-Based Compensation

In March 2006, the Company's Board of Directors approved the Steven Madden, Ltd. 2006 Stock Incentive Plan, as amended (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 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	35,199,000
Stock-based awards, including restricted stock and stock options granted, net of expired or cancelled	(33,861,447	)
Common stock available for grant of stock-based awards as of September 30, 2018	1,337,553

Total equity-based compensation for the three and nine months ended September 30, 2018 and 2017 is as follows:



	Three Months Ended September 30,				Nine Months Ended September 30,
	2018		2017		2018		2017
Restricted stock	$	3,937	$	3,902	$	12,075	$	12,540
Stock options	1,168		1,005		3,265		3,140
Total	$	5,105	$	4,907	$	15,340	$	15,680

Equity-based compensation is included in operating expenses on the Company’s condensed consolidated statements of income.

Note K – Equity-Based Compensation (continued)

Stock Options

Cash proceeds and intrinsic values related to total stock options exercised during the three and nine months ended September 30, 2018 and 2017 are as follows:



	Three Months Ended September 30,				Nine Months Ended September 30,
	2018		2017		2018		2017
Proceeds from stock options exercised	$	1,686	$	5,663	$	12,801	$	11,312
Intrinsic value of stock options exercised	$	1,258	$	1,220	$	6,737	$	4,729

During the three and nine months ended September 30, 2018, options to purchase approximately 132,304 shares of common stock with a weighted average exercise price of $30.25 and options to purchase approximately 698,732 shares of common stock with a weighted average exercise price of $25.68 vested, respectively. During the three and nine months ended September 30, 2017, options to purchase approximately 84,533 shares of common stock with a weighted average exercise price of $23.15 and options to purchase approximately 523,545 shares of common stock with a weighted average exercise price of $22.23 vested, respectively. As of September 30, 2018, there were unvested options relating to 1,718,970 shares of common stock outstanding with a total of $8,883 of unrecognized compensation cost and an average vesting period of 2.8 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. The dividend yield is based on the Company's annualized dividend per share amount divided by the Company's stock price. The following weighted average assumptions were used for stock options granted during the nine months ended September 30, 2018 and 2017:



	2018	2017
Volatility	25.1% to 27.2%	23.0% to 26.4%
Risk free interest rate	2.1% to 2.7%	1.5% to 2.0%
Expected life in years	3.4 to 4.9	3.4 to 5.0
Dividend yield	1.7%	0.0%
Weighted average fair value	$6.52	$5.94

Note K – Equity-Based Compensation (continued)

Activity relating to stock options granted under the Company’s plans and outside the plans during the nine months ended September 30, 2018 is as follows:



	Number of Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
Outstanding at January 1, 2018	2,848,000		$	23.87
Granted	576,000		32.40
Exercised	(581,000	)	22.03
Forfeited	(23,000	)	22.59
Outstanding at September 30, 2018	2,820,000		$	26.00	4.9 years	$	26,128
Exercisable at September 30, 2018	1,101,000		$	24.72	4.0 years	$	11,607

Restricted Stock

The following table summarizes restricted stock activity during the nine months ended September 30, 2018 and 2017:



	2018				2017
	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,	5,873,000		$	17.37	6,287,000		$	17.29
Granted	372,000		31.47		389,000		24.92
Vested	(294,000	)	23.79		(320,000	)	22.17
Forfeited	(71,000	)	25.61		(51,000	)	23.39
Non-vested at September 30,	5,880,000		$	17.84	6,305,000		$	17.46

As of September 30, 2018, the Company had $59,527 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 4.8 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 June 18, 2018, pursuant to an employment agreement between the Company and its Creative and Design Chief, Steven Madden, Mr. Madden was granted an option to purchase 225,000 shares of the Company's common stock at an exercise price of $35.95 per share, which option is exercisable in equal quarterly installments commencing on September 18, 2018. As of September 30, 2018, 1,068,750 shares remain unvested.