Equity

12 Months Ended

Dec. 31, 2019

Stockholders' Equity Note [Abstract]

Stockholders' Equity Note Disclosure [Text Block]

(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 aggregated $1.4 million and $1.1 million in 2019 and 2018, 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 2019:

	Number of Shares Grant Date			Weighted Average Grant Date Fair Value Grant Date
Nonvested options – beginning of year		485,360		$	10.72
Nonvested options granted		194,050		$	14.14
Nonvested options vested or forfeited		(165,200	)	$	9.65
Nonvested options – end of year		514,210		$	12.36

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

	Year Ended December 31,
	2019		2018		2017
Income before income taxes	$	3,390	$	2,200	$	2,100
Net income attributable to Inter Parfums, Inc.		2,060		1,390		1,150
Diluted earnings per share attributable to Inter Parfums, Inc.		0.07		0.04		0.04

The following table summarizes stock option activity and related information for the years ended December 31, 2019, 2018 and 2017:

	Year ended December 31,
	2019					2018					2017
	Options			Weighted Average Exercise Price		Options			Weighted Average Exercise Price		Options			Weighted Average Exercise Price
Shares under option - beginning of year		776,171		$	41.33		730,980		$	31.92		684,540		$	26.94
Options granted		194,050			72.89		196,350			63.91		174,600			43.48
Options exercised		(130,891	)		34.06		(140,579	)		24.21		(103,230	)		19.03
Options forfeited		(23,530	)		45.48		(10,580	)		37.64		(24,930	)		29.49
Shares under option - end of year		815,800			49.89		776,171			41.33		730,980			31.92

At December 31, 2019, options for 573,695 shares were available for future grant under the plans. The aggregate intrinsic value of options outstanding is $18.7 million as of December 31, 2019 and unrecognized compensation cost related to stock options outstanding aggregated $6.0 million, which will be recognized over the next five years.

The weighted average fair values of options granted by Inter Parfums, Inc. during 2019, 2018 and 2017 were $14.14, $14.31 and $9.82 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,
	2019			2018			2017
Weighted-average expected stock-price volatility		25	%		27	%		28	%
Weighted-average expected option life		5.0 years			5.0 years			5.0 years
Weighted-average risk-free interest rate		1.7	%		2.5	%		2.2	%
Weighted-average dividend yield		2.0	%		2.0	%		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,
	2019		2018		2017
Proceeds from stock options exercised	$	4,458	$	3,406	$	1,963
Tax benefits	$	690	$	807	$	600
Intrinsic value of stock options exercised	$	4,520	$	4,310	$	2,258

The following table summarizes additional stock option information as of December 31, 2019:

		Options		Options outstanding weighted average remaining	Options
	Exercise prices	outstanding		contractual life	exercisable
	$23.61 - $27.80		179,740	1.52 years		153,820
	$32.83 - $33.95		108,280	2.97 years		57,180
	$40.15 - $46.90		158,380	3.96 years		55,520
	$65.25-$66.46		181,350	4.97 years		35,070
	$73.09		188,050	6.00 years		—
Totals			815,800	3.99 years		301,590

As of December 31, 2019, the weighted average exercise price of options exercisable was $35.05 and the weighted average remaining contractual life of options exercisable is 2.62 years. The aggregate intrinsic value of options exercisable at December 31, 2019 is $11.4 million.

In September 2016, Interparfums SA, our 73% owned French subsidiary, 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 corporate performance conditions were met and therefore in September 2019, 172,851 shares, adjusted for stock splits, were distributed. The aggregate cost of the grant of approximately $3.9 million was recognized as compensation cost on a straight-line basis over the requisite three-year service period.

In December 2018, Interparfums SA approved an additional 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 and will follow the same guidelines as the September 2016 plan.

The fair value of the grant has been determined based on the quoted stock price of Interparfums SA shares as reported by the NYSE Euronext on the date of grant. The estimated number of shares to be distributed of 142,379 has been determined taking into account employee turnover. The aggregate cost of the grant of approximately $4.4 million will be recognized as compensation cost on a straight-line basis over the requisite three and a half year service period.

Similar to the September 2016 plan, in order to avoid dilution of the Company’s ownership of Interparfums SA, all shares distributed or to be distributed pursuant to these plans will be pre-existing shares of Interparfums SA, purchased in the open market by Interparfums SA. During the year ended December 31, 2019, the Company acquired 131,613 shares at an aggregate cost of $5.8 million.

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

Dividends

64. In October 2019, the Board of Directors of the Company authorized a 20% increase in the annual dividend to $1.32 per share. The quarterly dividend aggregating approximately $10.4 million ($0.33 per share) declared in December 2019 was paid in January 2020. The next quarterly dividend of $0.33 per share will be paid on April 15, 2020 to shareholders of record on March 31, 2020.