Share-Based Payments

9 Months Ended

Sep. 30, 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 for both the nine months ended September 30, 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 nine month period ended September 30, 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		(9,935	)	$	6.80
Nonvested options – end of period		389,570		$	7.14

Share-based payment expense decreased income before income taxes by $0.20 million and $0.59 million for the three and nine months ended September 30, 2015, respectively, as compared to $0.23 million and $0.69 million for the corresponding periods of the prior year. Share-based payment expense decreased income attributable to Inter Parfums, Inc. by $0.12 million and $0.35 million for the three and nine months ended September 30, 2015, respectively, as compared to $0.13 million and $0.38 million for the corresponding periods of the prior year.

The following table summarizes stock option information as of September 30, 2015:

				Weighted Average
	Shares			Exercise Price

Outstanding at January 1, 2015		639,495		$	23.19
Options granted		14,000			25.67
Options cancelled		(4,700	)		27.51
Options exercised		(27,915	)		16.18

Outstanding at September 30, 2015		620,880		$	23.53

Options exercisable		231,310		$	18.76
Options available for future grants		319,235

As of September 30, 2015, the weighted average remaining contractual life of options outstanding is 3.25 years (1.94 years for options exercisable), the aggregate intrinsic value of options outstanding and options exercisable is $2.6 million and $1.7 million, respectively, and unrecognized compensation cost related to stock options outstanding of Inter Parfums, Inc. aggregated $2.1 million.

Cash proceeds, tax benefits and intrinsic value related to stock options exercised during the nine months ended September 30, 2015 and September 30, 2014 were as follows:

	September 30,		September 30,
(In thousands)	2015		2014

Cash proceeds from stock options exercised	$	451	$	861
Tax benefits		—		—
Intrinsic value of stock options exercised		482		1,631

The weighted average fair values of the options granted by Inter Parfums, Inc. during the nine months ended September 30, 2015 and 2014 were $6.73 and $8.47 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 September 30, 2015 and 2014 are set forth in the following table:

	September 30,			September 30,
	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	%		1.60	%
Weighted average dividend yield		1.8	%		2.4	%

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 increases.