11. Leadership Changes and Restructuring Activities

The Company’s former Chief Executive Officer retired on December 31, 2014 and pursuant to the terms of the Separation and Release of Claims Agreement (the “Separation Agreement”), the Company is required to provide severance and other related benefits over a 36 month period, beginning on December 31, 2014. The Company recorded a liability, measured at its estimated fair value, for payments that will be made under the Separation Agreement, with a corresponding charge of $3,545,000 in 2014. As of June 30, 2015 and December 31, 2014, the short-term portion of the liability was $640,000 and $500,000, respectively, and is included in “Accrued liabilities” in the accompanying Condensed Consolidated Balance Sheets. As of June 30, 2015 and December 31, 2014, the long-term portion of the liability was $1,151,000 and $1,488,000, respectively, and is included in “Other liabilities, net of current portion” in the accompanying Condensed Consolidated Balance Sheets.

Subsequent to the retirement of the Company’s former Chief Executive Officer, the Company undertook a realignment of various personnel resources. In addition, on May 4, 2015, the Company’s President Emeritus entered into a retirement agreement with the Company (the “Retirement Agreement”) pursuant to which he will retire on August 19, 2015. Subject to the terms of the Retirement Agreement, the Company is required to provide retirement benefits over a 24 month period, beginning on September 1, 2015. The Company recorded a liability, measured at its estimated fair value, for payments that will be made under the Retirement Agreement, with a corresponding charge to “Selling, operating and administrative expenses” in the accompanying Condensed Consolidated Statements of Income. The Company expects to incur a total cost of $877,000, including $216,000 of equity-based compensation expense. Of the total expected cost, $434,000 was recorded during the three and six months ended June 30, 2015. As of June 30, 2015, the short-term portion of the liability was $206,000 and is included in “Accrued liabilities” in the accompanying Condensed Consolidated Balance Sheets and the long-term portion of the liability was $294,000 and is included in “Other liabilities, net of current portion” in the accompanying Condensed Consolidated Balance Sheets.

Furthermore, the Company incurred severance and other related expenses of $154,000 and $605,000 during the three and six months ended June 30, 2015, respectively, which is included in “Selling, operating and administrative expenses” in the accompanying Condensed Consolidated Statements of Income.

In addition, management of the Company approved and implemented a restructuring plan during the fourth quarter of 2014 designed to improve operating efficiencies, which reduced the Company’s overall headcount at its corporate headquarters (the “Restructuring Plan”). In connection with the Restructuring Plan, the Company incurred $1,303,000 of expenses in 2014 related to severance and outplacement services provided to certain former employees of the Company.

The following table presents a rollforward of the estimated fair value liability established for the aforementioned severance and other related costs, which are entirely attributable to the Company’s Real Estate Franchise Services reportable segment, from January 1, 2015 to June 30, 2015 (in thousands):


Balance, January 1, 2015	$	2,408
Additional severance and other related expenses		1,039
Accretion		38
Cash payments		(1,053)
Non-cash adjustment (a)		(107)
Balance, June 30, 2015	$	2,325

(a) Non-cash adjustment represents the non-cash equity-based compensation expense recorded during the three and six months ended June 30, 2015 for the expected vesting of certain restricted stock units in August 2015 pursuant to the terms of the Retirement Agreement. See also Note 10, Equity-Based Compensation.