Share-Based Payments

3 Months Ended

Mar. 31, 2015

Share-Based Payments:

The Company maintains a stock option program for key employees, executives and directors. The plans, all of which have been approved by shareholder vote, provide for the granting of both nonqualified and incentive options. Options granted under the plans typically have a six-year term and vest over a four to five-year period. The fair value of shares vested during both the three months ended March 31, 2015 and 2014 aggregated $0.03 million. Compensation cost is recognized on a straight-line basis over the requisite service period for the entire award. It is generally our policy to issue new shares upon exercise of stock options.

The following table sets forth information with respect to nonvested options for the three month period ended March 31, 2015:

				Weighted Average
	Number of Shares			Grant Date Fair Value
Nonvested options – beginning of period		385,505		$	7.14
Nonvested options granted		14,000		$	6.73
Nonvested options vested or forfeited		(7,085	)	$	6.39
Nonvested options – end of period		392,420		$	7.14

Share-based payment expense decreased income before income taxes by $0.19 million and $0.23 million for the three months ended March 31, 2015 and 2014, respectively, and decreased net income attributable to Inter Parfums, Inc. by $0.12 million and $0.11 million for the three months ended March 31, 2015 and 2014, respectively.

The following table summarizes stock option information as of March 31, 2015:

				Weighted Average
	Shares			Exercise Price

Outstanding at January 1, 2015		639,495		$	23.19
Options granted		14,000			25.67
Options cancelled		(2,170	)		25.49
Options exercised		(4,808	)		17.14

Outstanding at March 31, 2015		646,517		$	23.28

Options exercisable		254,097		$	18.50
Options available for future grants		316,705

As of March 31, 2015, the weighted average remaining contractual life of options outstanding is 3.69 years (2.39 years for options exercisable), the aggregate intrinsic value of options outstanding and options exercisable is $6.4 million and $3.7 million, respectively, and unrecognized compensation cost related to stock options outstanding of Inter Parfums, Inc. aggregated $2.5 million.

Cash proceeds, tax benefits and intrinsic value related to stock options exercised during the three months ended March 31, 2015 and March 31, 2014 were as follows:

	March 31,		March 31,
(In thousands)	2015		2014

Cash proceeds from stock options exercised	$	82	$	695
Tax benefits		0		0
Intrinsic value of stock options exercised		66		1,455

The weighted average fair values of the options granted by Inter Parfums, Inc. during the three months ended March 31, 2015 and 2014 were $6.73 and $8.37 per share, respectively, on the date of grant using the Black-Scholes option pricing model to calculate the fair value of options granted. The assumptions used in the Black-Scholes pricing model for the periods ended March 31, 2015 and 2014 are set forth in the following table:

	March 31,			March 31,
	2015			2014

Weighted average expected stock-price volatility		34	%		37	%
Weighted average expected option life		5 years			5 years
Weighted average risk-free interest rate		1.28	%		1.55	%
Weighted average dividend yield		1.8	%		2.8	%

Expected volatility is estimated based on historic volatility of the Company's common stock. The expected term of the option is estimated based on historic data. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of the grant of the option and the dividend yield reflects the assumption that the dividend payout as authorized by the Board of Directors would increase as the earnings of the Company and its stock price continue to increase.

- Definition

The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details.

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