and regulations relating to the plan.

 

Restricted Stock .   Restricted stock awards under our 2005 Incentive Compensation Plan are generally forfeited if the recipient is terminated, with or without cause, prior to vesting. However, the committee retains the discretion of vest in full, pro-rata, or not at all, restricted stock awards upon death, disability, retirement or otherwise.

 

Change of Control .   For Mr. Edison’s employment agreement, a change of control is generally defined as: (i) a person or group acquiring beneficial ownership (as defined in the agreement) of more shares of our common

stock than: (X) the number held by Mr. Edison, provided that this does not occur because he has reduced the number of shares he owns by a specified amount, or (Y) 50% of our common stock, or (ii) approval by our shareholders of a merger, sale of assets, or other specified transactions, in which persons who were our shareholders immediately prior to such transaction would not thereafter own more than 50% the combined voting power of the successor company, unless Mr. Edison owns 10% or more of our common stock and votes to approve such transaction, or (iii) liquidation or dissolution of the Company. More than one of our shareholders has filed a Schedule 13G and a Form 4 with the SEC reporting beneficial ownership of our common stock in excess of the amount beneficially owned by Mr. Edison.

 

For the employment agreement of Mr. VanderPluym, a change of control is generally defined as: (i) a sale by our shareholders of more than 50% of our common stock; (ii) a sale of substantially all of our assets; or (iii) a reorganization, merger or consolidation, resulting in our shareholders immediately prior to such transaction thereafter owing less than 50% of the combined voting power of the resulting company.

 

Our 2003 Stock Option Plan and our 2005 Incentive Compensation Plan generally define a change of control as: (i) the acquisition of beneficial ownership of 50% or more of our common stock or combined voting power by any person, entity or group (as defined in the plan), except for Peter Edison and the Company; (ii) specified changes to our incumbent board of directors; or (iii) approval by our shareholders of a reorganization, merger or consolidation in which our then current shareholders would not thereafter own more than 50% of our voting stock or of a liquidation or dissolution of the Company or of the sale of all or substantially all of the assets of the Company.

 

401(k) Plan .   The Company maintains a qualified 401(k) savings plan which allows executives to defer from 1% of cash compensation up to the maximum amount allowed under Internal Revenue Service guidelines. The Company can make discretionary contributions from time to time as determined by the Company. Participants are always vested in their own contributions to the plan and are fully vested in Company contributions generally after a three-year vesting period.

 

As of January 30, 2010, we had two equity compensation plans in effect under which our equity securities were authorized for issuance to employees or non-employee directors in exchange for goods or services. The Bakers Footwear Group, Inc. 2003 Stock Option Plan (the “2003 Plan”), was approved by our shareholders prior to our initial public offering and in June 2006, as amended. The Bakers Footwear Group, Inc. 2005 Incentive Compensation Plan (the “2005 Plan”) was approved by our shareholders at our 2005 annual meeting. The following table summarizes information about our equity compensation plans which authorize the issuance of equity securities as of January 30, 2010.

 

Equity Compensation Plan Table

 

 

 

 

You should also refer to the information regarding our incentive plans set forth in Note 14 to our Financial Statements in our 2009 Annual Report on Form 10-K.

 

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires all Company executive officers, directors, and persons owning more than 10% of any registered class of our capital stock to file reports of ownership and changes in ownership with the SEC. We believe that during the fiscal year ended January 30, 2010, our executive officers, directors and persons owning more than 10% of any registered class of our capital stock timely complied with all applicable filing requirements. However, Peter Edison, our Chairman, Chief Executive Officer and President, did file one Form 4 late reporting one transaction in April 2010. Please see “Stock Ownership of Management and Certain Beneficial Owners” which is incorporated by reference herein. In making these disclosures, we relied solely on a review of copies of such reports filed with the SEC and furnished to us and written representations from certain of our executive officers and directors that no other reports were required.

 

Shareholder Proposals

 

Proposals Included in Proxy Statement

 

Proposals of shareholders of the Company that are intended to be presented by such shareholders at the Company’s 2011 annual meeting and that shareholders desire to have included in the Company’s proxy materials relating to such meeting must be received by the Company at its principal executive offices no later than January 17, 2011, which is 120 calendar days prior to the anniversary of this year’s mailing date. Upon timely receipt of any such proposal, the Company will determine whether or not to include such proposal in the proxy statement and proxy in accordance with applicable regulations governing the solicitation of proxies.

