Equity-Based Compensation

2017 Equity Incentive Plan

The Company has adopted its 2017 Equity Incentive Plan, as amended (the “2017 Equity Plan”), which permits the issuance of up to 5,000,000 shares of Class A common stock, which may be granted as incentive stock options, nonqualified stock options, SARs, restricted stock, restricted stock units, or PSUs. Awards under the Plan generally vest over four years, with options expiring not more than ten years from the date of grant, three months after termination of employment or one year after the date of death or termination due to disability of the grantee. As of March 31, 2019, there were 3,251,741 shares of Class A common stock available to grant under the Plan. Pursuant to the terms of the Plan, awards may not be granted after February 28, 2027.

Conversion of Restricted Interests

On March 6, 2017, in connection with the Reorganization described in Note 1, all outstanding options and unvested restricted interests of HLA were cancelled and replaced with stock options and restricted stock awards under the Plan. The replacement awards were issued with remaining vesting periods and other terms substantially identical to the awards they replaced. There was no difference in the fair value of the cancelled awards and replacement awards and no additional compensation expense was recorded.

Summary of Option Activity

A summary of option activity under the Plan for the three years ended March 31, 2019 is presented below:



	Year Ended March 31,
	2019		2018				2017
	Number of Options	Weighted- Average Exercise Price	Number of Options		Weighted- Average Exercise Price		Number of Options		Weighted- Average Exercise Price
Options outstanding at beginning of year	—	—	233,495		$	1.34	3,532,340		$	1.03
Options exercised	—	—	(233,495	)	1.34		(3,298,845	)	1.01
Options outstanding at end of year	—	—	—		—		233,495		1.34
Options exercisable at end of year	—	—	—		—		233,495		1.34

The intrinsic value of options exercised was $4,350 and $46,436 for the years ended March 31, 2018, and 2017, respectively.

Restricted Stock

The Company has granted restricted Class A common stock under the 2017 Equity Plan to certain employees as part of the annual bonus program and in connection with the Reorganization. Holders of restricted stock have all of the rights of a stockholder with respect to such shares, including the right to vote the shares but not the right to receive dividends or other distributions. Substantially all of the awards vest over four years in equal annual installments. On each vesting date, the related employee tax liabilities are either paid in cash by the employee or stock is sold back to the Company at the then-current fair value to offset the required minimum tax withholding obligations. Forfeitures are recognized as they occur. Compensation expense related to the awards is recognized ratably each month over the vesting period.

The change in unvested restricted stock for the year ended March 31, 2019 is as follows:



	Total Unvested		Weighted- Average Grant-Date Fair Value of Award
March 31, 2018	893,557		$	19.32
Granted	177,585		40.77
Vested	(381,537	)	17.03
Forfeited	(27,529	)	14.73
March 31, 2019	662,076		$	26.58

The weighted-average fair value per share of restricted stock awarded during the years ended March 31, 2019, 2018 and 2017 was $40.77, $32.45, and $17.49, respectively. The total fair value of restricted stock that vested during the years ended March 31, 2019, 2018 and 2017 was $16,601, $16,214, and $8,589, respectively. As of March 31, 2019, total unrecognized compensation expense related to restricted stock was $17,101 with a weighted-average amortization period of 2.97 years.

The total tax benefit recognized from share-based compensation for the years ended March 31, 2019, 2018 and 2017 was $2,537, $2,403 and $656, respectively.

Employee Share Purchase Plan

On September 6, 2018, the Company’s stockholders approved the Hamilton Lane Incorporated Employee Share Purchase Plan (the “ESPP”). The ESPP provides for a purchase price equal to 85% of the closing price of the Company’s Class A common stock on the last trading day of each offering period, which begins the first day of each fiscal quarter and ends on the last day of that fiscal quarter. Our initial offering period started January 1, 2019. At inception, there were 1,000,000 shares available for purchase through the ESPP and 992,863 shares were available as of March 31, 2019. The benefit received by the employees, which is equal to a 15% discount on the shares of the Company’s Class A common stock purchased, is recognized as equity-based compensation expense on the date of each purchase. During the year ended March 31, 2019, the Company recorded expense of $47 related to the ESPP.