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 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 June 30, 2013, the total number of shares available for future grant under the 2007 Stock Incentive Plan and the 2012 LTIP was approximately 0.1 million shares and 4.7 million shares, respectively.

Incentive Equity Awards Granted by Realogy Holdings

A summary of option, restricted share, and restricted stock unit activity is presented below (number of shares in millions):



	Time-vesting Options		Weighted Average Exercise Price		Phantom / Other Performance Options	Weighted Average Exercise Price		Restricted Stock		Weighted Average Grant Date Fair Value		Restricted Stock Units	Weighted Average Grant Date Fair Value
Outstanding at January 1, 2013	3.10		$	26.61	0.16	$	20.61	0.29		$	27.09	—	—
Granted	0.01		44.30		—	—		0.09		44.00		0.04	34.14
Exercised	(0.06	)	18.37		—	—
Vested								—		—		—	—
Cancelled/Expired	(0.02	)	19.24		—	—		(0.03	)	27.00		—	—
Outstanding at June 30, 2013 (a)	3.03		$	26.86	0.16	$	20.61	0.35		$	31.27	0.04	$	34.14

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(a)	Options outstanding at June 30, 2013 had an intrinsic value of $77 million and have a weighted average remaining contractual life of 8.7 years.

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 comparable companies. The expected term of the options granted represents the period of time that options were expected to be outstanding. 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.



	2013 Options
Grant date fair value	$	19.27
Expected volatility	43.9		%
Expected term (years)	6.25
Risk-free interest rate	1.0		%
Dividend yield	—

Stock-Based Compensation Expense

As of June 30, 2013, there was approximately $34 million of unrecognized compensation cost related to options, restricted stock and restricted stock 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 approximately 2.7 years. The Company recorded stock-based compensation expense related to the incentive equity awards of $4 million and $7 million for the three and six months ended June 30, 2013, respectively, and $1 million and $2 million related to incentive equity awards for the three and six months ended June 30, 2012, respectively.

Phantom Value Plan

On January 5, 2011, the Board of Directors of Realogy Holdings approved the Realogy Group LLC Phantom Value Plan (the “Phantom Value Plan”), which is intended to provide certain of Realogy’s executive officers, with an incentive (the “Incentive Award”) to remain in the service of Realogy, 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 the Company made initial grants of Incentive Awards in an aggregate amount of $22 million to certain executive officers of Realogy. The amount of the Incentive Awards granted to certain of Realogy's executive officers was determined by the sum of (1) the shares of common stock purchased by the executives at $250.00 per share in April 2007 (representing an aggregate purchase price of $19 million) and (2) the implied $250.00 per share grant date value in April 2007 of the executive's restricted stock grant (representing an aggregate of $3 million). Incentive Awards are immediately cancelable and forfeitable in the event of the termination of a participant’s employment for any reason. The Incentive Awards terminate 10 years from the date of grant.

Incentive Awards under the Phantom Value Plan

Under the Phantom Value Plan, each participant is eligible to receive a cash payment based upon the Company’s success and the cash received by RCIV Holdings ("RCIV"), an affiliate of Apollo, upon the transfer or sale of the 57.46 million shares of Common Stock (the "RCIV Shares") that RCIV received in connection with our initial public offering upon conversion of the $1.3 billion of Convertible Notes that had been purchased by RCIV in January 2011 (the "RCIV Notes"). Each participant is eligible to receive a payment with respect to his or her Incentive Award at such time and from time to time that RCIV receives cash upon the transfer or exchange of RCIV Shares, including any third party sale. A payment would be an amount which bears the same ratio to the dollar amount of the Incentive Award as (i) the aggregate amount of cash received by RCIV at such time for the transfer or exchange of all or a portion of the RCIV Shares bears to (ii) $1.3 billion, representing the amount of the RCIV Notes on the date of issuance. Any payments made under the Phantom Value Plan will be recorded as compensation expense when RCIV receives cash upon the discharge or third-party sale of the RCIV Shares.

In the event that a payment is to be made with respect to an Incentive Award, a participant may elect to receive, in lieu of the cash payment, unrestricted shares of common stock with a fair market value, as determined in good faith by the Compensation Committee, equal to the dollar amount then due on such Incentive Award, plus restricted shares of such common stock with a fair market value, as determined in good faith by the Compensation Committee, equal to the amount then due multiplied by 0.15. The restricted shares of common stock will vest based on continued employment, on the first anniversary of issuance. In addition, Incentive Awards are subject to acceleration and payment upon a change of control as specified in the Phantom Value Plan.

On April 16, 2013, Apollo sold 40.25 million shares of Realogy Holdings common stock at a public offering price of $44.00 per share in an underwritten public offering. RCIV Holdings sold 35.38 million shares in this offering which was approximately 62% of their prior ownership interest of 57.46 million shares. The sale of shares by RCIV Holdings triggered a payment under the Phantom Value Plan. All of the participants in the Phantom Value Plan elected to receive their payment 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 will vest based on the participants' continued employment, on the first anniversary of issuance. The Company issued 0.58 million shares of common stock and granted 0.09 million shares of restricted shares of common stock to such executive officers in April 2013 and recognized a charge of approximately $25 million related to the issuance of common stock and $1 million related to the issuance of restricted shares of common stock in the second quarter of 2013. The Company will recognize a charge of approximately $1 million in each of the next three quarters as the restricted shares vest.

On July 16, 2013, Apollo sold the remaining 25.13 million shares of Realogy Holdings common stock it owned at $47.57 per share in an underwritten public offering. RCIV Holdings sold 22.08 million shares in the July 2013 offering. The sale of shares by RCIV Holdings triggered a second and final payment under the Phantom Value Plan. See Note 12, "Subsequent Events" for additional information.