Share-Based and Other Deferred Compensation

LP Units

At the time of the Company’s formation and IPO, collectively referred to as the reorganization (“Reorganization”), Members and certain trusts benefiting certain of their families received 13,548 vested and 9,589 unvested LP Units. The LP Units are exchangeable into Class A Shares of the Company on a one-for-one basis once vested.

The unvested LP Units vest ratably on December 31, 2011, 2012 and 2013 so long as the equity holder remains employed with Evercore Partners Inc., Evercore LP or their affiliates on such dates. The LP Units were all fully vested as of December 31, 2013. The Company is expensing the fair value of the awards, prospectively, over the service period. Expense related to the amortization of these LP Units was $20,063, $20,971 and $22,189 for the years ended December 31, 2013, 2012 and 2011, respectively.

Acquisition-related

During 2011, in connection with the Lexicon acquisition, the Company committed to issue 1,883 restricted Class A Shares, including dividend equivalent units, (“Acquisition-related Awards”) and deferred cash consideration. Compensation expense related to the Acquisition-related Awards and deferred cash consideration was $10,960 and $3,937, respectively, for the year ended December 31, 2013, $18,749 and $7,216, respectively, for the year ended December 31, 2012, and $6,621 and $2,455, respectively, for the year ended December 31, 2011.

The following table summarizes activity related to Acquisition-related Awards during the year ended December 31, 2013:



	Acquisition-related Awards
	Number of Shares		Grant Date Weighted Average Fair Value
Unvested Balance at January 1, 2013	1,719		$	39,338
Granted	27		1,221
Vested	(619	)	(14,395		)
Unvested Balance at December 31, 2013	1,127		$	26,164

As of December 31, 2013, the total compensation cost related to unvested Acquisition-related Awards and deferred cash consideration not yet recognized was $8,561. The weighted-average period over which this compensation cost is expected to be recognized is 18 months.

In addition, certain Lexicon employees received deferred compensation of $1,892, which vests over two years. Compensation expense related to these awards was $211, $875 and $413 for the years ended December 31, 2013, 2012 and 2011, respectively.

2006 Stock Incentive Plan

In 2006 the Company’s stockholders and board of directors adopted the Evercore Partners Inc. 2006 Stock Incentive Plan (the “2006 Plan”). The 2006 Plan permits the Company to grant to key employees, directors and consultants incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock, RSUs and other awards based on the Company’s Class A Shares. The total number of Class A Shares which may be issued under the 2006 Plan is 20,000 and the Company intends to use newly-issued Class A Shares to satisfy any awards under the 2006 Plan. Class A Shares underlying any award granted under the 2006 Plan that expire, terminate or are canceled or satisfied for any reason without being settled in stock again become available for awards under the 2006 Plan. During the second quarter of 2013, the Company's stockholders approved the amended and restated 2006 Evercore Partners Inc. Stock Incentive Plan. The amended and restated plan, among other things, authorizes an additional 5,000 shares of the Company's Class A Shares. The total shares available to be granted in the future under the 2006 Plan were 7,323 and 4,667 as of December 31, 2013 and 2012, respectively.

The Company also grants dividend equivalents, in the form of unvested RSU awards, concurrently with the payment of dividends to the holders of Class A Shares, on all unvested RSU grants awarded in conjunction with annual bonuses as well as new hire awards granted after April 2012. The dividend equivalents have the same vesting and delivery terms as the underlying RSU award.

The Company had 525 RSUs which were fully vested but not delivered as of December 31, 2013.

IPO Event-based Awards

Pursuant to the 2006 Plan, at the time of the IPO, the Company granted to employees 2,286 RSUs (“Event-based Awards”), which were convertible into Class A Shares on a one-for-one basis once vested. These Event-based Awards have since fully vested and, as a result, the Company recorded compensation expense equal to the value of these fully-vested awards.

In conjunction with the IPO, the Company also granted to an employee 12 IPO related Event-based awards, which remain unvested as of December 31, 2013.

During 2011, 546 Event-based Awards vested primarily in conjunction of the Company’s offering of Class A Shares resulting in an expense of $11,467 and 27 Event-based Awards were forfeited.

Deferred Cash Program

During the first quarter of 2011, the Company launched a deferred compensation program providing participants the ability to elect to receive a portion of their deferred compensation in cash, which is indexed to a notional investment portfolio. The Company awarded deferred cash compensation of $3,926 and $9,153, during the first quarters of 2012 and 2011, respectively, which will vest ratably over four years and require payment upon vesting. Compensation expense related to this deferred compensation program was $3,804, $4,210 and $1,938 for the years ended December 31, 2013, 2012 and 2011, respectively. As of December 31, 2013, the total compensation cost related to the deferred compensation program not yet recognized was $4,706. The weighted-average period over which this compensation cost is expected to be recognized is 16 months.

