14.

-Based Compensation

January 27, 2015,

the Company's board of directors adopted the JMP Group LLC Amended and Restated Equity Incentive Plan (“JMP Group Plan”).

he JMP Group Plan maintains authorization of the issuance of

4,000,000

shares, as originally approved by shareholders on

April 12, 2007

and subsequently approved by shareholders on

June 6, 2011.

This amount is increased by any shares the Company purchases on the open market, or through any share repurchase or share exchange program, initiated by the Company unless the board of directors or its appointee determines otherwise. The Company will issue shares upon exercises or vesting from authorized but unissued shares or from treasury shares.

Options

The following table summarizes the

share option activity for the years ended

December 31, 2019

and

2018

	Year Ended December 31,
	2019					2018
	Shares Subject			Weighted Average		Shares Subject			Weighted Average
	to Option			Exercise Price		to Option			Exercise Price

Balance, beginning of year		1,300,000		$	6.85		2,515,000		$	6.55
Expired		(1,300,000	)	$	6.85		(1,215,000	)		6.23
Balance, end of period		-			-		1,300,000		$	6.85

Options exercisable at end of period		-		$	-		1,300,000		$	6.85

The following table summarizes the

share options outstanding as well as share options vested and exercisable as of

December 31, 2018:

December 31, 2018

Options Outstanding

Options Vested and Exercisable

Weighted

Average

Weighted

Average

Weighted

Range of

Remaining

Average

Aggregate

Remaining

Average

Aggregate

Exercise

Number

Contractual

Exercise

Intrinsic

Number

Contractual

Exercise

Intrinsic

Prices

Outstanding

Life in Years

Price

Value

Exercisable

Life in Years

Price

Value

$6.79 - $7.33

1,300,000

1.00

6.85

1,300,000

1.00

6.85

The Company recognizes

share-based compensation expense for share options over the vesting period using the accelerated attribution method when they are subject to graded vesting and on a straight-line basis when they are subject to cliff vesting. The Company

did

not

recognize a

ny compensation expense related to share option

for the year ended

December 31, 2019

As of

December 31, 2019

and

2018

there was

nrecognized compensation expense related to share options.

There

were

hare options exercised during the years ended

December 31, 2019

and

December 31, 2018.

As a result, t

he Company did

not

recognize any current income tax benefits from the exercise of

share options during both years.

The Company uses

the Black-Scholes option-pricing model or other quantitative models to calculate the fair value of option awards.

Restricted

Units

and Restricted Shares

February 6,

2019

the Company granted approximately

280,000

RSUs to certain employees of the Company as part of the

2018

deferred compensation program.

50%

of these units vested on

December 1,

2019

and the remaining

50%

will vest on

December 1, 2020,

subject to the grantees’ continued employment through such dates.

The Company also granted RSUs for new hires throughout the year which have various vesting schedules.

February 6, 2018

the Company granted approximately

260,000

RSUs to certain employees of the Company as part of the

2017

deferred compensation program,

50%

of these units vested on

December 1, 2018

and the remaining

50%

vested on

December 1, 2019

. On

March 15, 2018,

the Company granted approximately

67,000

RSUs to its independent directors,

25%

of these units vested on

April 1, 2018

July 1,2018

October 1, 2018 and

January 1, 2019, respectively. The Company also granted RSUs for new hires throughout the year ended December 31, 2018.

The following table summarizes

RSU activity for the years ended

December 31, 2019

and

2018

	Year Ended December 31,
	2019					2018
	Restricted			Weighted Average		Restricted			Weighted Average
	Share Units			Grant Date Fair Value		Share Units			Grant Date Fair Value

Balance, beginning of year		297,639		$	4.79		277,193		$	5.60
Granted		572,695			4.06		454,974			5.01
Vested		(483,328	)		4.58		(302,691	)		5.62
Forfeited		-			-		(131,837	)		5.33
Balance, end of period		387,006		$	3.97		297,639		$	4.79

The aggregate fair value of RSUs vested during the years ended

December 31, 2019

and

2018

were

$2.2

million and

$1.7

million, respectively. The income tax benefits realized from the vested RSUs were

$0.5

million

$0.3

million for the years ended

December 31, 2019

and

2018

, respectively.

