-Based Compensation

In March 2006, the Company's Board of Directors approved the Steven Madden, Ltd. 2006 Stock Incentive Plan (the “Plan”) under which nonqualified stock options, stock appreciation rights, performance shares, restricted stock, other stock-based awards and performance-based cash awards may be granted to employees, consultants and non-employee directors. The stockholders approved the Plan on May 26, 2006. On May 25, 2007, the stockholders approved an amendment to the Plan to increase the maximum number of shares that may be issued under the Plan from 4,050,000 to 5,231,250. On May 22, 2009, the stockholders approved a second amendment to the Plan that increased the maximum number of shares that may be issued under the Plan to 13,716,000. On May 25, 2012, the stockholders approved a third amendment to the Plan that increased the maximum number of shares that may be issued under the Plan to 23,466,000. The following table summarizes the number of shares of common stock authorized for use under the Plan, the number of stock-based awards granted (net of expired or cancelled awards) under the Plan and the number of shares of common stock available for the grant of stock-based awards under the Plan:



Common stock authorized	23,466,000
Stock-based awards, including restricted stock and stock options granted, net of expired or cancelled	(19,287,000	)
Common stock available for grant of stock-based awards as of March 31, 2015	4,179,000

Note L – Equity-Based Compensation (continued)

Total equity-based compensation for the three months ended March 31, 2015 and 2014 is as follows:



	Three Months Ended March 31,
	2015		2014
Restricted stock	$	3,760	$	3,785
Stock options	998		1,139
Total	$	4,758	$	4,924

Equity-based compensation is included in operating expenses on the Company’s Condensed Consolidated Statements of Income.

Stock Options

Cash proceeds and intrinsic values related to total stock options exercised during the three months ended March 31, 2015 and 2014 are as follows:



	Three Months Ended March 31,
	2015		2014
Proceeds from stock options exercised	$	16,807	$	521
Intrinsic value of stock options exercised	$	27,446	$	586

During the three months ended March 31, 2015, options to purchase approximately 298,527 shares of common stock with a weighted average exercise price of $26.73 vested. During the three months ended March 31, 2014, options to purchase approximately 237,510 shares of common stock with a weighted average exercise price of $22.63 vested. As of March 31, 2015, there were unvested options relating to 814,923 shares of common stock outstanding with a total of $6,844,500 of unrecognized compensation cost and an average vesting period of 2.62 years.

The Company uses the Black-Scholes option-pricing model to estimate the fair value of options granted, which requires several assumptions. The expected term of the options represents the estimated period of time until exercise and is based on the historical experience of similar awards. Expected volatility is based on the historical volatility of the Company’s common stock. The risk free interest rate is based on the U.S. Treasury yield curve in effect at the time of the grant. With the exception of special dividends paid in November of 2005 and 2006, the Company historically has not paid regular cash dividends and thus the expected dividend rate is assumed to be zero. The following weighted average assumptions were used for stock options granted during the three months ended March 31, 2015 and 2014:



	2015	2014
Volatility	23.7% to 28.3%	29.7% to 31.8%
Risk free interest rate	0.99% to 1.60%	1.06% to 1.72%
Expected life in years	4.1 to 5.1	4.1 to 5.1
Dividend yield	0.00%	0.00%
Weighted average fair value	$8.48	$10.04

Note L – Equity-Based Compensation (continued)

Activity relating to stock options granted under the Company’s plans and outside the plans during the three months ended March 31, 2015 is as follows:



	Number of Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
Outstanding at January 1, 2015	3,428,000		$	19.48
Granted	41,000		34.74
Exercised	(1,190,000	)	14.12
Cancelled/Forfeited	(6,000	)	16.93
Outstanding at March 31, 2015	2,273,000		$	22.56	3.6 years	$	35,097
Exercisable at March 31, 2015	1,457,000		$	17.34	2.6 years	$	30,106

Restricted Stock

The following table summarizes restricted stock activity during the three months ended March 31, 2015 and 2014:



	2015				2014
	Number of Shares		Weighted Average Fair Value at Grant Date		Number of Shares		Weighted Average Fair Value at Grant Date
Non-vested at January 1,	4,067,000		$	24.69	4,257,000		$	24.24
Granted	191,000		35.80		112,000		35.78
Vested	(135,000	)	21.23		(116,000	)	24.54
Forfeited	—		—		(2,000	)	27.03
Non-vested at March 31,	4,123,000		$	22.84	4,251,000		$	24.54

As of March 31, 2015, the Company had $79,836 of total unrecognized compensation cost related to restricted stock awards granted under the Plan. This cost is expected to be recognized over a weighted average of 7.54 years. The Company determines the fair value of its restricted stock awards based on the market price of its common stock on the date of grant.

On January 3, 2012, the Company and its Creative and Design Chief, Steven Madden, entered into an amendment of Mr. Madden’s existing employment agreement, pursuant to which, on February 8, 2012, Mr. Madden was granted 1,463,057 restricted shares of the Company’s common stock at the then market price of $27.34, which will vest in equal annual installments over a seven-year period commencing on December 31, 2017 and, thereafter, on each December 31 through December 31, 2023, subject to Mr. Madden’s continued employment on each such vesting date. Pursuant to the contract, on June 30, 2012, Mr. Madden exercised his right to receive an additional restricted stock award, and, on July 3, 2012, he was granted 1,893,342 restricted shares of the Company's common stock at the then market price of $21.13, which will vest in the same manner as the aforementioned grant.