|6 Months Ended|
Jun. 30, 2023
SLP has 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 $2,078 and $3,524, for the three months ended June 30, 2023 and 2022, respectively. Partnership distributions totaled $6,192 and $6,209 for the six months ended June 30, 2023 and 2022, 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 six months ended June 30, 2023 and 2022 amounted to $32,262 and $34,429, 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 six months ended June 30, 2023 and 2022. The Company treats SLP’s partner incentive allocations as compensation expense and accrues such amounts when earned. During the three months ended June 30, 2023 and 2022, SLP accrued partner incentive allocations of $6,962 and $8,323, respectively. During the six months ended June 30, 2023 and 2022, SLP accrued partner incentive allocations of $13,493 and $16,950, respectively.
Silvercrest has the following authorized and outstanding equity:
Each share of Class A common stock is entitled to . Class A common stockholders have 100% of the rights of all classes of Silvercrest’s capital stock to receive dividends.
During the six months ended June 30, 2023 and 2022, Silvercrest granted 0 and 10,270 restricted stock units, respectively. As of June 30, 2023 there are 23,732 unvested restricted stock units which will vest and settle in the form of Class A shares of Silvercrest.
Each share of Class B common stock is entitled to .
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 4,529,370 Class B units, which represent the right to receive their proportionate share of the distributions made by SLP, and 264,037 restricted stock units which will vest and settle in the form of Class B units of SLP. The 264,037 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.
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 three and six months ended June 30, 2023, Silvercrest issued the following shares:
Class A Common Stock
Class B Common Stock
In March 2023, the Company issued 8,242 shares of Class A common stock upon the vesting of restricted stock units.
In March 2023, the Company redeemed 1,555 shares of Class B common stock from certain existing partners, in connection with the exchange of 1,555 Class B units to Class A common stock pursuant to the Resale and Registration Rights Agreement.
In May 2023, the Company issued 50,081 shares of Class B common stock upon the vesting of restricted stock units.
In May 2023, the Company redeemed 44,669 shares of Class B common stock from certain existing partners, in connection with the exchange of 44,669 Class B units to Class A common stock pursuant to the Resale and Registration Rights Agreement.
In May 2023, in connection with the Neosho Acquisition, the Company issued 1,376 shares of Class B common stock.
In June 2023, the Company redeemed 21,243 shares of Class B common stock from certain existing partners, in connection with the exchange of 21,243 Class B units to Class A common stock pursuant to the Resale and Registration Rights Agreement.
On July 29, 2021, the Company announced that its Board of Directors had approved a share repurchase program authorizing the Company to repurchase up to $15,000 of the Company’s outstanding Class A common stock (the “Repurchase Program”).
Repurchases under the Repurchase Program may be made using either cash on hand, borrowings under the Company’s existing credit facilities or other sources, or (a) one or more 10b5-1 share trading plans, to be established with one or more banks or brokers (the “Trading Plans”), (b) pursuant to accelerated share repurchase programs with one or more investment banks or other financial intermediaries (the “ASR Programs”), or (c) through repurchases to be made outside of the Trading Plans or ASR Programs but in compliance with all applicable requirements under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), including the safe harbor provided by Exchange Act Rule 10b-18, and consummated during an open trading window under the Company’s insider trading policy. The program may be amended, suspended, or discontinued at any time and does not commit the Company to repurchase any shares of Common Stock.
As of June 30, 2023 and December 31, 2022, the Company had purchased 770,635 and 508,782 shares of Class A common stock, respectively, for an aggregate price of approximately $14,284 and $9,295, respectively.
Treasury stock is accounted for under the cost method and is included as a deduction from equity in the Company’s Equity section of the Condensed Consolidated Statement of Financial Condition. Upon any subsequent retirement or resale, the treasury stock account is reduced by the cost of such stock.
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.
The entire disclosure for equity.
Reference 1: http://www.xbrl.org/2003/role/disclosureRef