The Company recognizes compensation expense for RSUs over the vesting period using the accelerated attribution method when they are subject to graded vesting and on a straight-line basis when they are subject to cliff vesting.

For the years ended

December 31, 2019

and

2018

, the Company recorded compensation expenses related to RSU's of

$2.0

million

and

$1.7

million, respectively.

For the years ended

December 31, 2019

and

2018

, the Company recognized income tax benefits of

$0.5

million and

$0.3

million, respectively, related to the compensation expense recognized for RSUs. As of

December 31, 2019

and

2018

there was

$0.8

million and

$0.7

million, respectively, of unrecognized compensation expense related to RSUs expected to be recognized over a weighted average period of

1.75

years and

1.03

years, respectively.

The Company pays cash

distribution equivalents on certain eligible unvested RSUs

in the event the Company declares any cash distributions on its common shares during such eligible RSU’s vesting period.

Distribution equivalents paid on RSUs are generally charged to retained earnings. Distribution equivalents paid on RSUs expected to be forfeited are included in compensation expense. The Company accounts for the tax benefit related to distribution equivalents paid on RSUs as an increase in additional paid-in capital.

Appreciation Rights

February 2015,

the Company granted an aggregate of

2,865,000

share appreciation rights (“SARs”) to certain employees and the Company

’s independent directors. These SARs have a base price of

$7.33

per share, an exercise period of

five

years and have vested and became exercisable on

December 31, 2017

subject to the terms and conditions of the applicable grant agreements. The fair value of the SARs was determined using a quantitative model, using the following assumptions: expected life of

2.0

years, risk-free interest rate of

2.73%

distribution yield of

.67%

and volatility of

20.00%.

The risk-free rate was interpolated from the U.S. constant maturity treasuries for a term corresponding to the maturity of the SAR. The volatility was estimated from the historical weekly share prices of the Company as of the grant date for a term corresponding to the maturity of the SAR. The distribution yield was calculated as the sum of the last

twelve

-month distributions over the share price as of the grant date.

The following table summarizes the

SARs activity for the years ended

December 31, 2019

and

2018

	Year Ended December 31,
	2019					2018
	Share Appreciation			Weighted Average		Share Appreciation		Weighted Average
	Rights			Exercise Price		Rights		Exercise Price

Balance, beginning of year		2,485,000		$	7.33		2,485,000	$	7.33
Expired		(2,485,000	)	$	7.33		-		-
Balance, end of period		-		$	-		2,485,000	$	7.33

The following table summarizes the SAR

s outstanding as well as SARs vested and exercisable as of

December 31, 2018.

There were

SARs outstanding as of

December 31, 2019.

December 31, 2018

Options Outstanding

Weighted

Average

Weighted

Remaining

Average

Aggregate

Exercise

Number

Contractual

Exercise

Intrinsic

Price

Outstanding

Life in Years

Price

Value

$7.33

2,485,000

1.00

7.33

The Company recognizes compensation expense for SARs over the vesting period. On

December 31, 2019,

all of the SARs expired. For the years ended

December 31, 2019

and

2018

, the Company recorded compensation benefit of

zero

and

$0.2

million, respectively.

For the years ended

December 31, 2019

and

2018

, the Company recognized income tax benefit of

zero

and

$0.1

million, respectively, related to the compensation expense recognized for SARs. As of

December 31, 2019

and

2018

there was

unrecognized compensation expense related to SARs. In addition,

SARs

were exercised during the years ended

December 31, 2019

and

2018;

as a result, the Company did

not

recognize any current income tax benefits from the exercise of SAR

s in both years.