Equity-Based Compensation

9 Months Ended

Sep. 30, 2014

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Equity-Based Compensation

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 RE/MAX Holdings and RMCO.

On October 7, 2013, the Company granted 107,971 restricted stock units to certain employees in connection with the IPO that vested upon grant. The underlying shares were issued on May 20, 2014, of which 30,519 shares were withheld and cancelled to cover the Company’s tax withholding obligation associated with the employees’ statutory income tax requirements. The estimated value of the withheld shares was $818,000. Concurrently, 30,519 common units in RMCO owned by RE/MAX Holdings were cancelled. The related corporate income tax benefit realized upon the issuance of the underlying shares was approximately $125,000 and was recorded in “Additional paid-in capital” in the accompanying Condensed Consolidated Balance Sheets and Condensed Consolidated Statement of Stockholders’ Equity.  

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 the accompanying Condensed Consolidated Statements of Income and Comprehensive Income resulting from restricted stock units that were granted on October 7, 2013. For the nine months ended September 30, 2013, the Company recognized equity-based compensation expense of $701,000 related to 31,500 RMCO Class B common unit options that were granted to certain employees on November 15, 2012. In connection with the IPO, the RMCO Class B common unit options were split 25 for 1 and then substituted for 787,500 options to acquire shares of RE/MAX Holdings’ Class A common stock.  

The following table summarizes equity-based compensation activity for the nine months ended September 30, 2014:  

	Restricted Stock Units			Options
Balance as of January 1, 2014		241,854			787,500
Granted		-			-
Exercised (a)		-			(15,000	)
Forfeited		(9,550	)		-
Delivered and exchanged for shares of Class A common stock		(77,452	)		-
Cancelled		(30,519	)		-
Balance as of September 30, 2014		124,333			772,500
Vested		-			772,500
Unvested		124,333			-

(a) Cash received from stock option exercises for the three and nine months ended September 30, 2014 was $54,000. The Company recorded a corporate income tax benefit relating to the options exercised during the three and nine months ended September 30, 2014 of $54,000 in “Additional paid-in capital” in the accompanying Condensed Consolidated Balance Sheets and Condensed Consolidated Statement of Stockholders’ Equity.

At September 30, 2014, there were 1,679,167 additional shares available for the Company to grant under the 2013 Incentive Plan.