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Share-Based Payments:
 3 Months Ended
Mar. 31, 2022
Equity:  
Share-Based Payments:

 

9.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 the three months ended March 31, 2022 and 2021 aggregated $0.10 million and $0.09 million, respectively. 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 months ended March 31, 2022:

 

   Number of Shares   Weighted Average Grant-Date Fair Value 
Nonvested options – beginning of period   209,510   $13.45 
Nonvested options granted   --    -- 
Nonvested options vested or forfeited   (9,780)  $12.18 
Nonvested options – end of period   199,730   $13.51 

 

Share-based payment expense decreased income before income taxes by $0.65 million and $0.73 million for the three months ended March 31, 2022 and 2021, respectively, and decreased income attributable to Inter Parfums, Inc. by $0.44 million and $0.49 million for the three months ended March 31, 2022 and 2021, respectively.

 

The following table summarizes stock option information as of March 31, 2022:

 

   Shares   Weighted Average Exercise Price 
         
Outstanding at January 1, 2022   524,900   $57.58 
Options forfeited   (1,180)   65.96 
Options exercised   (13,425)   52.73 
           
Outstanding at March 31, 2022   510,295   $57.69 
           
Options exercisable   310,565   $52.42 
Options available for future grants   613,715      

 

As of March 31, 2022, the weighted average remaining contractual life of options outstanding is 2.51 years (2.12 years for options exercisable); the aggregate intrinsic value of options outstanding and options exercisable is $15.5 million and $11.1 million, respectively; and unrecognized compensation cost related to stock options outstanding aggregated $2.5 million.

 

 

Cash proceeds, tax benefits and intrinsic value related to stock options exercised during the three months ended March 31, 2022 and 2021were as follows:

 

(In thousands)  March 31,
2022		   March 31,
2021		 
         
Cash proceeds from stock options exercised  $708   $1,467 
Tax benefits   75    200 
Intrinsic value of stock options exercised   635    1,457 

 

The weighted average fair values of the options granted by Inter Parfums, Inc. during the three months ended March 31, 2021 were $11.35 per share on the date of grant using the Black-Scholes option pricing model to calculate the fair value of options granted. There were no options granted during the three months ended March 31, 2022. The assumptions used in the Black-Scholes pricing model for the period ended March 31, 2021 is set forth in the following table:

 

    March 31,
2021		 
      
 Weighted average expected stock-price volatility    25% 
 Weighted average expected option life    5 years 
 Weighted average risk-free interest rate    0.4% 
 Weighted average dividend yield    1.6% 

 

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 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 order to avoid dilution of the Company’s ownership of Interparfums SA, all shares to be distributed pursuant to the plan will be pre-existing shares of Interparfums SA, purchased in the open market by Interparfums SA in prior years.

 

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. As of March 31, 2022, the number of shares to be distributed, after forfeited shares, was 172,343 resulting from modifications and stock splits. The increase in shares anticipated to be distributed were transferred from treasury shares at the Interparfums SA level. The revised cost of the grant was approximately $4.4 million.