 

Proposals Not Included in the Proxy Statement

 

If a shareholder wishes to present a proposal at the Company’s annual meeting in 2011 or to nominate one or more directors and the proposal is not intended to be included in the Company’s proxy statement relating to that meeting, the shareholder must give advance written notice to the Company prior to the deadline for such meeting determined in accordance with the Company’s by-laws. For business to be properly brought before a meeting by a shareholder of record, or to nominate a person for election as a director, the shareholder must have given timely notice thereof in writing to our Secretary. To be timely, a shareholder’s notice must be delivered to or mailed and received by our Secretary at our principal executive offices not less than 90 days nor more than 120 days prior to the meeting; provided, however, that in the event that less than 100 days’ notice or prior public notice of the date of the meeting is given or made to shareholders, notice by the shareholder to be timely must be so received not later than the 10th day following the day on which such notice of the date of the meeting was mailed or on which such public notice was given. These time limits also apply in determining whether notice is timely for purposes of rules adopted by the SEC relating to exercise of discretionary voting authority. Our restated bylaws contain specific requirements for the notice, which are summarized below. For nominations, a shareholder’s notice must set forth as to each proposed nominee:

 

 

For all other proposals, as to each matter of business proposed:

 

 

Please see our restated bylaws for a more complete description of this process. Our shareholders may also provide recommendations for nominations, or may otherwise contact us. See “Information Regarding Board of Directors and Committees — Director Nominations” and “— Shareholder Communications Policy.”

 

Other Information

 

The board of directors knows of no matter, other than those referred to in this proxy statement, which will be presented at the meeting. However, if any other matters, including a shareholder proposal excluded from this proxy statement pursuant to the rules of the SEC, properly come before the meeting or any of its adjournments, the person or persons voting the proxies will vote in accordance with their best judgment on such matters. Should any nominee for director be unable to serve or for good cause will not serve at the time of the meeting or any adjournments thereof, the persons named in the proxy will vote for the election of such other person for such directorship as the board of directors may recommend, unless, prior to the meeting, the board has eliminated that directorship by reducing the size of the board. The board is not aware that any nominee herein will be unable to serve or for good cause will not serve as a director.

 

The Company will bear the expense of preparing, printing and mailing this proxy material, as well as the cost of any required solicitation. Directors, officers or employees of the Company may solicit proxies on behalf of the Company. In addition, the Company will reimburse banks, brokerage firms, and other custodians, nominees and fiduciaries for reasonable expenses incurred in forwarding proxy materials to beneficial owners of the Company’s stock and obtaining their proxies.

 

You are urged to vote promptly by marking, signing, dating, and returning your proxy card. You may revoke your proxy at any time before it is voted, and if you attend the meeting, as we hope you will, you may vote your shares in person.

Annual Report

 

This proxy statement has been accompanied with or preceded by our Annual Report to Shareholders, which contains our Annual Report on Form 10-K, excluding exhibits, as filed with the SEC.

 

We will provide a copy of our Annual Report on Form 10-K for our last fiscal year, without charge, to each person solicited, upon written request to our Secretary at our principal executive offices, 2815 Scott Avenue, St. Louis, Missouri 63103.

 

By Order of the Board of Directors,
BAKERS FOOTWEAR GROUP, INC.

 

 

CHARLES R. DANIEL, III

Secretary

 

May 17, 2010

 

AUDIT COMMITTEE CHARTER

 

BAKERS FOOTWEAR GROUP, INC.

 

 

The Audit Committee (the “Committee”) will assist the Board of Directors (the “Board”) of Bakers Footwear Group, Inc. (the “Company”) in fulfilling the Board’s oversight responsibilities with regard to the Company’s accounting and financial reporting process and the Company’s independent registered public accounting firm. The duties of the Committee are ones of oversight. It is not the duty of the Committee to plan or conduct audits or to determine that the Company’s financial statements are complete and accurate and prepared in accordance with generally accepted accounting principles. The primary responsibility for the Company’s financial statements and internal controls rests with the Company’s management. Similarly, it is not the duty of the Committee to conduct investigations or to assure compliance with laws and regulations or to monitor the Company’s legal compliance programs. The primary responsibility for these matters also rests with the Company’s management. The Board of Directors recognizes that the Committee necessarily will rely on the advice and information it receives from the Company’s management, internal auditors and the independent registered public accounting firm. Recognizing these inherent limits on the scope of the Committee’s review, however, the Board expects the Committee to exercise independent judgment in assessing the quality of the Company’s financial reporting process and its internal controls. The Board also expects that the Committee will maintain free and open communication with the other directors, the Company’s independent registered public accounting firm and internal auditors and the financial management of the Company.

