v2.4.0.8
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Stock-Based Compensation
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9 Months Ended |
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| Disclosure of Compensation Related Costs, Share-based Payments [Abstract] |
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| Stock-Based Compensation |
The Company has stock-based compensation plans available under which non-qualified stock options, rights to purchase shares of common stock, restricted stock, restricted stock units, performance share units and other awards settleable in, or based upon, Realogy Holdings common stock may be issued to employees, consultants or directors of Realogy. The number of shares authorized for issuance under the Realogy 2007 Stock Incentive Plan and the 2012 Long-Term Incentive Plan are 2.8 million shares and 6.8 million shares, respectively. As of September 30, 2014, the total number of shares available for future grant under the 2007 Stock Incentive Plan and the 2012 Long Term Incentive Plan was 0.1 million shares and 2.6 million shares, respectively. The 2014 Long-Term Incentive Plan was adopted in February 2014 and includes a mix of options, restricted stock units and performance share units granted under the 2012 Long-Term Incentive Plan. The 2014 performance share unit awards ("PSUs") are incentives that reward grantees based upon the Company's financial performance over a three-year performance period ending December 31, 2016. The number of shares that may be issued under the PSU is variable and based upon the extent to which the performance goals are achieved over the performance period (with a range of payout from 0% to 200% of the target award). The shares earned will be distributed in early 2017. The 2014 PSUs contain two performance metrics: (1) improvement in the Company's net debt leverage ratio measured as of December 31, 2016, defined as the ratio of the Company's net debt at December 31, 2016 to Adjusted EBITDA (as defined under the senior secured credit facility) for the year ending December 31, 2016, and (2) improvement in the Company's operating margin defined as Adjusted EBITDA divided by net revenues, each for the year ending December 31, 2016. Incentive Equity Awards Granted by Realogy Holdings A summary of stock option activity for the nine months ended September 30, 2014 is presented below (number of shares in millions): | | | | | | | | | Options | | Weighted Average Exercise Price | | 3.22 |
| | $ | 28.04 |
| Granted | 0.32 |
| | 43.44 |
| Exercised (a) (b) | (0.10 | ) | | 20.93 |
| Forfeited/Expired | (0.04 | ) | | 24.64 |
| | 3.40 |
| | $ | 29.74 |
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| | (a) | The intrinsic value of options exercised during the nine months ended September 30, 2014 was $2.1 million. |
| | (b) | Cash received from options exercised during the nine months ended September 30, 2014 was $2.1 million. |
| | (c) | Options outstanding at September 30, 2014 had an intrinsic value of $38.0 million and had a weighted average remaining contractual life of 7.8 years. |
A summary of restricted stock, restricted stock unit and performance share unit activities for the nine months ended September 30, 2014 is presented below (number of shares in millions): | | | | | | | | | | | | | | | | | | | | Restricted
Stock | Weighted Average Grant Date Fair Value | | Restricted
Stock Units | Weighted Average Grant Date Fair Value | | Performance Share Units | Weighted
Average
Grant Date
Fair Value | | 0.31 |
| $ | 35.21 |
| | 0.43 |
| $ | 43.86 |
| | 0.04 |
| $ | 43.93 |
| Granted | — |
| — |
| | 0.50 |
| 47.11 |
| | 0.33 |
| 46.93 |
| Vested (a) | (0.14 | ) | 45.02 |
| | (0.16 | ) | 45.11 |
| | — |
| — |
| Forfeited | — |
| — |
| | (0.02 | ) | 46.04 |
| | — |
| — |
| | 0.17 |
| $ | 27.14 |
| | 0.75 |
| $ | 45.72 |
| | 0.37 |
| $ | 46.62 |
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| | (a) | The total fair value of restricted stock and restricted stock units which vested during the nine months ended September 30, 2014 was $6.4 million and $7.3 million, respectively. |
The fair value of the options was estimated on the date of grant using the Black-Scholes option-pricing model utilizing the following assumptions. Expected volatility was based on historical volatilities of the Company and select comparable companies. The expected term of the options granted represents the period of time that options were expected to be outstanding and is based on the "simplified method" in accordance with accounting guidance. The Company utilizes the simplified method to determine the expected life of options as the Company does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate expected term. The risk-free interest rate was based on the U.S. Treasury yield curve in effect at the time of the grant, which corresponds to the expected term of the options. | | | | | | 2014 Options | Weighted average grant date fair value | $ | 18.35 |
| Expected volatility | 41.5 | % | Expected term (years) | 6.25 |
| Risk-free interest rate | 1.4 | % | Dividend yield | — |
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Stock-Based Compensation Expense As of September 30, 2014, there was $54 million of unrecognized compensation cost related to options, restricted stock, restricted stock units, and performance share units under the plans. Unrecognized compensation costs for the options, restricted stock and restricted stock units will be recorded in future periods as compensation expense and have a remaining weighted average period of 1.8 years. The Company recorded stock-based compensation expense related to the incentive equity awards of $11 million and $32 million for the three and nine months ended September 30, 2014, respectively, and $6 million and $13 million for the three and nine months ended September 30, 2013, respectively. Phantom Value Plan On January 5, 2011, the Board of Directors of Realogy Group approved the Realogy Group LLC Phantom Value Plan (the “Phantom Value Plan”), which was intended to provide certain of the Company's executive officers, with an incentive (the “Incentive Award”) to remain in the service of the Company, increase interest in the success of Realogy and create the opportunity to receive compensation based upon Realogy’s success. On January 5, 2011, the Board of Directors of Realogy Group made initial grants of Incentive Awards in an aggregate amount of $22 million to certain executive officers of the Company. Under the Phantom Value Plan, each participant was eligible to receive a cash payment in the same proportion to his or her Incentive Award as the cash received by RCIV Holdings ("RCIV"), an affiliate of Apollo, upon the sale of shares of common stock bore to $1.338 billion (the face amount of the Realogy Group convertible debt issued to RCIV in January 2011 in exchange for debt it had previously purchased). The sale of shares by RCIV in the second and third quarter of 2013 triggered payments under the Phantom Value Plan. All of the participants elected to receive their payments in shares of common stock and therefore received unrestricted shares of common stock equal to the dollar amount then due, plus restricted shares of such common stock equal to the amount then due multiplied by 0.15. The restricted shares of common stock vested based on the participants' continued employment, on the first anniversary of issuance. The Company recognized stock compensation expense of $17 million and $42 million for the three and nine months ended September 30, 2013 related to the issuance of common stock. The Company also recognized $5 million related to the issuance of restricted shares of common stock during the year ended December 31, 2013 and an additional $2 million during the nine months ended September 30, 2014. No further expense will be recorded in connection with the Phantom Value Plan as the shares of restricted stock have fully vested. |
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- Definition
The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details.
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