7.	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, 2017 and 2016 aggregated $0.05 million. Compensation cost, net of 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 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, 2017:

			Weighted Average Grant
	Number of Shares		Date Fair Value
Nonvested options – beginning of period		401,440	$	7.14
Nonvested options granted		5,000	$	7.67
Nonvested options vested or forfeited		(11,825)	$	6.90
Nonvested options – end of period		394,615	$	7.15

Share-based payment expense decreased income before income taxes by $0.51 million and $0.21 million for the three months ended March 31, 2017 and 2016, respectively, and decreased net income attributable to Inter Parfums, Inc. by $0.32 million and $0.13 million for the three months ended March 31, 2017 and 2016, respectively.

The following table summarizes stock option information as of March 31, 2017:

			Weighted Average
	Shares		Exercise Price

Outstanding at January 1, 2017		684,540	$	26.94
Options granted		5,000		33.95
Options forfeited		(5,500)		29.89
Options exercised		(29,790)		18.18

Outstanding at March 31, 2017		654,250	$	27.37

Options exercisable		259,635	$	24.91
Options available for future grants		1,080,155

As of March 31, 2017, the weighted average remaining contractual life of options outstanding is 3.70 years (2.46 years for options exercisable); the aggregate intrinsic value of options outstanding and options exercisable is $6.0 million and $3.0 million, respectively; and unrecognized compensation cost related to stock options outstanding aggregated $2.6 million.

Cash proceeds, tax benefits and intrinsic value related to stock options exercised during the three months ended March 31, 2017 and March 31, 2016 were as follows:

	March 31,		March 31,
(In thousands)	2017		2016

Cash proceeds from stock options exercised	$	542	$	132
Tax benefits		135		—
Intrinsic value of stock options exercised		549		80

The weighted average fair values of the options granted by Inter Parfums, Inc. during the three months ended March 31, 2017 and 2016 were $7.67 and $6.50 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, 2017 and 2016 are set forth in the following table:

	March 31,			March 31,
	2017			2016

Weighted average expected stock-price volatility		29	%		33	%
Weighted average expected option life		5 years			5 years
Weighted average risk-free interest rate		2.0	%		1.42	%
Weighted average dividend yield		2.1	%		2.2	%

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.

In September 2016, Interparfums SA, our 73% owned subsidiary in Paris, approved a plan to grant an aggregate of 15,100 shares of its stock to employees with no performance condition requirement, and an aggregate of 133,000 shares to officers and managers, subject to certain corporate performance conditions. The shares will be distributed in September 2019 so long as the individual is employed by Interparfums SA at the time, and in the case of officers and managers, only to the extent that the performance conditions have been met. Once distributed, the shares will be unrestricted and the employees will be permitted to trade their shares.

The fair value of the grant of €22.46 per share (approximately $25.00 per share) has been determined based on the quoted stock price of Interparfums SA shares as reported by the NYSE Euronext on the date of grant taking into account the dividend yield as no dividends on this grant will be earned until the shares are distributed. The estimated number of shares to be distributed of 137,381 has been determined taking into account employee turnover. The aggregate cost of the grant of €3.1 million (approximately $3.4 million) will be recognized as compensation cost by Interparfums SA on a straight-line basis over the requisite three year service period. For the three months ended March 31, 2017, $0.3 million of compensation cost has been recognized in connection with this plan.

To avoid dilution of the Company’s ownership of Interparfums SA, all shares to be distributed pursuant to this plan will be pre-existing shares of Interparfums SA, purchased in the open market by Interparfums SA. As of December 31, 2016, 108,348 shares have been acquired in the open market at an aggregate cost of $2.9 million, and such amount has been classified as an equity transaction on the accompanying balance sheet. No additional shares were purchased during the three months ended March 31, 2017.