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Stockholders' Equity
6 Months Ended
Jun. 30, 2014
Stockholders' Equity Note [Abstract]  
Shareholder's equity
Note 9. Stockholders' Equity

APAM - Stockholders’ Equity
As of June 30, 2014 and December 31, 2013, APAM had the following authorized and outstanding equity:
 
 
 
Outstanding
 
 
 
 
 
Authorized
 
June 30, 2014
 
December 31, 2013
 
Voting Rights (1)
 
Economic Rights (2)
Common shares
 
 
 
 
 
 
 
 
 
Class A, par value $0.01 per share
500,000,000

 
31,141,608

 
19,807,436

 
1 vote per share
 
Proportionate
Class B, par value $0.01 per share
200,000,000

 
21,566,436

 
25,271,889

 
5 votes per share
 
None
Class C, par value $0.01 per share
400,000,000

 
18,817,775

 
25,206,554

 
1 vote per share
 
None
 
 
 
 
 
 
 
 
 
 
Preferred shares
 
 
 
 
 
 
 
 
 
Convertible preferred, par value $0.01 per share
15,000,000

 

 
1,198,128

 
1 vote per share
 
Proportionate
(1) The Company’s employees to whom Artisan has granted equity have entered into a stockholders agreement with respect to all shares of APAM common stock they have acquired from the Company and any shares they may acquire from the Company in the future, pursuant to which they granted an irrevocable voting proxy to a Stockholders Committee. As of June 30, 2014, Artisan’s employees held 1,616,969 shares of Class A common stock subject to the agreement and all 21,566,436 outstanding shares of Class B common stock.
(2) The holders of preferred units of Holdings were entitled to preferential distributions in the case of a partial capital event or upon dissolution of Holdings. In the case of any distributions on the preferred units, prior to paying any dividends on the Class A common stock, APAM was required to pay the holders of convertible preferred stock a dividend equal to the distribution APAM received in respect of the preferred units it held, net of taxes, if any.

APAM is dependent on cash generated by Holdings to fund any dividends. Generally, Holdings will make distributions to all of its partners, including APAM, based on the proportionate ownership each holds in Holdings. APAM will fund dividends to its stockholders from its proportionate share of those distributions after provision for its taxes and other obligations. During the three and six months ended June 30, 2014, APAM paid dividends of $0.55 and $2.73, respectively, per share of outstanding Class A common stock and $0.81 and $3.81, respectively, per share of outstanding convertible preferred stock.
Class A Common Stock
During the six months ended June 30, 2014, APAM issued 11,334,172 shares of Class A common stock, in connection with the 2014 Follow-on Offering, H&F Conversion, Holdings Common Unit Exchange and restricted share award grants. APAM also granted a total of 8,670 restricted stock units with respect to Class A common stock to non-employee directors during the year-to-date period.
Each Class A, Class B, Class D and Class E unit of Holdings (together with the corresponding share of Class B or Class C common stock) is exchangeable for one share of Class A common stock. The preferred units of Holdings (together with the corresponding shares of Class C common stock) were also exchangeable for Class A common stock generally on a one-for-one basis. APAM’s convertible preferred stock was convertible into Class A common stock generally on a one-for-one basis.
Class B Common Stock
In 2013, APAM issued shares of Class B common stock to employee-partners in amounts equal to the number of Class B common units those individuals held in Holdings. Upon termination of employment with Artisan, an employee-partner’s vested Class B common units are automatically exchanged for Class E common units; unvested Class B common units are forfeited. The employee-partner’s shares of Class B common stock are canceled and APAM issues the former employee-partner a number of shares of Class C common stock equal to the former employee-partner’s number of Class E common units. The former employee-partner’s Class E common units are exchangeable for Class A common stock subject to the same restrictions and limitations on exchange applicable to the other common units of Holdings. As part of the 2014 Follow-on Offering, APAM canceled 3,705,453 shares of Class B common stock corresponding to the Class B common units APAM purchased.


Class C Common Stock
In 2013, APAM issued shares of Class C common stock to certain investors in Holdings in amounts equal to the number of units the investors held in Holdings. During the six months ended June 30, 2014, APAM canceled a total of 6,388,779 shares of Class C common stock in connection with the 2014 Follow-on Offering, H&F Conversion and Holdings Common Unit Exchange.
Convertible Preferred Stock
As part of the 2014 Follow-on Offering, APAM purchased 743,117 shares of convertible preferred stock and immediately canceled the shares. As part of the H&F Conversion, the remaining 455,011 outstanding shares of convertible preferred stock were converted into 455,011 shares of Class A common stock. There were no shares of convertible preferred stock outstanding as of June 30, 2014.
Artisan Partners Holdings - Partners’ Equity
Prior to the IPO Reorganization, Holdings was a private company. Holdings has several outstanding classes of partnership units held by investors.
Holdings makes cash distributions to the holders of its partnership units under the terms of the partnership agreement. The distributions are recorded in the financial statements on the declaration date, or on the payment date in lieu of a declaration date.
Holdings’ partnership distributions totaled $116.5 million and $20.4 million for the three months ended June 30, 2014 and 2013, respectively, and $248.1 million and $186.6 million for the six months ended June 30, 2014 and 2013, respectively. The portion of these distributions made prior to the IPO to the holders of Class B common units (which were classified as liability awards prior to the IPO) are reflected as compensation and benefits expense within the Unaudited Consolidated Statements of Operations and totaled $65.7 million for the six months ended June 30, 2013. The portion of these distributions made prior to the IPO to the other partners of Holdings and, after the IPO, to all partners are recorded to consolidated stockholders’ equity, with the exception of the portion of distributions made to APAM, which is eliminated upon consolidation. Holdings distributions to APAM totaled $42.3 million and $6.8 million for the three months ended June 30, 2014 and 2013, respectively, and $80.9 million and $6.8 million for the six months ended June 30, 2014 and 2013, respectively.