STOCKHOLDERS' EQUITY

9 Months Ended

Sep. 30, 2022

STOCKHOLDERS' EQUITY

STOCKHOLDERS' EQUITY

7.STOCKHOLDERS’ EQUITY

The following table represents a share reconciliation of the Company’s common stock issued for the periods presented:

​	Three Months Ended September 30,		Nine Months Ended September 30,
(Shares of Common Stock)	2022	2021	2022	2021
Common stock:
Balance, beginning of quarter	163,286,569	151,146,986	155,516,284	146,677,786
Shares issued for stock options exercised	681,139	337,234	2,044,193	2,682,142
Agent growth incentive stock compensation	1,184,446	990,147	2,098,770	1,615,173
Agent equity stock compensation	3,410,310	1,075,500	8,903,217	2,574,766
Balance, end of quarter	168,562,464	153,549,867	168,562,464	153,549,867

The Company’s stockholder approved equity plans described below are administered under the 2013 Stock Option Plan and the 2015 Equity Incentive Plan. Although a limited number of awards under the plan remain outstanding, no awards have been granted under the 2013 Stock Option Plan since 2015. The purpose of the equity plans is to retain the services of valued employees, directors, officers, agents, and consultants and to incentivize such persons to make contributions to the Company and motivate excellent performance.

Agent Equity Program

The Company provides agents and brokers the opportunity to elect to receive 5% of commissions earned from each completed real estate transaction in the form of common stock (the “Agent Equity Program” or “AEP”). If agents and brokers elect to receive portions of their commissions in common stock, they are entitled to receive the equivalent number of shares of common stock, based on the fixed monetary value of the commission payable. The Company recognizes a 10% discount on these issuances as an additional cost of sales charge during the periods presented.

During the three months ended September 30, 2022 and 2021, the Company issued 3,410,310 and 1,075,500 shares of common stock, respectively, to agents and brokers with a value of $44,395 and $41,838, respectively, inclusive of discount. During the nine months ended September 30, 2022 and 2021, the Company issued 8,903,217 and 2,574,766 shares of common stock, respectively, to agents and brokers with a value of $131,230 and $101,691, respectively, inclusive of discount.

Agent Growth Incentive Program

The Company administers an equity incentive program whereby agents and brokers become eligible to receive awards of the Company’s common stock through agent attraction and performance benchmarks (the “Agent Growth Incentive Program” or “AGIP”). The incentive program encourages greater performance and awards agents with common stock based on achievement of performance milestones. Awards typically vest after performance benchmarks are reached and three years of subsequent service is provided to the Company. Share-based performance awards are based on a fixed-dollar amount of shares based on the achievement of performance metrics. As such, the awards are classified as liabilities until the number of share awards becomes fixed once the performance metric is achieved.

For the three months ended September 30, 2022, the Company’s stock compensation expense attributable to the Agent Growth Incentive Program was $5,800, of which the total amount of stock compensation expense attributable to liability classified awards was ($985).  For the nine months ended September 30, 2022, the Company’s stock compensation expense attributable to the Agent Growth Incentive

Program was $22,828 of which the total amount of stock compensation expense attributable to liability classified awards was $3,466. Stock compensation expense related to the Agent Growth Incentive Program is included in general and administrative expense in the condensed consolidated statements of comprehensive income.

The following table illustrates changes in the Company’s stock compensation liability for the periods presented:

		Amount
Stock grant liability balance at December 31, 2021	$	4,341
Stock grant liability increase year to date		3,466
Stock grants reclassified from liability to equity year to date		(2,430)
Balance, September 30, 2022		$ 5,377

Stock Option Awards

During the three months ended September 30, 2022, and 2021, the Company granted 394,657 and 176,263 stock options, respectively, to employees with an estimated grant date fair value of $8.50 and $23.26 per share, respectively. During the nine months ended September 30, 2022 and 2021, the Company granted 1,167,042 and 370,594 stock options, respectively, to employees with an estimated grant date fair value of $11.21 and $24.05 per share, respectively. The fair value was calculated using a Black Scholes-Merton option pricing model.

Stock Repurchase Plan

In December 2018, the Company’s board of directors (the “Board”) approved a stock repurchase program authorizing the Company to purchase up to $25.0 million of its common stock, which was later amended in November 2019 and again in June 2020 increasing the authorized repurchase amount to $75.0 million. In December 2020, the Board approved another amendment to the repurchase plan, increasing the total amount authorized to be purchased from $75.0 million to $400.0 million. Purchases under the repurchase program may be made in the open market or through a 10b5-1 plan and are expected to comply with Rule 10b-18 under the Securities Exchange Act of 1934, as amended. The timing and number of shares repurchased depends upon market conditions. The repurchase program does not require the Company to acquire a specific number of shares. The cost of the shares that are repurchased is funded from cash and cash equivalents on hand.

Repurchase Plan Amendment

On May 3, 2022, the Board authorized an increase to the Company’s stock repurchase program from $400 million of its common stock up to $500 million and approved a form of amendment to its Issuer Repurchase Plan, dated January 10, 2022, by and between the Company and Stephens Inc., (the “Issuer Repurchase Plan”) to increase monthly repurchases from $10 million of its common stock per month up to $20 million which amendment was signed May 6, 2022. On September 27, 2022, the Board approved, and the Company entered into, a form of second amendment to the Issuer Repurchase Plan, to decrease the monthly repurchases from $20 million of its common stock per month to $13.3 million, in anticipation of volume decreases in connection with the contraction in the real estate market.

For accounting purposes, common stock repurchased under the stock repurchase programs is recorded based upon the transaction date of the applicable trade. Such repurchased shares are held in treasury and are presented using the cost method. These shares are not retired and are considered issued but not outstanding. During the third quarter of 2022 the Company issued treasury shares in an acquisition. For information regarding the Company’s recent acquisitions, see Note 3 – Acquisitions.

The following table shows the changes in treasury stock for the periods presented:

	Three Months Ended September 30,		Nine Months Ended September 30,
(Shares of Treasury Stock)	2022	2021	2022	2021
Treasury stock:
Balance, beginning of quarter	11,487,691	4,725,296	6,751,692	2,534,494
Repurchases of common stock	4,716,026	1,287,499	9,452,025	3,478,301
Issuance of treasury stock for acquisition	(343,331)	-	(343,331)	-
Balance, end of quarter	15,860,386	6,012,795	15,860,386	6,012,795