16.

COST SAVING INITIATIVES AND 2010 RESTRUCTURING PLAN

Cost Saving Initiatives—In October 2012, the Company announced a number of cost saving initiatives (the “Cost Saving Initiatives”) relating to the Company’s operations. These initiatives include streamlining our corporate structure and consolidating support functions; realigning our investments into areas with potential for the greatest long-term return; and creating greater flexibility to retain and attract the best people and invest in new growth areas. The Company expects associated aggregate pre-tax implementation expenses to range between $110,000 and $130,000, primarily consisting of compensation-related expense, including the acceleration of unrecognized expenses pertaining to previously granted RSUs, severance and benefit payments and other non-compensation-related costs. Approximately 75% of the aggregate implementation expense is expected to be paid in cash. As reflected in the table below, the Company incurred $102,576 of the pre-tax implementation expense in the fourth quarter of 2012, with the remainder expected to be recorded in the first half of 2013.

The Company’s consolidated statement of operations for the quarter and year ended December 31, 2012 includes pre-tax implementation expense, by segment, as reflected in the table below:


	Financial Advisory		Asset Management		Corporate		Total
Compensation and benefits	$	76,133	$	12,056	$	11,798	$	99,987
Other		1,399		733		457		2,589

Total	$	77,532	$	12,789	$	12,255	$	102,576

Activity related to the obligation pursuant to the Cost Saving Initiatives during 2012 was as follows:


	Accrued Compensation and Benefits			Other Liabilities			Total
Balance, October 1, 2012	$	–		$	–		$	–
New charges		99,987			2,589			102,576
Less:
Non-cash charges		(22,360	)		–			(22,360	)
Settlements		(31,499	)		(875	)		(32,374	)

Balance, December 31, 2012	$	46,128		$	1,714		$	47,842

2010 Restructuring Plan—In the first quarter of 2010, the Company announced a restructuring plan which included certain staff reductions and realignments of personnel (the “2010 Restructuring Plan”). In connection with the 2010 Restructuring Plan, the Company recorded a charge in the first quarter of 2010 of $87,108, inclusive of $46,880 relating to the acceleration of RSUs (in aggregate, the “2010 Restructuring Charge”).

The 2010 Restructuring Charge primarily consisted of compensation-related expenses, including the acceleration of unrecognized expenses pertaining to RSUs previously granted to individuals who were terminated pursuant to the restructuring, severance and benefit payments and certain other costs. As of December 31, 2011, the remaining liability associated with the 2010 Restructuring Plan was $9,456, and is reported within “accrued compensation and benefits” and “other liabilities” on the accompanying consolidated statement of financial condition (there was no remaining liability as of December 31, 2012). During the years ended December 31, 2012, 2011 and 2010, the Company made cash payments of $8,546, $10,625 and $18,847, respectively, for the 2010 Restructuring Plan, and during the years ended December 31, 2012 and 2011, we reduced our provision for the 2010 Restructuring Charge by $910 and $1,300, respectively.