Equity-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 Company's stockholders approved the Plan as well as successive amendments of the Plan, most recently on May 25, 2012. 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	(34,131,866	)
Common stock available for grant of stock-based awards as of December 31, 2018	1,067,134

For the years ended December 31, 2018, 2017 and 2016, total equity-based compensation was as follows:



	Years Ended December 31,
	2018		2017		2016
Restricted stock	$	16,720	$	16,616	$	16,494
Stock options	4,356		4,231		3,015
Total	$	21,076	$	20,847	$	19,509

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

Stock Options

Cash proceeds and intrinsic values related to total stock options exercised during December 31, 2018, 2017, 2016 are as follows:



	Years Ended December 31,
	2018		2017		2016
Proceeds from stock options exercised	$	13,036	$	16,433	$	10,713
Intrinsic value of stock options exercised	$	6,841	$	9,936	$	16,983

During the years ended December 31, 2018, 2017 and 2016, options to purchase approximately 773,351 shares of common stock with a weighted average exercise price of $26.38, 614,283 options with a weighted average exercise price of $22.68 and 483,033 options with a weighted average exercise price of $21.58 vested, respectively. As of December 31, 2018, there were unvested options relating to 1,651,337 shares of common stock outstanding with a total of $7,863 of unrecognized compensation cost and an average vesting period of 2.6 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 2018, 2017, and 2016:



	2018	2017	2016
Volatility	25.1% to 33.2%	23.0% to 26.4%	22.2% to 26.2%
Risk free interest rate	2.1% to 2.9%	1.5% to 2.0%	0.9% to 1.9%
Expected life in years	3.0 to 5.0	3.0 to 5.0	3.0 to 5.0
Dividend yield	1.7%	0.0%	0.0%
Weighted average fair value	$6.75	$5.94	$4.74

Activity relating to stock options granted under the Company’s plans and outside the plans during the three years ended December 31, 2018 is as follows:



	Number of Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
Outstanding at January 1, 2016	3,024,000		$	15.67
Granted	393,000		22.57
Exercised	(1,119,000	)	9.57
Forfeited	(49,000	)	20.39
Outstanding at December 31, 2016	2,249,000		19.81
Granted	1,593,000		25.03
Exercised	(983,000	)	16.49
Forfeited	(13,000	)	23.49
Outstanding at December 31, 2017	2,846,000		23.87
Granted	585,000		32.39
Exercised	(593,000	)	22.04
Forfeited	(23,000	)	22.59
Outstanding at December 31, 2018	2,815,000		$	26.03	4.7	$	11,911
Exercisable at December 31, 2018	1,164,000		$	25.27	3.8	$	5,813

The following table summarizes information about stock options at December 31, 2018:



	Options Outstanding			Options Exercisable
Range of Exercise Price	Number Outstanding	Weighted Average Remaining Contractual Life (in Years)	Weighted Average Exercise Price	Number Exercisable	Weighted Average Exercise Price
$17.97 to $21.97	164,000	1.9	$20.11	127,000	$20.02
$21.98 to $25.98	1,806,000	4.5	24.40	679,000	23.94
$25.99 to $29.99	532,000	5.7	28.08	245,000	26.77
$30.00 to $34.00	52,000	6.6	30.88	—	—
$34.01 to $38.01	261,000	4.7	35.85	113,000	35.95
	2,815,000	4.7	$26.03	1,164,000	$25.27

Restricted Stock

The following table summarizes restricted stock activity during the three years ended December 31, 2018:



	Number of Shares		Weighted Average Fair Value at Grant Date
Outstanding at January 1, 2016	6,083,000		$	16.88
Granted	651,000		22.87
Vested	(414,000	)	20.19
Forfeited	(33,000	)	22.30
Outstanding at December 31, 2016	6,287,000		17.29
Granted	413,000		25.11
Vested	(762,000	)	20.39
Forfeited	(64,000	)	23.65
Outstanding at December 31, 2017	5,874,000		17.37
Granted	509,000		31.70
Vested	(1,177,000	)	18.44
Forfeited	(71,000	)	25.61
Outstanding at December 31, 2018	5,135,000		$	18.42

As of December 31, 2018, the Company had $60,517 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 period of 4.5 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. The fair value of the restricted stock that vested during the years ended December 31, 2018, 2017 and 2016 was $36,122, $21,549 and $9,758, respectively.

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 2,194,586 restricted shares of the Company’s common stock at the then market price of $18.23, 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. On June 30, 2012, Mr. Madden exercised his right under his employment agreement to receive an additional restricted stock award and, on July 3, 2012, he was granted 2,840,013 restricted shares of the Company's common stock at the then market price of $14.09, which vests in equal annual installments over a six-year period commencing on December 31, 2018 and, thereafter, on each December 31 through December 31, 2023, subject to Mr. Madden’s continued employment on each such vesting date. On July 20, 2017, pursuant to the employment agreement, Mr. Madden was granted an option to purchase 225,000 shares of the Company's common stock at an exercise price of $26.77 per share, which option is exercisable in equal quarterly installments commencing on October 20, 2017. On March 1, 2017, pursuant to his employment agreement, Mr. Madden was granted an option to purchase 1,125,000 shares of the Company’s common stock at an exercise price of $24.90 per share, which option is exercisable in equal annual installments over a five-year period commencing on the first anniversary of the grant date. On June 18, 2018, pursuant to his employment agreement, 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 December 31, 2018, 4,946,738 shares remain unvested.