Equity-Based Compensation

9 Months Ended

Sep. 30, 2022

11. Equity-Based Compensation

Equity-based compensation expense under the RE/MAX Holdings, Inc. 2013 Omnibus Incentive Plan (the “Incentive Plan”), net of the amount capitalized in internally developed software, is as follows (in thousands):


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2022		2021		2022		2021
Expense from time-based awards^(a)	$	5,725	$	3,756	$	13,417	$	17,321
Expense from performance-based awards^(b)		1,130		3,188		1,408		4,855
Expense from bonus to be settled in shares^(c)		979		2,064		3,181		5,139
Equity-based compensation expense	$	7,834	$	9,008	$	18,006	$	27,315

(a)

During the third quarter of 2022, the Company recognized $1.7 million of expense upon the acceleration of certain grants issued in connection with the restructuring, as further discussed in Note 2, Summary of Significant Accounting Policies. In addition, during the third quarter of 2022, the Company recognized $1.4 million of expense upon acceleration of certain grants that were issued to two employees and former owners of an acquired company who departed during the third quarter of 2022. During the first quarter of 2021, the Company recognized $5.5 million of expense upon acceleration of certain grants that were issued to two employees of an acquired company who departed during the first quarter of 2021.

(b)

Expense recognized for performance-based awards is re-assessed each quarter based on expectations of achievement against the performance conditions. During the first quarter of 2022, the Company had a significant amount of forfeitures related to performance-based awards issued to the Company’s former CEO which, subsequent to his departure, will no longer vest.

(c)	A portion of the annual corporate bonus earned is to be settled in shares. These amounts are recognized as “Accrued liabilities” in the accompanying Condensed Consolidated Balance Sheets and are not included in “Additional paid-in capital” until the shares are issued.

Time-based Restricted Stock

The following table summarizes equity-based compensation activity related to time-based restricted stock units and restricted stock awards:


	Shares	Weighted average grant date fair value per share
Balance, January 1, 2022	765,813	$	36.84
Granted	471,005	$	28.45
Shares vested (including tax withholding) ^(a)	(437,722)	$	35.92
Forfeited	(148,602)	$	33.36
Balance, September 30, 2022	650,494	$	32.18

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

As of September 30, 2022, there was $9.6 million of total unrecognized expense. This compensation expense is expected to be recognized over the weighted-average remaining vesting period of 1.7 years.

Performance-based Restricted Stock

The following table summarizes equity-based compensation activity related to performance-based restricted stock units:


	Shares	Weighted average grant date fair value per share
Balance, January 1, 2022	241,821	$	31.02
Granted ^(a)	215,761	$	28.45
Shares vested (including tax withholding) ^(b)	(58,759)	$	27.37
Forfeited	(140,013)	$	30.39
Balance, September 30, 2022	258,810	$	30.05

(a)	Represents the total participant target award.

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

As of September 30, 2022, there was $3.5 million of total unrecognized expense. This compensation expense is expected to be recognized over the weighted-average remaining vesting period of 1.5 years.