Quarterly report pursuant to Section 13 or 15(d)

Equity

v3.19.3
Equity
9 Months Ended
Sep. 30, 2019
Equity [Abstract]  
Equity

11. EQUITY

SLP historically made, and will continue to make, distributions of its net income to the holders of its partnership units for income tax purposes as required under the terms of its Second Amended and Restated Limited Partnership Agreement and also made, and will continue to make, additional distributions of net income under the terms of its Second Amended and Restated Limited Partnership Agreement.  Partnership distributions totaled $1,626 and $1,529, for the three months ended September 30, 2019 and 2018, respectively.  Partnership distributions totaled $7,385 and $6,541, for the nine months ended September 30, 2019 and 2018, respectively  

Pursuant to SLP’s Second Amended and Restated Limited Partnership Agreement, partner incentive allocations are treated as distributions of net income. The remaining net income or loss after partner incentive allocations was generally allocated to the partners based on their pro rata ownership. Net income allocation is subject to the recovery of the allocated losses of prior periods. Distributions of partner incentive allocations of net income for the nine months ended September 30, 2019 and 2018 amounted to $27,199 and $24,935, respectively. The distributions are included in non-controlling interests in the Condensed Consolidated Statements of Financial Condition and Condensed Consolidated Statement of Changes in Equity for the nine months ended September 30, 2019 and 2018.  The Company treats SLP’s partner incentive allocations as compensation expense and accrues such amounts when earned.  During the three months ended September 30, 2019 and 2018, SLP accrued partner incentive allocations of $7,115 and $7,154, respectively.  During the nine months ended September 30, 2019 and 2018, SLP accrued partner incentive allocations of $18,766 and $21,055, respectively.      

Silvercrest—Equity

Silvercrest has the following authorized and outstanding equity:

 

 

  

Shares at September 30, 2019

 

  

Authorized

 

  

Outstanding

 

  

Voting Rights

  

Economic
Rights

Common shares

  

 

 

 

  

 

 

 

  

 

  

 

Class A, par value $0.01 per share

  

 

50,000,000

  

  

 

9,180,013

  

  

1 vote per share (1), (2)

  

All (1), (2)

Class B, par value $0.01 per share

  

 

25,000,000

  

  

 

5,180,883

  

  

1 vote per share (3), (4)

  

None (3), (4)

Preferred shares

  

 

 

 

  

 

 

 

  

 

  

 

Preferred stock, par value $0.01 per share

  

 

10,000,000

  

  

 

 

  

See footnote (5) below

  

See footnote (5) below

 

(1)

Each share of Class A common stock is entitled to one vote per share. Class A common stockholders have 100% of the rights of all classes of Silvercrest’s capital stock to receive dividends.

(2)

During 2016, Silvercrest granted 10,582 restricted stock units which will vest and settle in the form of Class A shares of Silvercrest, of which 1,896 remain unvested as of September 30, 2019.

(3)

Each share of Class B common stock is entitled to one vote per share.

(4)

Each Class B unit of SLP held by a principal is exchangeable for one share of the Company’s Class A common stock. The principals collectively hold 5,180,883 Class B units, which represent the right to receive their proportionate share of the distributions made by SLP, and 35,336 restricted stock units which will vest and settle in the form of Class B units of SLP.  The 35,336 restricted stock units which have been issued to our principals entitle the holders thereof to participate in distributions from SLP as if the underlying Class B units are outstanding and thus are taken into account to determine the economic interest of each holder of units in SLP. However, because the Class B units underlying the restricted stock units have not been issued and are not deemed outstanding, the holders of restricted stock units have no voting rights with respect to those Class B units. Silvercrest will not issue shares of Class B common stock in respect of restricted stock units of SLP until such time that the underlying Class B units are issued.

(5)

Silvercrest’s board of directors has the authority to issue preferred stock in one or more classes or series and to fix the rights, preferences, privileges and related restrictions, including dividend rights, dividend rates, conversion rights, voting rights, terms of redemption, redemption prices, liquidation preferences and the number of shares constituting any class or series, or the designation of the class or series, without the approval of its stockholders.

Silvercrest is dependent on cash generated by SLP to fund any dividends. Generally, SLP will distribute its profits to all of its partners, including Silvercrest, based on the proportionate ownership each holds in SLP. Silvercrest will fund dividends to its stockholders from its proportionate share of those distributions after provision for its income taxes and other obligations.

