
	STOCK-BASED COMPENSATION

The Company has stock-based compensation plans available under which incentive equity awards such as non-qualified stock options, rights to purchase shares of common stock, restricted stock, restricted stock units and performance share units may be issued to employees, consultants or directors of Realogy.

Consistent with the 2014 long-term incentive equity awards, the 2015 awards include a mix of performance share unit awards ("PSUs"), restricted stock units (performance restricted stock units for the CEO and direct reports) and options.

The 2015 PSUs are incentives that reward grantees based upon the Company's financial performance over a three-year performance period ending December 31, 2017. There are two PSU awards: one is based upon the total stockholder return of Realogy's common stock relative to the total stockholder return of the SPDR S&P Homebuilders Index ("XHB") (the "RTSR award"), and the other is based upon the achievement of cumulative free cash flow goals. The number of shares that may be issued under the PSUs 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 175% of target for the RTSR award and 0% to 200% of target for the achievement of cumulative free cash flow award). The shares earned will be distributed in early 2018.

The restricted stock units vest over three years, with 33.33% vesting on each anniversary of the grant date. Time-vesting of performance restricted stock units for the CEO and direct reports is conditioned upon achievement of a minimum EBITDA performance goal for 2015.

The stock options have a maximum term of ten years and vest over four years, with 25% vesting on each anniversary date of the grant date. The options have an exercise price equal to the closing sale price of the Company's common stock on the date of grant.

The total number of shares authorized for issuance under the plans is 9.6 million shares. As of September 30, 2015, the total number of shares available for future grants under the plans was 1.4 million shares.

The fair value of restricted stock, restricted stock units and performance share units without a market condition is equal to the closing sale price of the Company's common stock on the date of grant. The fair value of the RTSR PSU award was estimated on the date of grant using the Monte Carlo Simulation method utilizing the following assumptions. Expected volatility was based on historical volatilities of the Company and select comparable companies.



	2015 RTSR PSU
Weighted average grant date fair value	$	41.08
Weighted average expected volatility	25.1		%
Weighted average volatility of XHB	21.1		%
Weighted average correlation coefficient	0.57
Weighted average risk-free interest rate	1.0		%
Weighted average dividend yield	—

A summary of restricted stock, restricted stock unit and performance share unit activities for the nine months ended September 30, 2015 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 (b)	Weighted Average Grant Date Fair Value
Unvested at January 1, 2015	0.09	$	27.14	0.74		$	45.83	0.37	$	46.63
Granted	—	—		0.62		46.52		0.43	44.69
Vested (a)	—	—		(0.30	)	45.83		—	—
Forfeited	—	—		(0.02	)	46.24		—	—
Unvested at September 30, 2015	0.09	$	27.14	1.04		$	46.21	0.80	$	45.59

______________


(a)	The total fair value of restricted stock units which vested during the nine months ended September 30, 2015 was $14 million.


(b)	The PSU amounts in the table are shown at the target amount of the award.

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.



	2015 Options
Weighted average grant date fair value	$	17.66
Weighted average expected volatility	36.1		%
Weighted average expected term (years)	6.25
Weighted average risk-free interest rate	1.6		%
Weighted average dividend yield	—

A summary of stock option unit activity for the nine months ended September 30, 2015 is presented below (number of shares in millions):



	Options		Weighted Average Exercise Price
Outstanding at January 1, 2015	3.22		$	30.02
Granted	0.18		46.45
Exercised (a) (b)	(0.16	)	21.31
Forfeited/Expired	(0.03	)	34.33
Outstanding at September 30, 2015 (c)	3.21		$	31.31

______________


(a)	The intrinsic value of options exercised during the nine months ended September 30, 2015 was $4 million.


(b)	Cash received from options exercised during the nine months ended September 30, 2015 was $3 million.


(c)	Options outstanding at September 30, 2015 have an intrinsic value of $34 million and have a weighted average remaining contractual life of 6.9 years.

Stock-Based Compensation Expense

As of September 30, 2015, based on current performance achievement expectations, there was $53 million of unrecognized compensation cost related to incentive equity awards under the plans which will be recorded in future periods as compensation expense over a remaining weighted average period of 1.2 years. The Company recorded stock-based compensation expense related to the incentive equity awards of $14 million and $40 million for the three and nine months ended September 30, 2015, respectively, and $11 million and $32 million for the three and nine months ended September 30, 2014, respectively.