SHAREHOLDERS’ EQUITY

Preferred Shares

The Company has 14.95 million of Series A LLC Preferred Shares issued and outstanding, which trade on the NYSE under the ticker symbol “KFN.PR”. Distributions on the Series A LLC Preferred Shares are cumulative and are payable, when, as, and if declared by the Company's board of directors, quarterly on January 15, April 15, July 15 and October 15 of each year at a rate per annum equal to 7.375% of $373.8 million par amount.

Common Shares

As a result of the Merger Transaction, disclosure related to common shares below pertains to the Predecessor Company. As of April 30, 2014, the Company's amended and restated share incentive plan (the “2007 Share Incentive Plan”) authorized a total of 8,964,625 shares. The 2007 Share Incentive Plan was terminated in May 2015, but continued to govern unvested awards with respect to restricted KKR common units. All such remaining outstanding awards vested on March 1, 2016.

As of December 31, 2016, all restricted KFN common shares and KFN common share options outstanding at the time of the Merger Transaction (other than any restricted Company common shares held by the Manager) had been converted to grants in respect of KKR & Co. common units and there were no outstanding equity awards in respect of KFN common shares.

The following table summarizes the restricted common share transactions that occurred prior to the Merger Transaction:



	Predecessor Company
	Manager		Directors	Total
Unvested shares as of December 31, 2013	584,634		85,194	669,828
Issued	—		—	—
Vested	(243,648	)	—	(243,648	)
Unvested shares as of April 30, 2014	340,986		85,194	426,180

The Company was required to value any unvested restricted common shares granted to the Manager at the current market price. The Company valued the unvested restricted common shares granted to the Manager at $11.54 per share at April 30, 2014. There was $2.2 million of total unrecognized compensation costs related to unvested restricted common shares granted as of April 30, 2014. These costs were expected to be recognized through 2016.

The following table summarizes common share option transactions that occurred prior to the Merger Transaction:



	Predecessor Company
	Number of Options	Weighted Average Exercise Price
Outstanding as of December 31, 2013	1,932,279	$	20.00
Granted	—	—
Exercised	—	—
Forfeited	—	—
Outstanding as of April 30, 2014	1,932,279	$	20.00

As of April 30, 2014, 1,932,279 common share options were fully vested and exercisable. In connection with the Merger Transaction, each outstanding option to purchase a KFN common share was cancelled, as the exercise price per share applicable to all outstanding options exceeded the cash value of the number of KKR & Co. common units that a holder of one KFN common share was entitled to receive in the merger.

The components of share-based compensation expense that existed prior to the Merger Transaction were as follows (amounts in thousands):



	Predecessor Company
	For the four months ended April 30, 2014
Restricted common shares granted to Manager	$	690
Restricted common shares granted to certain directors	328
Total share-based compensation expense	$	1,018