Share-Based Payments:

9 Months Ended

Sep. 30, 2024

Equity:

Share-Based Payments:

8. 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 nine months ended September 30, 2024 and 2023 aggregated $0.04 million and $0.10 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 our policy to issue new shares upon exercise of stock options. 

The following table sets forth information with respect to nonvested options for the nine months ended September 30, 2024:

	Number of Shares			Weighted Average Grant-Date Fair Value
Nonvested options – beginning of period		122,100		$	24.47
Nonvested options granted		—			—
Nonvested options vested or forfeited		(3,380	)	$	12.02
Nonvested options – end of period		118,720		$	24.83

Share-based payment expense decreased income before income taxes by $0.60 million and $1.77 million for the three and nine months ended September 30, 2024 respectively, as compared to $0.62 million and $1.89 million for the corresponding periods of the prior year, and decreased income attributable to Interparfums, Inc. by $0.4 million and $1.17 million for the three and nine months ended September 30, 2024 respectively, as compared to $0.41 million and $1.27 million for the corresponding periods of the prior year.

The following table summarizes stock option information as of September 30, 2024:

	Shares			Weighted Average Exercise Price
Outstanding at January 1, 2024		308,970		$	86.52
Options forfeited		(380	)		73.09
Options exercised		(24,920	)		69.39
Outstanding at September 30, 2024		283,670		$	88.04
Options exercisable		164,950		$	70.69
Options available for future grants		537,745

As of September 30, 2024, the weighted average remaining contractual life of options outstanding is 2.23 years (0.96 years for options exercisable); the aggregate intrinsic value of options outstanding and options exercisable is $12.6 million and $9.7 million, respectively; and unrecognized compensation cost related to stock options outstanding aggregated $2.2 million.

Cash proceeds, tax benefits and intrinsic value related to stock options exercised during the nine months ended September 30, 2024 and 2023 were as follows:

(In thousands)	September 30, 2024		September 30, 2023
Cash proceeds from stock options exercised	$	1,729	$	5,523
Tax benefits		272		900
Intrinsic value of stock options exercised		1,721		6,135

There were no options granted during the nine months ended September 30, 2024 and September 30, 2023.

Expected volatility is estimated based on historic volatility of the Company’s common stock. The expected term of the option is estimated based on historical 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 maintain its current payout ratio as a percentage of earnings.

In March 2022, Interparfums SA, our 72% owned French Subsidiary, approved a plan to grant an aggregate of 88,400 shares of its stock to all Interparfums SA employees and corporate officers having more than six months of employment at grant date, subject to certain corporate performance conditions. The shares, subject to adjustment for stock splits, will be distributed in June 2025.

The fair value of the grant had been determined based on the quoted stock price of Interparfums SA shares as reported by the Euronext on the date of grant. The estimated number of shares to be distributed of 103,409 has been determined taking into account employee turnover. The aggregate cost of the grant of approximately $4.2 million will be recognized as compensation cost on a straight-line basis over the requisite three and a quarter year service period.

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. As of September 30, 2024 the Company acquired 96,371 shares at an aggregate cost of $4.1 million.

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