Stock-Based Compensation

3 Months Ended

Mar. 31, 2020

Share-based Payment Arrangement [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 non-qualified 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			(1,849,578)
Common stock available for grant of stock-based awards as of March 31, 2020			9,150,422

Total equity-based compensation for the three months ended March 31, 2020 and 2019 is as follows:


	Three Months Ended March 31,
	2020		2019
Restricted stock	$	4,864	$	4,617
Stock options	822		1,054
Total	$	5,686	$	5,671

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, 2020 and 2019 are as follows:


	Three Months Ended March 31,
	2020		2019
Proceeds from stock options exercised	$	874	$	722
Intrinsic value of stock options exercised	$	737	$	329

During the three months ended March 31, 2020, options to purchase approximately 388,479 shares of common stock with a weighted average exercise price of $26.04 vested. During the three months ended March 31, 2019, options to purchase approximately 403,687 shares of common stock with a weighted average exercise price of $26.52 vested. As of March 31, 2020, there were unvested options relating to 1,042,871 shares of common stock outstanding with a total of $4,539 of unrecognized compensation cost and an average vesting period of 2.2 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 the three months ended March 31, 2020 and 2019:

2020

2019

Volatility

33.9% to 37.6%

32.4% to 33.4%

Risk free interest rate

0.5% to 1.6%

2.4% to 2.5%

Expected life in years

3.0 to 5.0

Dividend yield

1.5%

1.7%

Weighted average fair value

$10.22

$7.88

Activity relating to stock options granted under the Company’s plans during the three months ended March 31, 2020 is as follows:


	Number of Shares	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
Outstanding at January 1, 2020	2,802,000	$	26.85
Granted	274,000	42.65
Exercised	(48,000)	20.55
Forfeited	(14,000)	32.02
Outstanding at March 31, 2020	3,014,000	$	28.36	4.1 years	$	136
Exercisable at March 31, 2020	1,970,000	$	26.98	3.7 years	$	131

Restricted Stock

The following table summarizes restricted stock activity during the three months ended March 31, 2020 and 2019:


	2020				2019
	Number of Shares	Weighted Average Fair Value at Grant Date		Number of Shares	Weighted Average Fair Value at Grant Date
Outstanding at January 1,	4,427,000	$	19.84	5,135,000	$	18.42
Granted	366,000	34.69		518,000	32.45
Vested	(219,000)	27.15		(187,000)	25.09
Forfeited	(9,000)	32.84		(11,000)	28.19
Outstanding at March 31,	4,565,000	$	20.66	5,455,000	$	19.48

As of March 31, 2020, the Company had $61,286 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 3.9 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.

As of March 31, 2020, the Company's founder and Creative and Design Chief, Mr. Madden, had unvested options to purchase 562,500 shares of the Company's common stock and 3,347,390 restricted shares of the Company's common stock.