Equity-Based Compensation

9 Months Ended

Sep. 30, 2015

10. Equity-Based Compensation

On September 30, 2013, the Company’s Board of Directors adopted the RE/MAX Holdings, Inc. 2013 Omnibus Incentive Plan (the “2013 Incentive Plan”) that provides for the grant of incentive stock options to the Company’s employees, and for the grant of shares of RE/MAX Holdings’ Class A common stock, non-qualified stock options, stock appreciation rights, restricted stock, restricted stock units, dividend equivalent rights, cash-based awards and any combination thereof to employees, directors and consultants of the Company.

On June 24, 2015, RE/MAX Holdings granted 2,941 shares of RE/MAX Holdings’ Class A common stock to an employee at a grant-date fair value of $34.01. Of this amount, 940 shares were withheld and cancelled with an estimated value of $32,000 to cover the Company’s minimum statutory tax withholding obligation. On March 11, 2015, RE/MAX Holdings granted an aggregate of 74,893 restricted stock units at a value of $32.45 per unit to certain employees, which vest over a three-year period beginning on April 1, 2016, and an aggregate of 10,787 restricted stock units at a value of $32.45 per unit to its directors, excluding David Liniger, the Company’s Chief Executive Officer, Chairman and Co-Founder, and Gail Liniger, the Company’s Vice Chair and Co-Founder, which vest on April 1, 2016. The grant-date fair value of $32.45 per unit equaled the closing price of RE/MAX Holdings’ Class A common stock on March 11, 2015.

For the three and nine months ended September 30, 2015, the Company recognized equity-based compensation expense of $430,000 and $1,098,000, respectively, in “Selling, operating and administrative expenses” in the accompanying Condensed Consolidated Statements of Income resulting from the shares of RE/MAX Holdings’ Class A common stock granted on June 24, 2015 and restricted stock units that were granted on March 11, 2015 and October 7, 2013. For the three and nine months ended September 30, 2014, the Company recognized equity-based compensation expense of $200,000 and $532,000, respectively, in “Selling, operating and administrative expenses” in the accompanying Condensed Consolidated Statements of Income resulting from restricted stock units that were granted on October 7, 2013.

The following table summarizes equity-based compensation activity related to restricted stock units and stock options as of and for the nine months ended September 30, 2015:


	Restricted Stock	Stock
	Units	Options
Balance, January 1, 2015	40,472	652,500
Granted	85,680	—
Exercised (a)	—	(564,443)
Forfeited	(6,588)	—
Delivered and exchanged for shares of Class A common stock (b)	(5,154)	—
Cancelled (c)	(2,422)	—
Balance, September 30, 2015	111,988	88,057

As of September 30, 2015
Vested	—	88,057
Unvested	111,988	—

(a) Cash received from stock option exercises for the nine months ended September 30, 2015 was $2,032,000. The Company recorded a corporate income tax benefit relating to the options exercised and restricted stock units delivered during the nine months ended September 30, 2015 of $2,411,000 in “Additional paid-in capital” in the accompanying Condensed Consolidated Balance Sheets and Condensed Consolidated Statement of Stockholders’ Equity.

(a)

In connection with a retirement agreement entered into with the Company’s former President as described in Note 11, Leadership Changes and Restructuring Activities, 7,576 unvested restricted stock units granted in October 2013 vested in August 2015 on an accelerated timeline. As such, incremental equity-based compensation expense of $109,000 and $216,000 was recognized during the three and nine months ended September 30, 2015, respectively.

(b)

Of the 7,576 restricted stock units vested during the three and nine months ended September 30, 2015, 2,422 shares were withheld and cancelled with an estimated value of $88,000 to cover the Company’s minimum statutory tax withholding obligation.

At September 30, 2015, there were 1,930,704 additional shares available for the Company to grant under the 2013 Incentive Plan.