 

 

The Committee shall be comprised of at least three members of the Board of Directors, with the number of members to be determined from time to time by the Board. The members shall be designated by the Board of Directors, and the composition of the Committee shall, in the judgment of the Board, be such as to comply with the rules of the Securities and Exchange Commission and Rule 4350(d)(2) of The Nasdaq Stock Market Rules, or the applicable rule governing audit committees of such other national market system or exchange on which the Company’s stock may be traded from time to time, or any successor rules.

 

 

The Committee shall meet at least four (4) times annually, or more frequently as the Committee may from time to time determine may be appropriate. No less than quarterly, these meetings shall include separate executive sessions with the Company’s Chief Financial Officer, the independent registered public accounting firm and the Controller. Unless the Board has previously designated the Chair, the members of the Committee shall designate a Chair by majority vote. Two or more committee members shall constitute a quorum.

 

Teleconferences may also be held at such other times as shall be reasonably requested by the Chair of the Board, Chair of the Committee, independent registered public accounting firm, or the Company’s financial management.

 

At the invitation of the Committee Chair, the meetings will be attended by the Chair of the Board, Chief Executive Officer, Chief Financial Officer, Controller, representatives from the independent audit firm, and/or other persons as are appropriate to matters under consideration.

 

 

The duties and responsibilities of the Committee shall include the following:

 

 

1. Receive the written disclosures and letter from the Company’s independent registered public accounting firm contemplated by Independence Standards Board Standard No. 1, Independence Discussions with Audit

Committees, as the same may be modified or supplemented, and discuss with the independent registered public accounting firm any issues required to be discussed regarding their objectivity and independence. The Committee shall monitor all relationships between the Company and the Company’s independent registered public accounting firm for compliance with the auditor independence requirements of the Securities and Exchange Commission, including, but not limited to, rotation of audit partners, employment by the Company of former employees of the Company’s independent registered public accounting firm and compensation practices of the independent registered public accounting firm.

 

2. The Committee shall implement procedures to assure that the Company’s independent registered public accounting firm does not provide any services to the Company that are prohibited by the rules of the Securities and Exchange Commission or the Nasdaq Stock Market. The Committee shall pre-approve all audit and non-audit services (and related fees) that are to be provided to the Company by the Company’s independent registered public accounting firm, pursuant to pre-approval policies and procedures set forth in Appendix A hereto. The Committee shall consider any significant non-audit assignments awarded to the independent registered public accounting firm and determine whether or not these have any impact on the independence of the independent registered public accounting firm in the performance of the annual audit.

 

3. Annually evaluate the qualifications, quality control procedures, prior performance and independence of the Company’s current independent registered public accounting firm, which shall be ultimately accountable to this Committee, as representatives of the shareholders.

 

4. The Committee shall be directly responsible for the appointment, compensation, retention and oversight of the work of the independent registered public accounting firm (including resolution of disagreements between management and the independent registered public accounting firm regarding financial reporting) and the independent registered public accounting firm shall report directly to the Committee. Based on the independent registered public accounting firm’s representations regarding independence and the results of the Committee’s evaluation of the Company’s independent registered public accounting firm, the Committee shall be directly responsible for determining whether the independent registered public accounting firm should be reappointed or replaced. If a determination is made to replace the current independent registered public accounting firm, the Committee shall be directly responsible for the appointment of such replacement.

 

5. Meet with the independent registered public accounting firm and financial management of the Company in advance of the annual audit to review its proposed scope, the proposed scope of the quarterly reviews, and the procedures to be followed in conducting the audit and the reviews.

 

6. Review and approve the independent registered public accounting firm’s annual engagement letter, and the compensation of the independent registered public accounting firm.

 

7. Review with the independent registered public accounting firm any matters required to be discussed by Statement of Auditing Standards No. 61, as the same may be modified or supplemented.

 

8. Review and discuss, prior to filing, the Company’s financial statements, including Management’s Discussion and Analysis of Financial Condition and Results of Operations, proposed to be included in the Company’s Annual Report on Form 10-K with the Company’s financial management and independent registered public accounting firm, including discussions about (i) critical accounting policies used by the Company, (ii) alternative accounting treatments that have been discussed by the independent registered public accounting firm and management and the ramifications of using those alternatives, (iii) other written communications between the independent registered public accounting firm and management (including any management letter or schedule of unadjusted differences), (iv) other major issues regarding accounting and auditing principles and practices, (v) consideration of the effect of regulatory accounting initiatives, as well as off-balance sheet structures on the financial statements, and (vi) the adequacy of the Company’s internal controls. If deemed appropriate after such review and discussion, recommend to the Board of Directors that the financial statements be included in the Annual Report on Form 10-K.

