Related Party Transactions

12 Months Ended

Dec. 31, 2019

Related Party Transactions [Abstract]

Related Party Transactions

RELATED PARTY TRANSACTIONS

Ladenburg Thalmann Financial Services Inc. As of December 31, 2019, the Company owned 15,191,205 common shares of Ladenburg Thalmann Financial Services Inc. (NYSE American: LTS), a publicly-traded diversified financial services company engaged in independent advisory and brokerage services, asset management services, investment research, investment banking, institutional sales and trading, wholesale life insurance brokerage, annuity marketing and trust services through its subsidiaries. The Company, through its various investments in LTS, beneficially owned approximately 10.22% and accounts for its investment in LTS under the equity method of accounting.

In September 2006, the Company entered into an agreement with LTS pursuant to which the Company agreed to make available to LTS the services of the Company’s Executive Vice President (the “EVP”) to serve as the President and Chief Executive Officer of LTS and to provide certain other financial, accounting and tax services, including assistance with complying with Section 404 of the Sarbanes-Oxley Act of 2002 and assistance in the preparation of income tax returns. LTS paid the Company $850 for each of 2019, 2018 and 2017 under the agreement. These amounts are recorded as equity income. LTS paid cash compensation to the President and Chief Executive Officer of the Company, who served as Vice Chairman of LTS, of $1,525, $1,525 and $1,425 for 2019, 2018 and 2017, respectively, and director fees of $75, $50 and $53 for 2019, 2018 and 2017, respectively. LTS paid cash compensation to the Company EVP, who served as President and CEO of LTS, of $2,142, $2,025 and $1,625 for 2019, 2018 and 2017, respectively.

The Company owned 240,000 shares of LTS’s 8% Series A Cumulative Redeemable Preferred Stock (Liquidation Preference $25.00 Per Share) as of December 31, 2019 and recorded dividend income from the investment of $480 in each of 2019, 2018 and 2017.

On November 11, 2019, LTS entered into an Agreement and Plan of Merger with Advisor Group whereby each LTS common share was converted into the right to receive $3.50 per common share. On February 14, 2020, the merger was completed and the Company received proceeds of $53,169 from the Company’s 15,191,205 common shares of LTS. The Company has also tendered 240,000 shares of LTS 8% Series A Cumulative Redeemable Preferred Stock (Liquidation Preference $25.00 Per Share) for redemption and anticipates receiving an additional $6,009 in March 2020. At the closing of the transaction, the Company’s Executive Vice President resigned as Chairman, President and Chief Executive Officer of LTS, and the Company’s management agreement with LTS was terminated.

Castle Brands Inc. In October 2008, the Company entered into an agreement with Castle Brands Inc. (NYSE American: ROX), a publicly-traded developer and importer of premium branded spirits where the Company agreed to make available to Castle the services of the EVP to serve as the President and Chief Executive Officer of Castle and to provide other financial, accounting and tax services. The Company recognized management fees of $75 in 2019 and $100 in both 2018 and 2017 under the agreement, respectively. Castle paid retention payments of $515 in 2019, $500 in 2018 and $400 in 2017 to the EVP who served as President and Chief Executive Officer as well as a director of Castle until October 2019.

On October 9, 2019, Castle was acquired pursuant to a cash tender offer of $1.27 per outstanding Common Share and, in connection therewith, the Company tendered the entire amount of its 12,895,017 common shares of Castle. The Company received $16,377 in proceeds from this sale. Additionally, at the closing of the transaction, the Company’s Executive Vice President resigned as President and Chief Executive Officer of Castle and the Company’s management agreement with Castle was terminated.

Insurance. The Company’s Chief Executive Officer, a firm in which he is a shareholder, and affiliates of that firm received insurance commissions aggregating approximately $215, $247 and $249 in 2019, 2018 and 2017, respectively, on various insurance policies issued for the Company and its subsidiaries.

Other. In addition to its investment in LTS and Castle, the Company has made investments in other entities where Dr. Frost has a relationship. Dr. Frost is a director, executive officer and/or more than 10% shareholder in these entities other than LTS. As of December 31, 2019, these included the following: (i) an investment in BioCardia, Inc. (OTC: BCDA) and (ii) an investment in Cocrystal Pharma, Inc. (OTCQB: COCP). Additional investments in entities where Dr. Frost has a relationship may be made in the future.

In September 2012, the Company entered into an office lease (the “Lease”) with Frost Real Estate Holdings, LLC (“FREH”), an entity affiliated with Dr. Frost. The Lease is for 12,390 square feet of space in an office building in Miami, Florida and will expire on April 20, 2023. The Lease provides for payments of $36 per month increasing to $41 per month. The Company recorded rental expense of $458, $450 and $415 for the years ended December 31, 2019, 2018 and 2017, respectively, associated with the lease.

A son of the Company’s President and Chief Executive Officer is an associate broker with Douglas Elliman and he received commissions and other payments of $712, $318 and $787, respectively, in accordance with brokerage activities in 2019, 2018 and 2017, respectively.