11. Restructuring

In May 2010, Legg Mason announced a plan to streamline its business model to drive increased profitability and growth that primarily involved transitioning certain shared services to its investment affiliates which are closer to actual client relationships. This plan involves headcount reductions in operations, technology, and other administrative areas, which may be partially offset by headcount increases at the affiliates, and will enable Legg Mason to eliminate a portion of its corporate office space that was primarily dedicated to operations and technology employees. The initiative was substantially completed by December 31, 2011.

This initiative involves transition-related costs primarily comprised of charges for employee termination benefits and retention incentives during the transition period, recorded in Transition-related compensation in the Consolidated Statements of Income. The transition-related costs also involve other costs, including charges for consolidating leased office space, early contract terminations, asset disposals, and professional fees, recorded in the appropriate operating expense classifications. Total transition-related costs have been $125,603 through December 31, 2011. Charges for transition-related costs were $23,998 for the three months ended December 31, 2010, and $71,169 and $38,741 for the nine months ended December 31, 2011 and 2010, respectively, which primarily represent costs for severance and retention incentives. Charges for transition-related costs were $42,311 for the three months ended December 31, 2011, which primarily represent costs for lease loss accruals and fixed asset accelerated depreciation related to space permanently abandoned.

The table below presents a summary of changes in the transition-related liability from the initiation of the restructuring plan through December 31, 2011, including non-cash charges, such as asset write-offs and stock-based compensation expense, and cumulative charges incurred to date:



	Severance and retention incentives			Other			Total
Balance as of March 31, 2010	$	—		$	—		$	—
Accrued charges	35,487			6,160			41,647
Payments	(12,276		)	(325		)	(12,601		)
Balance as of March 31, 2011	23,211			5,835			29,046
Accrued charges ⁽¹⁾	27,504			26,000			53,504
Payments	(28,642		)	(12,563		)	(41,205		)
Balance as of December 31, 2011	$	22,073		$	19,272		$	41,345

Non-cash charges ⁽²⁾
Year ended March 31, 2011	$	9,561		$	3,226		$	12,787
Nine months ended December 31, 2011	5,055			12,610			17,665
Total	$	14,616		$	15,836		$	30,452

Cumulative charges incurred as of December 31, 2011	$	77,607		$	47,996		$	125,603


(1)	Other includes lease loss accruals of $18,246 for space permanently abandoned.


(2)	Includes stock-based compensation expense, fixed asset accelerated depreciation related to space permanently abandoned, and accelerated depreciation for internally-developed software that will no longer be utilized as a result of the initiative.