Common Shares, Compensation Plans And Preferred Shares

6 Months Ended

Jun. 30, 2014

Common Shares, Compensation Plans And Preferred Shares [Abstract]

Common Shares, Compensation Plans And Preferred Shares

Note 18. Common Shares, Compensation Plans and Preferred Shares

Prior to the acquisition of Jefferies, we had two share-based compensation plans: a fixed stock option plan and a senior executive warrant plan. The fixed stock option plan provides for the issuance of stock options and stock appreciation rights to non-employee directors and certain employees at not less than the fair market value of the underlying stock at the date of grant. Options granted to employees under this plan are intended to qualify as incentive stock options to the extent permitted under the Internal Revenue Code and become exercisable in five equal annual instalments starting one year from date of grant. Options granted to non-employee directors become exercisable in four equal annual instalments starting one year from date of grant. No stock appreciation rights have been granted. At June 30, 2014 and December 31, 2013, 7,117,322 and 7,124,429, respectively, of our common shares were reserved for stock options and warrants.

Compensation and benefits expense included $24.6 million and $30.6 million for the three months ended June 30, 2014 and 2013, respectively, and $62.8 million and $32.4 million for the six months ended June 30, 2014 and 2013, respectively, for share-based compensation expense relating to grants made under our share-based compensation plans. Total compensation cost includes the amortization of sign-on, retention and senior executive awards, less forfeitures and clawbacks. The total tax benefit recognized in results of operations related to share-based compensation expenses was $8.9 million and $22.9 million for the three and six months ended June 30, 2014, respectively, and $11.1 million and $11.6 million for the three and six months ended June 30, 2013, respectively. As of June 30, 2014, total unrecognized compensation cost related to nonvested share-based compensation plans was $141.7 million; this cost is expected to be recognized over a weighted-average period of 2.2 years.

The net tax benefit related to share-based compensation plans recognized in additional paid-in capital was not significant during the 2014 and 2013 periods. Cash flows resulting from tax deductions in excess of the grant date fair value of share-based awards are included in cash flows from financing activities; accordingly, we reflected the excess tax benefit related to share-based compensation in cash flows from financing activities. Such amounts for the 2014 and 2013 periods were not significant.

At June 30, 2014, there were 4,626,736 shares of restricted stock outstanding with future service required, 4,402,551 RSUs outstanding with future service required, 8,428,574 RSUs outstanding with no future service required and 910,635 shares issuable under other plans. Excluding shares issuable pursuant to outstanding stock options and warrants, the maximum potential increase to common shares outstanding resulting from these outstanding awards is 13,741,760.