 

9. Review and discuss, prior to issuance or filing, the Company’s financial statements, including Management’s Discussion and Analysis of Financial Condition and Results of Operations, proposed to be included in the Company’s public earnings reports and the Company’s Quarterly Reports on Form 10-Q with the Company’s

financial management and independent registered public accounting firm, including the results of the independent registered public accounting firm quarterly reviews. The Chair of the Committee may represent the entire Committee for purposes of the Form 10-Q review.

 

10. Discuss at least annually with the Company’s independent registered public accounting firm the following: the adequacy and effectiveness of the Company’s internal financial controls; the management letter issued by the independent registered public accounting firm and management’s response thereto; actions management has taken or progress it has made in addressing issues raised by the independent registered public accounting firm; any disagreements with management; and major areas of financial risk.

 

11. Review with management and the independent registered public accounting firm any comments or inquiries from the Securities and Exchange Commission relating to the Company’s financial statements or other financial matters included in the Company’s filings with the Commission.

 

 

1. Approve the annual audit plan, charter and staffing of the internal audit department, or the engagement of internal auditing consultants or similar persons.

 

2. Discuss at least annually with the internal auditors or internal auditing consultants the effectiveness of the Company’s internal accounting controls, as well as any significant letters or reports to management issued by the internal auditors, and management’s responses thereto.

 

3. Review annually with the independent registered public accounting firm and the controller the coordination of audit efforts to ensure completeness of coverage, reduction of redundant efforts and the effective use of audit resources.

 

 

1. Discuss at least annually with the Company’s management and outside counsel the effectiveness of the Company’s legal compliance programs, any legal matters that may have a material impact on the Company’s financial statements and any material reports or inquiries received from regulators or government agencies.

 

2. Review, on an ongoing basis, for potential conflict of interest situations all related party transactions, including any transactions required to be disclosed pursuant to Item 404(a) of Regulation S-K (“Item 404(a)”) promulgated by the Securities and Exchange Commission, involving the Company and any of the Company’s principal shareholders or members of the Board of Directors or senior management or any immediate family member of any of the foregoing. If the Committee determines that any such related party transaction creates a conflict of interest situation or would require disclosure under Item 404(a), then the transaction must be approved by the Committee prior to the Company entering into such transaction or ratified thereafter. The Chair of the Committee is delegated the authority to approve such transactions on behalf of the full Committee, provided such approval is thereafter reviewed by the Committee. Transactions or relationships previously approved by the Committee or in existence prior to the formation of the Committee do not require approval or ratification. In reviewing related party transactions, the Committee has discretion to consider any and all facts and circumstances that it deems appropriate.

 

3. Authorize and oversee investigations deemed appropriate by the Committee into any matters within the Committee’s scope of responsibility as described in this Charter or as may subsequently be delegated to the Committee by the Board of Directors, with the power to retain and set the fees for, at Company expense, independent counsel, accountants and other advisors and experts to assist the Committee if deemed appropriate in the discretion of the Committee.

 

4. Prepare the disclosure required of this Committee by S-K Item 407(d)(3) of the Securities and Exchange Commission regulations to be included in the Company’s annual proxy statement.

 

5. Review and reassess the adequacy of this Charter on an annual basis and make recommendations to the Board of Directors concerning any changes deemed appropriate; ensure that this Charter is filed with the Securities and Exchange Commission, as required.

 

1. Establish procedures for the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls or auditing matters and for the confidential, anonymous submission by Company employees of concerns regarding questionable accounting or auditing matters.

 

2. Report actions of the Committee periodically to the Board of Directors with such recommendations for action as the Committee deems appropriate.

 

3. Maintain minutes or other records, either separately or within the minutes of the Board of Directors, of meetings and activities of the Committee.

 

4. The Company shall provide the Committee with adequate funding, as determined by the Committee, for payment of compensation to the Company’s independent registered public accounting firm and to any advisors engaged by the Committee.

 

5. The Committee shall satisfy its responsibilities, if any, pursuant to any codes of conduct or policies as determined from time to time by the Board.

Appendix A

 

Audit and Non-Audit Service Pre-Approval Policy

 

Audit Fees :

 

Annually, the Committee will review and approve the audit services and the estimated audit fees for the following fiscal year. The projections will be updated quarterly and the Committee will pre-approve any amounts exceeding the original estimates.

