(12)

Equity

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 in 2015 and 2014 aggregated $0.8 million and $0.7 million, respectively. Compensation cost, net of estimated forfeitures, is recognized on a straight-line basis over the requisite service period for the entire award. Forfeitures are estimated based on historic trends. It is generally the Company’s policy to issue new shares upon exercise of stock options.

The following table sets forth information with respect to nonvested options for 2015:

	Number of Shares Grant Date		Weighted Average Grant Date Fair Value Grant Date
Nonvested options – beginning of year		385,505	$	7.14
Nonvested options granted		158,300	$	5.99
Nonvested options vested or forfeited		(128,955)	$	6.65
Nonvested options – end of year		414,850	$	6.86

The effect of share-based payment expenses decreased income statement line items as follows:

	Year Ended December 31,
	2015		2014		2013
Income before income taxes	$	800	$	900	$	800
Net income attributable to Inter Parfums, Inc.		500		500		500
Diluted earnings per share attributable to Inter Parfums, Inc.		0.01		0.01		0.01

The following table summarizes stock option activity and related information for the years ended December 31, 2015, 2014 and 2013:

	Year ended December 31,
	2015				2014				2013
	Options		Weighted Average Exercise Price		Options		Weighted Average Exercise Price		Options		Weighted Average Exercise Price
Shares under option - beginning of year		639,495	$	23.19		643,595	$	19.58		716,235	$	14.41
Options granted		158,300		23.79		139,250		27.93		136,350		34.84
Options exercised		(80,685)		13.82		(136,640)		11.19		(204,240)		11.68
Options forfeited		(7,810)		27.77		(6,710)		19.37		(4,750)		17.47
Shares under option - end of year		709,300		24.34		639,495		23.19		643,595		19.58

At December 31, 2015, options for 178,045 shares were available for future grant under the plans. The aggregate intrinsic value of options outstanding is $1.7 million as of December 31, 2015 and unrecognized compensation cost related to stock options outstanding aggregated $2.7 million, which will be recognized over the next five years.

The weighted average fair values of options granted by Inter Parfums, Inc. during 2015, 2014 and 2013 were $5.99, $7.42 and $9.20 per share, respectively, on the date of grant using the Black-Scholes option pricing model to calculate the fair value. The assumptions used in the Black-Scholes pricing model are set forth in the following table:

	Year Ended December 31,
	2015			2014			2013
Weighted-average expected stock-price volatility		33	%		34	%		37	%
Weighted-average expected option life		5.0 years			5.0 years			5.0 years
Weighted-average risk-free interest rate		1.7	%		1.7	%		1.7	%
Weighted-average dividend yield		2.1	%		1.8	%		2.7	%

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 maintain its current payout ratio as a percentage of earnings.

Proceeds, tax benefits and intrinsic value related to stock options exercised were as follows:

	Year Ended December 31,
	2015		2014		2013
Proceeds from stock options exercised, excluding cashless exercise of $0.5 million, $0.6 million and $0.7 million in 2015, 2014 and 2013, respectively	$	653	$	953	$	1,668
Tax benefits	$	260	$	670	$	700
Intrinsic value of stock options exercised	$	1,137	$	2,733	$	4,088

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

			Options outstanding
	Number		weighted average remaining	Options
Exercise prices	outstanding		contractual life	exercisable
$15.59		92,880	2.00 years		71,380
$17.07		2,000	1.08 years		1,125
$19.03 - $19.33		189,370	2.14 years		142,290
$21.76		3,000	2.09 years		1,000
$22.20		4,000	3.09 years		1,600
$23.61		144,300	6.00 years		—
$25.82		14,000	4.80 years		—
$27.80		130,100	5.00 years		26,020
$29.36		2,000	3.69 years		500
$32.12		3,500	3.09 years		875
$35.75		124,150	4.00 years		49,660
Totals		709,300	3.82 years		294,450

As of December 31, 2015, the weighted average exercise price of options exercisable was $21.93 and the weighted average remaining contractual life of options exercisable is 2.54 years. The aggregate intrinsic value of options exercisable at December 31, 2015 is $1.3 million.

The Chief Executive Officer and the President each exercised 19,000, 32,875 and 28,500 outstanding stock options of the Company’s common stock in 2015, 2014 and 2013, respectively. The aggregate exercise prices of $0.5 million in 2015, $0.6 million in 2014 and $0.7 million in 2013 were paid by them tendering to the Company in 2015, 2014 and 2013, an aggregate of 18,764, 19,656 and 18,880 shares, respectively, of the Company’s common stock, previously owned by them, valued at fair market value on the dates of exercise. All shares issued pursuant to these option exercises were issued from treasury stock of the Company. In addition, the Chief Executive Officer tendered in 2015, 2014 and 2013 an additional 1,299, 3,112 and 2,573 shares, respectively, for payment of certain withholding taxes resulting from his option exercises.

Dividends

The quarterly dividend of $4.0 million ($0.13 per share) declared in December 2015 was paid in January 2016. Furthermore, in January 2016, the Board of Directors of the Company authorized a 15% increase in the annual dividend to $0.60 per share. The next quarterly dividend of $0.15 per share will be paid on April 15, 2016 to shareholders of record on March 31, 2016.