During the nine months ended September 30, 2019, Silvercrest issued the following shares:

Class A Common Stock

 

 

 

Transaction

 

# of

 

 

 

Date

 

Shares

 

Class A common stock outstanding - January 1, 2019

 

 

 

 

8,518,096

 

Issuance of Class A common stock upon conversion of
Class B units to Class A common stock

 

March 2019

 

 

17,074

 

Issuance of Class A common stock upon conversion of
Class B units to Class A common stock

 

May 2019

 

 

84,268

 

Issuance of Class A common stock upon vesting of restricted stock units

 

May 2019

 

 

1,896

 

Issuance of Class A common stock upon conversion of
Class B units to Class A common stock

 

June 2019

 

 

2,386

 

Issuance of Class A common stock upon conversion of
Class B units to Class A common stock

 

August 2019

 

 

556,293

 

Class A common shares outstanding – September 30, 2019

 

 

 

 

9,180,013

 

 

Class B Common Stock

 

 

 

Transaction

 

# of

 

 

 

Date

 

Shares

 

Class B common stock outstanding - January 1, 2019

 

 

 

 

4,934,103

 

Issuance of Class B common stock in connection with the Neosho Acquisition

 

January 2019

 

 

1,516

 

Cancellation of Class B common stock upon conversion of Class B units to Class A common stock

 

March 2019

 

 

(17,074

)

Cancellation of Class B common stock upon conversion of Class B units to Class A common stock

 

May 2019

 

 

(84,268

)

Issuance of Class B common stock upon vesting of restricted stock units

 

May 2019

 

 

948

 

Cancellation of Class B common stock upon conversion of Class B units to Class A common stock

 

June 2019

 

 

(2,386

)

Issuance of Class B common stock in connection with the Cortina Acquisition

 

July 2019

 

 

662,713

 

Cancellation of Class B common stock upon conversion of Class B units to Class A common stock

 

August 2019

 

 

(556,293

)

Issuance of Class B common stock upon vesting of restricted stock units

 

August 2019

 

 

241,624

 

Class B common shares outstanding – September 30, 2019

 

 

 

 

5,180,883

 

In January 2019, the Company issued 1,516 shares of Class B common stock to certain Principals of Neosho in connection with the Neosho Acquisition.

In March 2019, the Company redeemed from certain existing partners 17,074 shares of Class B common stock in connection with the exchange of a like number of Class B units to Class A common stock pursuant to the resale and registration rights agreement between the Company and its principals.

In May 2019, the Company redeemed from certain existing partners 84,268 shares of Class B common stock in connection with the exchange of a like number of Class B units to Class A common stock pursuant to the resale and registration rights agreement between the Company and its principals.

In May 2019, the Company issued 1,896 shares of Class A common stock and 948 shares of Class B common stock upon the vesting of restricted stock units.

In June 2019, the Company redeemed from certain existing partners 2,386 shares of Class B common stock in connection with the exchange of a like number of Class B units to Class A common stock pursuant to the resale and registration rights agreement between the Company and its principals.

In July 2019, the Company issued 662,713 shares of Class B common stock to certain Principals of Cortina in connection with the Cortina Acquisition.

In August 2019, the Company redeemed from certain existing partners 556,293 shares of Class B common stock in connection with the exchange of a like number of Class B units to Class A common stock pursuant to the resale and registration rights agreement between the Company and its principals.

In August 2019, the Company issued 241,624 shares of Class B common stock upon the vesting of restricted stock units.

The total amount of shares of Class B common stock outstanding and held by principals equals the number of Class B units those individuals hold in SLP. Shares of Silvercrest’s Class B common stock are issuable only in connection with the issuance of Class B units of SLP. When a vested or unvested Class B unit is issued by SLP, Silvercrest will issue to the holder one share of its Class B common stock in exchange for the payment of its par value. Each share of Silvercrest’s Class B common stock will be redeemed for its par value and cancelled by Silvercrest if the holder of the corresponding Class B unit exchanges or forfeits its Class B unit pursuant to the terms of the Second Amended and Restated Limited Partnership Agreement of SLP, the terms of the 2012 Equity Incentive Plan of Silvercrest, or otherwise.