Stock-Based Compensation

9 Months Ended

Sep. 30, 2019

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Equity-Based Compensation

In February 2019, the Company's Board of Directors approved the Steven Madden, Ltd. 2019 Incentive Compensation Plan (the “2019 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 2019 Plan is the successor to the Company's Amended and Restated 2006 Stock Incentive Plan, as amended (the "2006 Plan"), the term of which expired on April 6, 2019. The Company's stockholders approved the 2019 Plan at the Company's annual meeting of stockholders held on May 24, 2019.

The following table summarizes the number of shares of common stock authorized for issuance under the 2019 Plan, the number of stock-based awards granted (net of expired or cancelled awards) under the 2019 Plan and the number of shares of common stock available for the grant of stock-based awards under the 2019 Plan:



Common stock authorized	11,000,000
Stock-based awards, including restricted stock and stock options granted, net of expired or cancelled	(453,425	)
Common stock available for grant of stock-based awards as of September 30, 2019	10,546,575

Total equity-based compensation for the three and nine months ended September 30, 2019 and 2018 is as follows:



	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
Restricted stock	$	4,695	$	3,937	$	14,250	$	12,075
Stock options	1,333		1,168		3,386		3,265
Total	$	6,028	$	5,105	$	17,636	$	15,340

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 and nine months ended September 30, 2019 and 2018 are as follows:



	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
Proceeds from stock options exercised	$	807	$	1,686	$	2,606	$	12,801
Intrinsic value of stock options exercised	$	453	$	1,258	$	1,295	$	6,737

During the three and nine months ended September 30, 2019, options to purchase approximately 100,300 shares of common stock with a weighted average exercise price of $28.83 and options to purchase approximately 581,062 shares of common stock with a weighted average exercise price of $27.88 vested, respectively. 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. As of September 30, 2019, there were unvested options relating to 1,329,475 shares of common stock outstanding with a total of $6,779 of unrecognized compensation cost and an average vesting period of 1.9 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, 2019 and 2018:



	2019	2018
Volatility	32.0% to 39.6%	25.1% to 27.2%
Risk free interest rate	1.7% to 2.5%	2.1% to 2.7%
Expected life in years	1.0 to 5.0	3.4 to 4.9
Dividend yield	1.7%	1.7%
Weighted average fair value	$5.12	$6.52

Activity relating to stock options granted under the Company’s plans and outside the plans during the nine months ended September 30, 2019 is as follows:



	Number of Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
Outstanding at January 1, 2019	2,815,000		$	26.03
Granted	260,000		30.46
Exercised	(117,000	)	22.61
Outstanding at September 30, 2019	2,958,000		$	26.55	4.5 years	$	27,323
Exercisable at September 30, 2019	1,629,000		$	26.39	3.6 years	$	15,310

Restricted Stock

The following table summarizes restricted stock activity during the nine months ended September 30, 2019 and 2018:



	2019				2018
	Number of Shares		Weighted Average Fair Value at Grant Date		Number of Shares		Weighted Average Fair Value at Grant Date
Outstanding at January 1,	5,135,000		$	18.42	5,874,000		$	17.37
Granted	629,000		32.57		405,000		31.47
Vested	(311,000	)	26.36		(328,000	)	23.79
Forfeited	(52,000	)	28.90		(71,000	)	25.61
Outstanding at September 30,	5,401,000		$	19.49	5,880,000		$	17.84

As of September 30, 2019, the Company had $58,431 of total unrecognized compensation cost related to restricted stock awards granted under the 2019 Plan and the 2006 Plan. This cost is expected to be recognized over a weighted average of 4.1 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 March 25, 2019, pursuant to an amendment of the employment agreement between the Company and its Creative and Design Chief, Steven Madden, which effected the extension of the term of the agreement for three years through December 31, 2026, Mr. Madden was granted 200,000 restricted shares of the Company's common stock. The restricted stock award will vest in three nearly equal annual installments commencing on December 31, 2024. On August 19, 2019, pursuant to his employment agreement with the Company, Mr. Madden was granted an option to purchase 225,000 shares of the Company's common stock at an exercise price of $30.14 per share, which option will vest in four equal installments commencing on November 19, 2019 and ending on June 30, 2020. As of September 30, 2019, Mr. Madden has unvested options to purchase 900,000 shares of the Company's common stock and 4,134,238 restricted shares of the Company's common stock.