Annual report pursuant to Section 13 and 15(d)

Stockholders' Equity

v2.4.1.9
Stockholders' Equity
12 Months Ended
Dec. 31, 2014
Equity [Abstract]  
Stockholders' Equity

11. STOCKHOLDERS’ EQUITY

Prior to the reorganization described in Note 1, Silvercrest was a private company. 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. Prior to the reorganization, distributions were treated as equity transactions and recorded in the financial statements on the payment date. Partnership distributions totaled $5,242, $29,317 and $14,749 for the years ended December 31, 2014, 2013 and 2012, respectively. Distributions paid or accrued prior to June 30, 2013 are included in partners’ capital and excess of liabilities, redeemable partners’ capital and partners’ capital over assets, respectively, in the Consolidated Statements of Financial Condition. Distributions accrued and paid subsequent to June 30, 2013 are included in non-controlling interests in the Consolidated Statements of Financial Condition.

SLP distributed $10,000 to its existing partners prior to the consummation of the IPO.

Prior to the reorganization and pursuant to SLP’s Second Amended and Restated Limited Partnership Agreement, as amended and restated, partner incentive allocations were 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 years ended December 31, 2014, 2013 and 2012 amounted to $14,266, $12,104 and $8,775, respectively, and are included in non-controlling interests as of December 31, 2014 and 2013 and in excess of liabilities, redeemable partners’ capital and partners’ capital over assets as of December 31, 2012. As part of the reorganization, partner incentive distributions for the six months ended June 30, 2013 were treated as an equity transaction and accrued and recorded in accrued compensation in the Consolidated Statements of Financial Condition. Subsequent to the consummation of the IPO, Silvercrest treats SLP’s partner incentive allocations as compensation expense and accrues such amounts when earned. During the years ended December 31, 2014 and 2013, SLP accrued partner incentive allocations of $18,653 and $14,196, respectively.

The pre-IPO partners of SLP received Silvercrest shares in connection with the reorganization and IPO, as described below.

Silvercrest—Stockholders’ Equity

As described in Note 1, Silvercrest’s equity structure was modified in connection with the IPO-related reorganization.

Silvercrest has the following authorized and outstanding equity:

 

 

  

Shares at December 31, 2014

 

  

Authorized

 

  

Outstanding

 

  

Voting Rights

  

Economic
Rights

Common shares

  

 

 

 

  

 

 

 

  

 

  

 

Class A, par value $0.01 per share

  

 

50,000,000

  

  

 

7,768,010

  

  

1 vote per
share (1)

  

All (1)

 

Class B, par value $0.01 per share

  

 

 

25,000,000

  

  

 

 

4,520,413

  

  

 

1 vote per
share (2),(3)

  

 

None (2), (3)

Preferred shares

  

 

 

 

  

 

 

 

  

 

  

 

Preferred stock, par value $0.01 per share

  

 

10,000,000

  

  

 

 

  

See footnote (4)
below

  

See footnote (4)
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)

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

(3)

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 4,520,413 Class B units, which represents the right to receive their proportionate share of the distributions made by SLP and 52,188 deferred equity units exercisable for Class B units of SLP, which represents the right to receive additional proportions of the distributions made by SLP. The 52,188 deferred equity 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 deferred equity units have not been issued and are not deemed outstanding, the holders of deferred equity 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 deferred equity units of SLP until such time that the underlying Class B units are issued.

(4)

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 income taxes and other obligations.

In connection with the reorganization and IPO described in Note 1, “Reorganization and Initial Public Offering”, Silvercrest issued the following shares on the date of the reorganization:

Class A Common Stock

Silvercrest issued 4,790,684 shares of Class A common stock in the IPO. Each Class B unit of SLP acquired by the Company with proceeds from the IPO immediately converted to a Class A unit. Class A units have the same rights as Class B units. During July 2013, the Company issued 718,603 shares of Class A common stock pursuant to the underwriters’ exercise in full of the over-allotment option that the Company granted to the underwriters in connection with its IPO. During November 2013, 2,013,677 shares of Class B common stock automatically converted to Class A common stock upon the death of the Company’s former Chief Executive Officer as per the terms of an exchange agreement entered into with the Company’s principal, a corresponding amount of Class B common stock was redeemed by the Company.  

Class B Common Stock

 

 

 

Transaction

 

 

 

# of

 

 

 

Date

 

 

 

Shares

 

Class B common stock outstanding - January 1, 2014

 

 

 

 

 

4,464,617

 

Class B common stock repurchased and cancelled

 

February 2014

 

 

 

(16,530

)

Class B common stock issued upon vesting of deferred equity units

 

February 2014

 

 

 

261,958

 

Class B common stock surrendered and cancelled

 

May 2014

 

 

 

(5,893

)

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

 

Q3 2014

 

 

 

(133,739

)

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

 

Q4 2014

 

 

 

(110,000

)

Class B common stock issued to new partners

 

December 2014

 

 

 

60,000

 

Class B common shares outstanding - December 31, 2014

 

 

 

 

 

4,520,413

 

In February 2014, the Company purchased from a former partner 16,530 shares of Class B common stock at a price equal to the par value thereof in connection with the repurchase of a like number of Class B Units from such former partner at a price of $14.50 per share.

In February 2014, the Company issued 261,958 shares of Class B common stock upon the vesting of deferred equity units which resulted in the issuance of a like number of Class B units of Silvercrest L.P. The shares of Class B common stock were issued pursuant to the terms of the Certificate of Incorporation of the Company which requires the Company to issue at the par value per share of Class B common stock, one share of Class B common stock for each Class B Unit of Silvercrest L.P. issued.    

In May 2014, a former partner surrendered 5,893 shares of Class B common stock at a price equal to the par value thereof in connection with the surrender of a like number of Class B Units from such former partner at a price of $17.73 per share. 4,596 shares of the Class B common stock were surrendered in settlement of an outstanding note receivable in the amount of $81 from the former partner.

During the three months ended September 30, 2014, the Company redeemed from certain existing partners 133,739 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.

During the three months ended December 31, 2014, the Company redeemed from certain existing partners 110,000 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 December 2014, the Company issued 60,000 Class B units to newly admitted partners at a price of $15.66 per share and an equivalent number of Class B common shares at par value.  

The total number of shares of Class B common stock outstanding and held by employee-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, subject to the holder’s agreement to be bound by the terms of a stockholders’ agreement amongst the Class B stockholders of the Company. 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.