 

Non-Audit Services and Fees :

 

Annually, and otherwise as necessary, the Committee will review and approve all non-audit services and the estimated fees for such services for the current fiscal year. For recurring services such as employee benefit plans, tax compliance, due diligence, internal control reviews, statutory filings and import/export reviews the Committee will review and approve the services and estimated total fees therefor by category of service. The projections will be updated quarterly and the Committee will pre-approve any amounts exceeding the original estimates. For non-recurring services such as tax or other consulting, the Committee will review and approve the services and estimated fees by category of service and all individual projects exceeding an amount determined by the Committee from time to time. The projections will be updated quarterly and the Committee will pre-approve any amounts exceeding the original estimates and any new projects exceeding an amount determined by the Committee from time to time.

 

Approval Matrix :

 

Should an engagement need pre-approval before the next Committee meeting, authority to grant such approval is delegated to the Audit Committee Chairman. Such approval will be reviewed with the entire Committee at the next quarterly meeting.

 

COMPENSATION COMMITTEE CHARTER

 

BAKERS FOOTWEAR GROUP, INC.

 

 

The Compensation Committee (the “Committee”) will assist the Board of Directors (the “Board”) of Bakers Footwear Group, Inc. (the “Company”) in fulfilling the Board’s oversight responsibilities with regard to the compensation of the Company’s Board and management.

 

 

The Committee shall be comprised of at least three members of the Board of Directors, with the number of members to be determined from time to time by the Board. The members shall be designated by the Board of Directors, and all members of the Committee shall be independent pursuant to Rule 4200(a)(15) of The Nasdaq Stock Market Rules, or the applicable rule governing director independence of such other national market system or exchange on which the Company’s stock may be traded from time to time, or any successor rules.

 

 

The Committee shall meet regularly, or as the Committee may from time to time determine may be appropriate. Unless the Board has previously designated the Chair, the members of the Committee shall designate a Chair by majority vote. Two or more committee members shall constitute a quorum.

 

Teleconferences may also be held at such other times as shall be reasonably requested by the Chair of the Board, Chair of the Committee, independent auditor, or the Company’s financial management.

 

At the invitation of the Committee Chair, the meetings will be attended by the Chair of the Board, Chief Executive Officer, representatives from any compensation consultant retained by the Company, and/or other persons as are appropriate to matters under consideration.

 

 

The duties and responsibilities of the Committee shall include the following:

 

1. Determine or recommend to the Board for determination the total compensation package, including salaries, bonuses, stock options, benefits and other compensation arrangements, for the Chief Executive Officer and other executive officers of the Company. The Chief Executive Officer may not be present at Committee meetings during discussions of Chief Executive Officer compensation.

 

2. Supervise the administration of any Company employee benefit plans, equity-based compensation plans or profit sharing plans.

 

3. Oversee performance evaluations of the Company’s executive officers in light of the Company’s corporate goals and other objectives and issues regarding management succession.

 

4. Review and discuss with management the Compensation Discussion and Analysis proposed to be included in the Company’s proxy statement, Annual Report on Form 10-K or other filings with the Securities and Exchange Commission (“SEC Filings”), and, based on such review and discussion, recommend to the Board of Directors that such Compensation Discussion and Analysis be included in the SEC Filings. Prepare the Compensation Committee report required to be included in the Company’s SEC Filings.

 

5. Consult with Company management regarding compensation policies and practices.

 

6. Make recommendations to the Board of Directors of the Company concerning the adoption of any compensation plan in which management is eligible to participate, including the granting of stock options, performance share awards, restricted stock or other benefits under such plans.

 

7. The Committee shall have the authority to engage independent advisors, including compensation consultants, at Company expense as the Committee may determine necessary in carrying out its responsibilities hereunder.

 

8. Review this Charter on an annual basis and make recommendations to the Board of Directors concerning any changes deemed appropriate.

 

9. Report actions of the Committee periodically to the Board of Directors with such recommendations for action as the Committee deems appropriate.

 

10. Maintain minutes or other records, either separately or within the minutes of the Board of Directors, of meetings and activities of the Committee.

▼ FOLD AND DETACH HERE AND READ THE REVERSE SIDE ▼

Bakers Footwear (NASDAQ:BKRS)
Historical Stock Chart
From Apr 2024 to May 2024

Bakers Footwear (NASDAQ:BKRS)
Historical Stock Chart
From May 2023 to May 2024