Related Party Transactions

6 Months Ended

Jun. 30, 2014

Related Party Transactions [Abstract]

Related Party Transactions

Related Party Transactions

The Company and its affiliated entities are the managing member, general partner and/or investment manager to the Company's alternative asset management products and certain managed accounts. Management fees and incentive income are primarily earned from affiliated entities. As of June 30, 2014 and December 31, 2013, $15.6 million and $18.9 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 three months endedJune 30, 2014 and 2013, the Company reimbursed the funds it manages $0.4 million and $0.5 million, respectively and $0.8 million and $1.0 million, for the six months endedJune 30, 2014 and 2013, respectively, which were recorded net in management fees and incentive income in the accompanying condensed consolidated statements of operations. As of June 30, 2014 and December 31, 2013, related amounts still payable were $1.6 million and $1.7 million, respectively, and were reflected in fees payable in the accompanying condensed 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 condensed consolidated statements of financial condition. As of June 30, 2014 and December 31, 2013, loans to employees of $9.1 million and $6.0 million, respectively, were included in due from related parties on the condensed consolidated statements of financial condition. Of these amounts $6.3 million and $3.8 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 $1.1 million and $0.9 million, respectively, related to amortization of forgivable loans for the three months endedJune 30, 2014 and 2013, and $1.9 million and $1.2 million, for the six months endedJune 30, 2014 and 2013, respectively. This expense is included in employee compensation and benefits in the condensed consolidated statement of operations. For the three and six months endedJune 30, 2014, and 2013, 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 5), whereby the Company was able to loan up to $3.0 million to Starboard Value LP at an interest rate of LIBOR plus 3.75% (payable quarterly). This loan matured on March 30, 2014 and was fully repaid. As of December 31, 2013, $1.5 million , related to this loan, was included in due from related parties in the accompanying consolidated statement of financial condition. For the three and six months endedJune 30, 2014, and 2013, interest charged for this loan was insignificant.

Included in due to related parties is approximately $0.4 million and $0.4 million as of June 30, 2014 and December 31, 2013, 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.

The Company entered into three real estate loan participation agreements during the six months endedJune 30, 2014 with related parties amounting to $50 million. All principle and interest balances were repaid to the Company as of June 30, 2014. Interest earned on these loans was insignificant.