12. Equity-Based Compensation

The Company’s Board of Directors adopted the RE/MAX Holdings, Inc. 2013 Omnibus Incentive Plan (the “2013 Incentive Plan”), under which 3,576,466 shares are currently authorized. (See below for shares available for grant at December 31, 2017.) The 2013 Incentive Plan provides for the grant of incentive stock options to the Company’s employees, and for the grant of shares of the RE/MAX Holdings Class A common stock, non-qualified stock options, stock appreciation rights, restricted stock, restricted stock units (“RSUs”) which may have time-based or performance-based vesting criteria, dividend equivalent rights, cash-based awards and any combination thereof to employees, directors and consultants of the Company.

The Company recognizes equity-based compensation expense in “Selling, operating and administrative expenses” in the accompanying Consolidated Statements of Income. The Company recognizes corporate income tax benefits relating to the exercise of options and vesting of restricted stock units in “Provision for income taxes” in the accompanying Consolidated Statements of Income.

Employee stock-based compensation expense under the Company’s 2013 Incentive Plan was as follows (in thousands):


	Year Ended December 31,
	2017		2016		2015
Expense from Time-based RSUs	$	2,523	$	2,330	$	1,453
Expense from Performance-based RSUs		377		-		-
Equity-based compensation expense		2,900		2,330		1,453
Tax benefit from equity-based compensation		(637)		(511)		(231)
Excess tax benefit from equity-based compensation		(324)		(261)		(2,770)
Net compensation cost	$	1,939	$	1,558	$	(1,548)

Time-based Restricted Stock Units

Time-based RSUs granted under the 2013 Incentive Plan are valued using the Company’s closing stock price on the date of grant. Grants awarded to the Company’s Board of Directors generally vest over a one year period. Grants awarded to the Company’s employees generally vest in annual installments over a three year period. Compensation expense is recognized on a straight line basis over the vesting period.

The following table summarizes equity-based compensation activity related to time-based RSUs for the year ended December 31, 2017:


	Time-based restricted stock units		Weighted average grant date fair value per share
Balance, January 1, 2017	127,011	$	33.00
Granted	43,450	$	55.45
Shares vested (including tax withholding)(a)	(58,426)	$	33.03
Forfeited	(6,173)	$	41.94
Balance, December 31, 2017	105,862	$	41.67

(a)

Pursuant to the terms of the 2013 Incentive Plan, RSUs withheld by the Company for the payment of the employee's tax withholding related to an RSU vesting are added back to the pool of shares available for future awards.

The following table summarizes information about our RSU grants during the years ended December 31, 2017, 2016 and 2015:


			Year ended December 31,
		2017			2016		2015
Weighted average grant date fair value per RSU granted	$	55.45		$	33.24	$	32.45

At December 31, 2017, there was $2.2 million of total unrecognized time-based RSU expense, all of which is related to unvested awards. This compensation expense is expected to be recognized over the weighted-average remaining vesting period of 1.52 years for time-based restricted stock units.

Performance-based Restricted Stock Units

Performance-based RSUs granted under the 2013 Incentive Plan are stock-based awards in which the number of shares ultimately received depends on the Company’s achievement of a specified revenue as well as the Company’s total shareholder return (“TSR”) relative to the TSR of all companies in the S&P SmallCap 600 Index over a three-year performance period. The number of shares that could be issued range from 0% to 150% of the participant’s target award. Performance-based RSUs are valued on the date of grant using a Monte Carlo simulation for the TSR element of the award. The Company’s expense will be adjusted based on the estimated achievement of revenue versus target. Performance-based RSUs cliff-vest at the end of the three-year performance period. Compensation expense is recognized over the vesting period based on the Company’s estimated achievement against the revenue target.

The following table summarizes equity-based compensation activity related to performance-based RSUs for year ended December 31, 2017:


	Performance-based restricted stock units		Weighted average grant date fair value per share
Balance, January 1, 2017	—	$	—
Granted (a)	33,961	$	57.88
Forfeited	(2,130)	$	57.88
Balance, December 31, 2017	31,831	$	57.88

(a)

Represents the total participant target award.

At December 31, 2017 there was $0.9 million of total unrecognized performance-based RSU expense, all of which is related to unvested awards. This compensation expense is expected to be recognized over the weighted-average remaining vesting period of 2.00 years for performance-based RSUs.

After giving effect to all outstanding awards (assuming maximum achievement of performance goals for performance-based awards), there were 2,400,857 additional shares available for the Company to grant under the 2013 Incentive Plan as of December 31, 2017.

Stock Options

The 2013 Incentive Plan provides for the grant of stock options. As of December 31, 2017, there are no stock options outstanding. The Company received $0.1 million and $2.2 million in cash proceeds related to the exercise of stock options during the years ended December 31, 2016 and 2015, respectively. Upon the exercise of stock options, shares of Class A common stock are issued from authorized common shares. For the year ended December 31, 2017, there were no options exercised. The total intrinsic value of stock options exercised during the years ended December 31, 2016 and 2015 were $0.9 million and $19.2 million, respectively. As there were no stock options exercised during the year ended December 31, 2017, there was no intrinsic value.