EQUITY AND EARNINGS PER SHARE

3 Months Ended

Mar. 31, 2015

Equity and Earnings Per Share [Abstract]

EQUITY AND EARNINGS PER SHARE

EQUITY AND EARNINGS PER SHARE

Equity and Dividends

New Residential’s Board of Directors authorized a one-for-two reverse stock split on August 5, 2014, subject to stockholder approval. In a special meeting on October 15, 2014, New Residential’s stockholders approved the reverse split. On October 17, 2014, New Residential effected the one-for-two reverse stock split of its common stock. As a result of the reverse stock split, every two shares of New Residential’s common stock were converted into one share of common stock, reducing the number of issued and outstanding shares of New Residential’s common stock from approximately 282.8 million to approximately 141.4 million. The impact of this reverse stock split has been retroactively applied to all periods presented.

On December 18, 2014, New Residential’s board of directors declared a fourth quarter 2014 dividend of $0.38 per common share or $53.7 million, which was paid on January 30, 2015 to stockholders of record as of December 30, 2014.

On March 16, 2015, New Residential’s board of directors declared a first quarter 2015 dividend of $0.38 per common share or $53.7 million, which was paid on April 30, 2015 to stockholders of record as of March 26, 2015.

Approximately 2.4 million shares of New Residential’s common stock were held by Fortress, through its affiliates, and its principals at March 31, 2015.

Option Plan

As of March 31, 2015, New Residential’s outstanding options were summarized as follows:

	Issued Prior to 2011	Issued in 2011-2014	Total
Held by the Manager	343,440	8,173,847	8,517,287
Issued to the Manager and subsequently transferred to certain of the      Manager’s employees	90,560	1,959,247	2,049,807
Issued to the independent directors	1,000	4,000	5,000
Total	435,000	10,137,094	10,572,094

The following table summarizes New Residential’s outstanding options as of March 31, 2015. The last sales price on the New York Stock Exchange for New Residential’s common stock in the quarter ended March 31, 2015 was $15.03 per share.

Recipient	Date of Grant/ Exercise(A)	Number of Options		Options Exercisable as of March 31, 2015	Weighted Average Exercise Price(B)		Intrinsic Value as of March 31, 2015 (millions)
Directors	Various	6,000		5,000	$	17.54	$	—
Manager(C)	2003 - 2007	1,226,555		434,000	31.36		—
Manager(C)	Mar-11	838,417		547,583	6.58		4.6
Manager(C)	Sep-11	1,269,917		849,916	4.98		8.5
Manager(C)	Apr-12	948,750		920,983	6.82		7.6
Manager(C)	May-12	1,150,000		1,117,333	7.34		8.6
Manager(C)	Jul-12	1,265,000		1,234,783	7.34		9.5
Manager(C)	Jan-13	2,875,000		2,491,665	10.24		11.9
Manager(C)	Feb-13	1,150,000		958,332	11.48		3.4
Manager(C)	Apr-14	1,437,500		527,083	12.20		1.5
Exercised(D)	2013-2014	(802,492	)	N/A	5.81		N/A
Expired unexercised	2003-2005	(792,553	)	N/A	N/A		N/A
Outstanding		10,572,094		9,086,678

(A) Options expire on the tenth anniversary from date of grant.

(B) The strike prices are subject to adjustment in connection with return of capital dividends.

(C) The Manager assigned certain of its options to Fortress’s employees as follows:

Date of Grant	Range of Strike Prices	Total Unexercised Inception to Date
2004 - 2007	$29.92 to $33.80	90,560
2012	$6.82 to $7.34	600,000
2013	$10.24 to $11.48	1,100,497
2014	$12.20	258,750
Total		2,049,807

(D) Exercised by employees of Fortress, subsequent to their assignment, or by directors. The options exercised had an intrinsic value of $4.5 million.

Income and Earnings Per Share

New Residential is required to present both basic and diluted earnings per share (“EPS”). Basic EPS is calculated by dividing net income by the weighted average number of shares of common stock outstanding. Diluted EPS is computed by dividing net income by the weighted average number of shares of common stock outstanding plus the additional dilutive effect, if any, of common stock equivalents during each period. New Residential’s common stock equivalents are its outstanding stock options. During the three months ended March 31, 2015, based on the treasury stock method, New Residential had 3,476,404 dilutive common stock equivalents outstanding. During the three months ended March 31, 2014, based on the treasury stock method, New Residential had 3,315,457 dilutive common stock equivalents outstanding.

Noncontrolling Interests

Noncontrolling interests is comprised of the interests held by third parties in consolidated entities that hold New Residential’s investments in servicer advances (Note 6).