Related Party Transactions

12 Months Ended

Dec. 31, 2013

Related Party Transactions [Abstract]

Related Party Transactions

Related Party Transactions

The Company acts as managing member, general partner and/or investment manager to most of the Company's alternative asset management products, HealthCare Royalty Management, LLC, and the HealthCare Royalty Partners funds, and certain managed accounts. Management fees and incentive income are primarily earned from affiliated entities. Fees receivable primarily represents the management fees and incentive income owed to the Company from these related funds and certain affiliated managed accounts. As of December 31, 2013 and 2012, $18.9 million and $13.6 million, respectively, included in fees receivable are earned from related parties.

The Company may, at its discretion, reimburse certain fees charged to the funds that it manages to avoid duplication of fees when such funds have an underlying investment in another affiliated investment fund. For the years endedDecember 31, 2013, 2012, and 2011, the Company reimbursed the funds it manages $1.7 million, $1.5 million, and $1.6 million, respectively, which were recorded net in management fees and incentive income in the accompanying consolidated statements of operations. As of December 31, 2013 and 2012, related amounts still payable were $1.7 million and $1.7 million, respectively, and were reflected in fees payable in the accompanying consolidated statements of financial condition.

The Company may also make loans to employees or other affiliates, excluding executive officers of the Company. These loans are interest bearing and settle pursuant to the agreed-upon terms with such employees or affiliates and are included in due from related parties in the consolidated statements of financial condition. As of December 31, 2013 and 2012, loans to employees of $6.0 million and $5.1 million, respectively, were included in due from related parties on the consolidated statements of financial condition. Of these amounts $3.8 million and $2.3 million, respectively, are related to forgivable loans. These forgivable loans provide for a cash payment up-front to employees, with the amount due back to the Company forgiven over a vesting period.  An employee that voluntarily ceases employment, or is terminated with cause, is generally required to pay back to the Company any unvested forgivable loans granted to them.  The forgivable loans are recorded as an asset to the Company on the date of grant and payment, and then amortized to compensation expense on a straight-line basis over the vesting period.  The vesting period on forgivable loans is generally one to three years. The Company recorded compensation expense of $3.2 million, $1.9 million, and $1.8 million, for the years endedDecember 31, 2013, 2012, and 2011, respectively. This expense is included in employee compensation and benefits in the consolidated statement of operations. For the years endedDecember 31, 2013, 2012, and 2011, the interest income was insignificant for all loans and advances. The remaining balance included in due from related parties primarily relates to amounts due to the Company from affiliated funds and real estate entities due to expenses paid on their behalf.

In April 2011, the Company entered into a credit agreement with Starboard Value LP (see Note 6), whereby the Company can loan up to $3.0 million to Starboard Value LP at an interest rate of LIBOR plus 3.75% (payable quarterly) with a maturity of March 30, 2014. As of December 31, 2013, $1.5 million is included in due from related parties in the accompanying consolidated statement of financial condition. For the year ended December 31, 2013, interest charged for this loan was $0.1 million. For the years ended December 31, 2012 and 2011, interest charged for this loan was insignificant.

Included in due to related parties is approximately $0.4 million and $0.4 million as of December 31, 2013 and 2012, respectively, related to a subordination agreement with an investor in certain real estate funds. This total is based on a hypothetical liquidation of the real estate funds as of the balance sheet date.