RE/MAX Holdings, Inc. appointed Stephen Joyce as new CEO

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangement of Certain Officers.


Departure of Chief Executive Officer and Director


On January 10, 2022, Adam Contos, the Chief Executive Officer of RE/MAX Holdings, Inc. (the "Company"), reached an understanding with the Board of Directors (the "Board") of the Company regarding his decision to leave the Company in order to spend more time with his family and to pursue new entrepreneurial endeavors. The Company and Mr. Contos entered into an Executive Separation and Release Agreement (the "Separation Agreement") in order to, among other things, provide for a transition period with the appointment of a new Chief Executive Officer. Pursuant to the Separation Agreement, Mr. Contos will cease serving as the Chief Executive Officer and as a member of the Company's Board effective March 31, 2022. Mr. Contos's resignation is not because of any disagreement with the Company on any matter relating to the Company's operations, policies, or practices.


Pursuant to the Separation Agreement, Mr. Contos will receive 24 months of his annual base salary, which shall be paid in the form of salary continuation beginning in April 2022, 24 months of continued employee benefits from the Company, a 2021 performance bonus based on the Company's achievement of financial metrics and strategic goals in accordance with the Company's short-term incentive plan for executive officers, and a pro-rated 2022 bonus at the target level. In addition, 30,893 of his unvested performance restricted stock units will vest on March 31, 2022, at which time his remaining performance and time-based restricted stock units will be forfeited. Mr. Contos will receive certain other benefits as set forth in the Separation Agreement.


The foregoing summary of the Separation Agreement does not purport to be complete and is qualified it its entirety by reference to such agreement, a copy of which is filed as Exhibit 10.1 and incorporated herein by reference.


Appointment of Chief Executive Officer on Interim Basis


The Company's Board has appointed Board member Stephen Joyce to become Chief Executive Officer on an interim basis upon Mr. Contos' departure and to serve as Co-Chief Executive Officer with Mr. Contos during an anticipated one-month time period from March 1, 2022 to March 31, 2022, to allow for an orderly transition of responsibilities. The Company expects to form a Chief Executive Officer search committee of Board members to identify a permanent Chief Executive Officer replacement and plans to retain an executive search firm to assist with the process, which will include evaluating internal and external candidates for the Chief Executive Officer role.


The Board has determined that Mr. Joyce is no longer independent as a result of his appointment as Chief Executive Officer, and therefore, he has resigned from the Compensation and Nominating and Corporate Governance Committees of the Board. As a result, the Board plans to commence a selection process to add one additional independent Board director who would fill the seat vacated by Mr. Contos. The Company is committed to a corporate governance program that ensures that its Board has the right people and practices to effectively create stockholder value while considering the interests of all of its stakeholders.


Mr. Joyce, 61, is a seasoned executive with proven experience successfully leading global franchise operations, including Dine Brands Global, the franchisor of IHOP and Applebee's Grill + Bar, where he was previously Chief Executive Officer and Board member. Prior to Dine Brands Global, Mr. Joyce served as President and Chief Executive Officer of Choice Hotels International, where he reinvigorated and grew its hotel brands, expanding them from nine to 13 brands, and grew Choice Hotels internationally to more than 6,700 hotels in over 45 countries. Earlier in his career, Mr. Joyce spent over 25 years with Marriott International, Inc., the world's largest hotel company, where he created the first franchise program and helped build a network of more than 2,500 franchised hotels. Mr. Joyce also serves on the Board of Directors of Hospitality Investors Trust, Inc. and on the Board of Directors of Cooperative for Assistance and Relief Everywhere, Inc. (CARE).


The Company has entered into an Interim Executive Agreement with Mr. Joyce which provides for a signing bonus of $100,000 in March 2022, and a monthly salary of $100,000 per month starting in March 2022 for the duration of his tenure as Co-Chief Executive Officer and after March 31, 2022, as Chief Executive Officer, with a six-month minimum. In addition, Mr. Joyce will receive a one-time option award with an aggregate grant date fair value of $1,000,000, vesting in 10 equal monthly installments beginning on March 31, 2022, subject to Mr. Joyce's continued service as Chief Executive Officer, with a six-month minimum. The Company anticipates that Mr. Joyce will remain on the Board during the time that he serves as Chief Executive Officer; however, Mr. Joyce will not receive incremental compensation for his service on the Board during such time. Mr. Joyce will receive certain other benefits as set forth in the Interim Executive Agreement.


2


The foregoing summary of the Interim Executive Agreement does not purport to be complete and is qualified it its entirety by reference to such agreement, a copy of which is filed as Exhibit 10.2 and incorporated herein by reference.


There are no related party transactions between Mr. Joyce and the Company as defined in Item 404(a) of Regulation S-K. There are no family relationships between Mr. Joyce and any other director, executive officer or person nominated or chosen to be a director or executive officer of the Company


Approval and Adoption of Named Executive Officers' Reward and Retention Bonus Program


Also on January 10, 2022, the Compensation Committee of the Board (the "Committee") approved and adopted Reward and Retention Bonus Agreements (the "Reward and Retention Agreements"), which provide for a special payment of cash awards to certain of the Company's Named Executive Officers: Karri R. Callahan, the Company's Chief Financial Officer; Nicholas R. Bailey, President and Chief Executive Officer of RE/MAX; Serene M. Smith, the Company's Chief Operating Officer and Chief of Staff; and Ward M. Morrison, President and Chief Executive Officer of Motto Mortgage and wemlo. The Committee adopted the Reward and Retention Agreements to recognize these executives' outsized contributions to the Company's strategic goals in 2021, including the substantial effort dedicated to successfully completing the acquisition of RE/MAX INTEGRA's North American business and the integration of the Gadberry Group and wemlo acquisitions which drove sustainable and meaningful revenue and earnings growth for the Company. In addition, the Reward and Retention Agreements are structured to encourage retention of the Company's management team given the transition of the Company's Chief Executive Officer and amidst the highly competitive market for talent, both within the real estate and mortgage industries and, more generally, for seasoned top leadership with the specific expertise possessed by these Named Executive Officers. Additionally, the Reward and Retention Agreements are in recognition of excellent leadership throughout the pandemic, which laid the groundwork for 2021's record results.


Under the Reward and Retention Agreements, certain of the Company's Named Executive Officers were granted special cash bonus awards in the following amounts: $308,000 for Ms. Callahan; $312,000 for Mr. Bailey; $288,000 for Ms. Smith; and $280,000 for Mr. Morrison. An initial payment in the amount of 75% of these cash awards will be made to each executive on January 15, 2022. The remaining 25% of these cash awards will be payable on September 30, 2022. The awards also require the grantees to agree to certain restrictive covenants, including non-competition, non-solicitation, non-disparagement, and confidentiality provisions. The awards are subject to repayment provisions in favor of the Company, at the discretion of the Committee, tied to continued service through September 30, 2022, and adherence with the restrictive covenants through December 31, 2022, as set forth in the Reward and Retention Agreements. The foregoing description of the Reward and Retention Agreements is qualified in its entirety by reference to the form of Reward and Retention Agreement, which is filed hereto as Exhibit 10.3 and incorporated herein by reference.


Executive Officer Title Changes


RE/MAX President Nick Bailey has been named as President and Chief Executive Officer of RE/MAX and will continue to lead all aspects of the RE/MAX brand and business globally. Additionally, Motto President Ward Morrison has been named as President and Chief Executive Officer of Motto Mortgage and wemlo and will continue to lead all aspects of the Company's mortgage operations. Both title changes were effective as of January 10, 2022.


3