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Equity
 12 Months Ended
Dec. 31, 2021
Equity:  
Equity

 

(13)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 aggregated $1.4 million, $1.7 million and $1.4 million in 2021, 2020 and 2019, 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 2021:

 

   Number of Shares   Weighted Average
Grant Date
Fair Value		 
Nonvested options – beginning of year   353,790   $12.96 
Nonvested options granted   9,000   $11.35 
Nonvested options vested or forfeited   (153,280)  $12.19 
Nonvested options – end of year   209,510   $13.45 

 

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

 

   Year Ended December 31, 
   2021   2020   2019 
Income before income taxes  $2,850   $3,030   $3,390 
Net income attributable to Inter Parfums, Inc.   1,880    2,040    2,060 
Diluted earnings per share attributable to Inter Parfums, Inc.   0.06    0.06    0.07 

 

The following table summarizes stock option activity and related information for the years ended December 31, 2021, 2020 and 2019:

 

   Year ended December 31, 
   2021   2020   2019 
   Options  

Weighted

Average

Exercise

Price

   Options  

Weighted

Average

Exercise

Price

   Options  

Weighted

Average

Exercise

Price

 
Shares under option - beginning of year   713,210   $52.74    815,800   $49.89    776,171   $41.33 
Options granted   9,000    62.18    9,000    69.11    194,050    72.89 
Options exercised   (156,490)   34.46    (95,570)   28.99    (130,891)   34.06 
Options forfeited   (40,820)   62.57    (16,020)   58.38    (23,530)   45.48 
Shares under option - end of year   524,900    57.58    713,210    52.74    815,800    49.89 

 

 

 

At December 31, 2021, options for 612,535 shares were available for future grant under the plans. The aggregate intrinsic value of options outstanding is $25.9 million as of December 31, 2021 and unrecognized compensation cost related to stock options outstanding aggregated $2.9 million, which will be recognized over the next five years.

 

The weighted average fair values of options granted by Inter Parfums, Inc. during 2021, 2020 and 2019 were $11.35, $12.16 and $14.14 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, 
   2021   2020   2019 
Weighted-average expected stock-price volatility   25%   25%   25%
Weighted-average expected option life   5.0 years    5.0 years    5.0 years 
Weighted-average risk-free interest rate   0.4%   1.4%   1.7%
Weighted-average dividend yield   1.6%   2.5%   2.0%

 

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, 
   2021   2020   2019 
Proceeds from stock options exercised  $5,393   $2,771   $4,458 
Tax benefits  $1,300   $400   $690 
Intrinsic value of stock options exercised  $7,800   $2,873   $4,520 

 

 

INTER PARFUMS, INC. AND SUBSIDIARIES

 

Notes to Consolidated Financial Statements

December 31, 2021, 2020 and 2019

(In thousands except share and per share data)

 

The following table summarizes additional stock option information as of December 31, 2021:

 

Exercise prices   Options
outstanding		   Options outstanding
weighted average remaining
contractual life		  Options
exercisable		 
 $32.83 - $33.95     81,190   0.99 years   81,190 
 $40.15 - $46.90     123,130   1.94 years   90,790 
 $65.18 - $69.11     164,940   3.03 years   84,790 
$73.09    155,640   4.00 years   58,620 
 Totals     524,900   2.75 years   315,390 

 

As of December 31, 2021, the weighted average exercise price of options exercisable was $52.23 and the weighted average remaining contractual life of options exercisable is 2.35 years. The aggregate intrinsic value of options exercisable at December 31, 2021 is $17.2 million.

 

In December 2018, Interparfums SA approved a plan to grant an aggregate of 26,600 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, subject to adjustment for stock splits, will be distributed in June 2022.

 

In March 2020, due to the potential impact on future net sales and operating results resulting from the COVID-19 pandemic, the estimated number of shares to be distributed, after forfeited shares, was reduced from 142,571 to 82,162. As the Company had already purchased shares in contemplation of the higher anticipated distribution, shares purchased in excess of the reduced anticipated distribution were transferred to treasury shares at the Interparfums SA level.

 

The fair value of the grant had been determined based on the quoted stock price of Interparfums SA shares as reported by the NYSE Euronext on the date of grant. The original cost of the grant was approximately $4.4 million, and the March 2020 revaluation resulted in a reduction of the cost, to approximately $2.5 million. 

 

In June 2020, the performance conditions were modified affecting 96 employees. As of December 31, 2021, the number of shares to be distributed, after forfeited shares, increased to 172,343. The increase in shares anticipated to be distributed were transferred from treasury shares at the Interparfums SA level. The modification resulted in a revised cost of the grant to approximately $4.6 million.

 

In order to avoid dilution of the Company’s ownership of Interparfums SA, all shares distributed or to be distributed pursuant to these plans are pre-existing shares of Interparfums SA, purchased in the open market by Interparfums SA.

 

All share purchases and issuances have been classified as equity transactions on the accompanying balance sheet.

 

Dividends

 

In October 2019, our Board of Directors authorized a 20% increase in the annual dividend to $1.32 per share on an annual basis. In April 2020, as a result of the uncertainties raised by the COVID-19 pandemic, the Board of Directors authorized a temporary suspension of the annual cash dividend. In February 2021, the Board of Directors authorized a reinstatement of an annual dividend of $1.00 payable quarterly. In February 2022, the Board of Directors authorized a 100% increase in the annual dividend to $2.00 per share. The next quarterly cash dividend of $0.50 per share is payable on March 31, 2022 to shareholders of record on March 15, 2022.