Long-term Incentive Plan

During the third quarter of 2013, the Board of Directors of the Company approved the Long-term Incentive Plan, which provides for incentive compensation awards to Advisory Senior Managing Directors, excluding executive officers of the Company, who exceed defined benchmark results over a four-year performance period beginning January 1, 2013. These awards will be paid, in cash or Class A Shares, at the Company's discretion, in the two years following the performance period, to Senior Managing Directors employed by the Company at the time of payment. These awards are subject to retirement eligibility requirements. The Company periodically assesses the probability of the benchmarks being achieved and expenses the probable payout over the requisite service period of the award. The compensation expense related to these awards was $1,584 for the year ended December 31, 2013.

Equity Grants

2013 Equity Grants. During 2013, pursuant to the 2006 Plan, the Company granted employees 2,398 RSUs that are Service-based Awards. Service-based Awards granted during 2013 had grant date fair values of $26.60 to $55.24 per share. During 2013, 2,188 Service-based Awards vested and 60 Service-based Awards were forfeited. Compensation expense related to Service-based Awards, excluding compensation expense related to the amortization of LP Units, was $79,678 for the year ended December 31, 2013.

The following table summarizes activity related to Service-based Awards, which includes RSUs as well as LP Units, during the year ended December 31, 2013:



	Service-based Awards
	Number of Shares		Grant Date Weighted Average Fair Value
Unvested Balance at January 1, 2013	7,972		$	196,868
Granted	2,398		75,229
Forfeited	(60	)	(1,789		)
Vested	(3,630	)	(88,706		)
Unvested Balance at December 31, 2013	6,680		$	181,602

As of December 31, 2013, the total compensation cost related to unvested Service-based Awards, excluding Acquisition-related Awards, not yet recognized was $113,469. The ultimate amount of such expense is dependent upon the actual number of Service-based Awards that vest. The Company periodically assesses the forfeiture rates used for such estimates. A change in estimated forfeiture rates would cause the aggregate amount of compensation expense recognized in future periods to differ from the estimated unrecognized compensation expense described herein. The weighted-average period over which this compensation cost is expected to be recognized is 20 months.

2012 Equity Grants. During 2012, pursuant to the 2006 Plan, the Company granted employees 3,163 RSUs that are Service-based Awards. Service-based Awards granted during 2012 had grant date fair values of $22.62 to $29.19 per share. During 2012, 1,760 Service-based Awards vested and 256 Service-based Awards were forfeited. Compensation expense related to Service-based Awards, excluding compensation expense related to the amortization of LP Units, was $62,840 for the year ended December 31, 2012.

2011 Equity Grants. During 2011, pursuant to the 2006 Plan, the Company granted employees 2,273 RSUs that are Service-based Awards. Service-based Awards granted during 2011 had grant date fair values of $21.93 to $36.41 per share. During 2011, 1,552 Service-based Awards vested and 76 Service-based Awards were forfeited. Compensation expense related to Service-based Awards, excluding compensation expense related to the amortization of LP Units, was $47,299 for the year ended December 31, 2011.

During 2011, the Company amended the terms of a Service-based Award with respect to 97 unvested and 37 vested RSUs. Due to this amendment, $2,828 was reclassified from Additional Paid-In-Capital to Other Current Liabilities on the Consolidated Statement of Financial Condition.

Other

Periodically, the Company provides compensation to new and existing employees in the form of loans and/or other cash awards which are subject to ratable vesting terms with service requirements ranging from one to five years. Generally, the terms of these awards include a requirement of either full or partial repayment of these awards based on the terms of their employment agreements with the Company. In circumstances where the employee meets the Company's minimum credit standards, the Company amortizes these awards to compensation expense over the relevant service period which is generally the period they are subject to forfeiture. Compensation expense related to these awards was $7,433 for the year ended December 31, 2013. The remaining unamortized amount of these awards was $13,378 as of December 31, 2013.

During the fourth quarter of 2013, the Board of Directors of the Company agreed to release the transfer restrictions associated with 1,267 LP Units and 610 Restricted Class A Shares held by certain employees of the Company.

The total income tax benefit related to share-based compensation arrangements recognized in the Company’s Consolidated Statements of Operations for the years ended December 31, 2013, 2012 and 2011 was $29,497, $26,773 and $19,423, respectively.

During the first quarter of 2014, as part of the 2013 bonus awards, the Company granted to certain employees approximately 1,767 unvested RSUs pursuant to the 2006 Plan. These awards will generally vest over four years. In addition, during the first quarter of 2014, the Company granted approximately $5,935 of deferred cash to certain employees.

The Company granted separation benefits to certain employees, resulting in expense included in Employee Compensation and Benefits of approximately $4,834 and $7,273 for the years ended December 31, 2013 and 2012, respectively. In conjunction with these arrangements, the Company distributed cash payments of $3,314 and $5,135 for the years ended December 31, 2013 and 2012, respectively.

During 2011, the Company modified equity-based compensation awards for four employees, primarily relating to the vesting terms of IPO related equity grants. These modifications resulted in the Company recognizing $4,261 in incremental compensation expense in 2011.