14. OTHER EXPENSES

Our other expenses consist of the management fees we incur as a result of the Management Agreement with our Manager and general and administrative expenses.

Management Fees

In conjunction with the Investment Management Business Sale, we entered into a new management agreement with our Manager, which was amended and restated as of March 26, 2013, and further amended on July 30, 2013, pursuant to which our Manager earns a base management fee in an amount equal to the greater of (i) $250,000 per annum and (ii) 1.50% per annum multiplied by our outstanding Equity balance, as defined in the Management Agreement with our Manager. In addition, our Manager is entitled to an incentive fee in an amount equal to the product of (i) 20% and (ii) the excess of (a) our Core Earnings (as defined in the Management Agreement) for the previous 12-month period (or the period since January 1, 2013, whichever is shorter) over (b) an amount equal to 7.00% per annum multiplied by our outstanding Equity, provided that our Core Earnings over the prior three-year period (or the period since the date of the first offering of our class A common stock following December 19, 2012, whichever is shorter) is greater than zero. Core Earnings is generally equal to our net income (loss) prepared in accordance with GAAP, excluding (i) certain non-cash items and (ii) the net income (loss) related to our legacy portfolio. Our Manager has determined, and a majority of our independent directors has approved, the exclusion from Core Earnings of the amortization of the deemed issue discount on our convertible notes resulting from the conversion option value accounting under GAAP.

During the year ended December 31, 2013, we incurred $5.9 million of management fees payable to our Manager. We did not incur any incentive fees payable to our Manager during the year ended December 31, 2013.

General and Administrative Expenses

General and administrative expenses consisted of the following ($ in thousands):


	Year Ended December 31,
	2013		2012		2011
Professional services	$	2,441	$	895	$	2,210
Operating and other costs		1,971		1,732		2,283
Transaction costs – investment management sale⁽¹⁾		—		3,870		—

		4,412		6,497		4,493

Non-cash compensation expenses
Management incentive awards plan – CT Legacy Partners⁽²⁾		4,915		2,232		3,054
Director stock-based compensation		263		223		206
Employee stock-based compensation		1,064		1,353		505

		6,242		3,808		3,765

Expenses of consolidated securitization vehicles		851		64		724

	$	11,505	$	10,369	$	8,982

(1)

See Note 1 for discussion of the Investment Management Business Sale.

(2)

Represents the accrual of amounts payable under the CT Legacy Partners management incentive awards during the period. See below for discussion of the CT Legacy Partners management incentive awards plan.

As a result of our Investment Management Business Sale, the operating expenses related to our investment management business have been reclassified to income (loss) from discontinued operations on our consolidated statements of operations. Refer to Note 3 for further discussion of the Investment Management Business Sale.

CT Legacy Partners Management Incentive Awards Plan

In conjunction with our March 2011 Restructuring, we created an employee pool for up to 6.75% of the distributions paid to the common equity holders of CT Legacy Partners (subject to certain caps and priority distributions). As of December 31, 2013, incentive awards for 92% of the pool have been granted, and the remainder was unallocated. If any awards remain unallocated at the time distributions are paid, any amounts otherwise payable to the unallocated awards will be distributed pro rata to the plan participants then employed by an affiliate of our Manager.

Approximately 54% of these grants have the following vesting schedule, which is contingent on continued employment with an affiliate of our Manager: (i) 25% vests on the date of grant; (ii) 25% vests in March 2013; (iii) 25% vests in March 2014; and (iv) the remainder vests upon our receipt of distributions from CT Legacy Partners. Of the remaining 46% of these grants, 28% are fully vested as a result of an acceleration event, and 18% vest only upon our receipt of distributions from CT Legacy Partners.

We accrue a liability for the amounts due under these grants based on the value of CT Legacy Partners and the periodic vesting of the awards granted. During 2013, we made payments of $7.6 million under the CT Legacy Partners incentive plan, which resulted in the recognition of compensation expenses of $2.0 million related to previously unvested awards. Accrued payables for these awards were $2.8 million and $5.3 million as of December 31, 2013 and 2012, respectively.