Stock-Based Compensation

12 Months Ended

Dec. 31, 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 awards	(483,185	)
Common stock available for grant of stock-based awards as of December 31, 2019	10,516,815

For the years ended December 31, 2019, 2018 and 2017, total equity-based compensation was as follows:



	Years Ended December 31,
	2019		2018		2017
Restricted stock	$	19,143	$	16,720	$	16,616
Stock options	4,027		4,356		4,231
Total	$	23,170	$	21,076	$	20,847

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, 2019, 2018 and 2017 are as follows:



	Years Ended December 31,
	2019		2018		2017
Proceeds from stock options exercised	$	6,212	$	13,036	$	16,433
Intrinsic value of stock options exercised	$	4,268	$	6,841	$	9,936

During the years ended December 31, 2019, 2018 and 2017, options to purchase approximately 738,903 shares of common stock with a weighted average exercise price of $28.20, 773,351 options with a weighted average exercise price of $26.38 and 614,283 options with a weighted average exercise price of $22.68 vested, respectively. As of December 31, 2019, there were unvested options relating to 1,171,934 shares of common stock outstanding with a total of $4,982 of unrecognized compensation cost and an average vesting period of 2.0 years.

The Company uses the Black-Scholes-Merton 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 2019, 2018 and 2017:



	2019	2018	2017
Volatility	32.0% to 39.6%	25.1% to 33.2%	23.0% to 26.4%
Risk free interest rate	1.6% to 2.5%	2.1% to 2.9%	1.5% to 2.0%
Expected life in years	1.0 to 5.0	3.0 to 5.0	3.0 to 5.0
Dividend yield	1.6%	1.7%	0.0%
Weighted average fair value	$5.38	$6.75	$5.94

Activity relating to stock options granted under the Company’s plans and outside the plans during the three years ended December 31, 2019 is as follows:



	Number of Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
Outstanding at January 1, 2017	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
Granted	272,000		30.93
Exercised	(273,000	)	22.77
Forfeited	(12,000	)	20.17
Outstanding at December 31, 2019	2,802,000		$	26.85	4.1	$	45,284
Exercisable at December 31, 2019	1,630,000		$	27.02	3.7	$	26,069

The following table summarizes information about stock options at December 31, 2019:



	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
$19.59 to $23.91	468,000	2.2	$22.79	347,000	$22.54
$23.92 to $28.24	1,474,000	4.1	25.18	775,000	25.43
$28.25 to $32.57	557,000	5.7	29.81	275,000	29.58
$32.58 to $36.90	291,000	3.9	35.55	233,000	35.93
$36.91 to $41.23	12,000	6.5	41.18	—	—
	2,802,000	4.1	$26.85	1,630,000	$27.02

Restricted Stock

The following table summarizes restricted stock activity during the three years ended December 31, 2019:



	Number of Shares		Weighted Average Fair Value at Grant Date
Outstanding at January 1, 2017	6,287,000		$	17.29
Granted	413,000		25.11
Vested	(762,000	)	20.39
Forfeited	(62,000	)	23.65
Outstanding at December 31, 2017	5,876,000		17.37
Granted	509,000		31.70
Vested	(1,177,000	)	18.44
Forfeited	(71,000	)	25.61
Outstanding at December 31, 2018	5,137,000		18.42
Granted	633,000		32.64
Vested	(1,200,000	)	19.40
Forfeited	(143,000	)	28.61
Outstanding at December 31, 2019	4,427,000		$	19.84

As of December 31, 2019, the Company had $57,134 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 period of 3.96 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, 2019, 2018 and 2017 was $23,263, $36,122 and $21,549, 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 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 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 December 31, 2019, Mr. Madden has unvested options to purchase 843,750 shares of the Company's common stock and 3,347,390 restricted shares of the Company's common stock.