9.	EQUITY-BASED COMPENSATION

Overview

Further information regarding equity-based compensation awards granted in connection with the spin-off is described in Note 10. “Equity-Based Compensation” in the “Notes to Consolidated and Combined Financial Statements” in “Part II. Item 8. Financial Statements and Supplementary Data” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016.

On October 1, 2015, the Company adopted the PJT Partners Inc. 2015 Omnibus Incentive Plan (the “PJT Equity Plan”) for the purpose of providing incentive compensation measured by reference to the value of the Company’s Class A common stock or Partnership Units. The PJT Equity Plan provides for the granting of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock, restricted stock units, partnership interests and other stock-based or cash-based awards. The Company has initially authorized 12.2 million shares of Class A common stock for issuance under the PJT Equity Plan.

The following table represents equity-based compensation expense and related income tax benefit for the three and nine months ended September 30, 2017 and 2016, respectively:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2017		2016		2017		2016
Equity-Based Compensation Expense	$	27,689	$	22,897	$	88,379	$	65,082
Income Tax Benefit	$	3,600	$	2,745	$	11,910	$	7,835

Restricted Stock Units

Pursuant to the PJT Equity Plan and in connection with the spin-off, annual compensation process and ongoing hiring process, the Company has issued RSUs, which generally vest over a service life of three to five years. Awards are generally forfeited if the employee ceases to be employed by the Company prior to vesting.

A summary of the status of the Company’s unvested RSUs in PJT Partners Inc. and PJT Partners Holdings LP as of September 30, 2017 and of changes during the period January 1, 2017 through September 30, 2017 is presented below:

	Restricted Stock Units
	PJT Partners Inc.					PJT Partners Holdings LP
				Weighted-					Weighted-
				Average					Average
				Grant Date		Number of			Grant Date
	Number of			Fair Value		Partnership			Fair Value
	Units			(in dollars)		Units			(in dollars)
Balance, December 31, 2016		5,776,114		$	21.71		443,689		$	25.58
Granted		1,459,754			36.74		—			—
Vested		(724,330	)		22.88		(199,689	)		18.02
Forfeited		(56,365	)		22.81		—			—
Dividends Reinvested on Participating RSUs		7,831			33.52		—			—
Balance, September 30, 2017		6,463,004		$	24.98		244,000		$	31.76

As of September 30, 2017, there was $70.1 million of estimated unrecognized compensation expense related to unvested RSU awards. The Company assumes a forfeiture rate of 1.0% to 14.0% annually based on expected turnover and periodically reassesses this rate. This cost is expected to be recognized over a weighted-average period of 0.9 years.

Partnership Units

In connection with the spin-off on October 1, 2015, certain individuals were issued Class A common stock of PJT Partners Inc., as well as Partnership Units that, subject to certain terms and conditions, are redeemable at the option of the holder for cash, or, at the Company’s election, for shares of PJT Partners Inc. Class A common stock on a one-for-one basis. These Partnership Units generally vest over a service life of five years.

A summary of the status of the Company’s unvested Partnership Units as of September 30, 2017 and of changes during the period January 1, 2017 through September 30, 2017 is presented below:

	Partnership Units
				Weighted-
				Average
	Number of			Grant Date
	Partnership			Fair Value
	Units			(in dollars)
Balance, December 31, 2016		5,591,357		$	21.23
Granted		74,894			37.24
Vested		(4,571	)		28.29
Balance, September 30, 2017		5,661,680		$	21.44

As of September 30, 2017, there was $61.4 million of estimated unrecognized compensation expense related to unvested Partnership Units. The Company assumes a forfeiture rate of 4.0% annually based on expected turnover and periodically reassesses this rate. This cost is expected to be recognized over a weighted-average period of 1.4 years.

Equity-Based Awards with Both Service and Market Conditions

In connection with the spin-off, the Company also granted equity-based awards containing both service and market conditions. The effect of the market condition is reflected in the grant date fair value of the award. Compensation cost is recognized over the requisite service period, provided that the service period is completed, irrespective of whether the market condition is satisfied. The service condition requirement with respect to such equity-based awards is five years with 20% vesting in the third year, 30% in the fourth year and 50% in the fifth year. The market condition requirement will be satisfied upon the publicly traded shares of Class A common stock achieving certain volume-weighted average share price targets over any consecutive 30-day trading period following the consummation of the spin-off, pro ratably at $48, $55, $63, $71 and $79 per share of Class A common stock.

The market condition requirements must be met prior to the sixth anniversary of the consummation of the spin-off. No portion of these awards will become vested until both the service and market conditions have been satisfied.

A summary of the status of the Company’s unvested equity-based awards in PJT Partners Holdings LP with both a service and market condition as of September 30, 2017 and of changes during the period January 1, 2017 through September 30, 2017 is presented below:

	Equity-Based Awards with Both Service and Market Conditions
				Weighted-
				Average
	Number of			Grant Date
	Partnership			Fair Value
	Units			(in dollars)
Balance, December 31, 2016		6,503,464		$	5.72
Forfeited		(50,633	)		5.72
Balance, September 30, 2017		6,452,831		$	5.72

As of September 30, 2017, there was $16.9 million of estimated unrecognized compensation expense related to equity-based awards with both a service and market condition. The Company assumes a forfeiture rate of 4.0% annually based on expected turnover and periodically reassesses this rate. This cost is expected to be recognized over a weighted-average period of 1.7 years.

Units Expected to Vest

The following unvested units, after expected forfeitures, as of September 30, 2017, are expected to vest:

			Weighted-Average
			Service Period
	Units		in Years
Partnership Units		11,723,249		1.5
Restricted Stock Units		6,538,228		0.9
Total Equity-Based Awards		18,261,477		1.3