Equity-Based Compensation

Equity-based compensation with respect to (a) ownership units of D&P Acquisitions ("Legacy Units"), (b) options to purchase shares of the Company's Class A common stock granted in connection with the IPO (“IPO Options”) and (c) restricted stock awards and units and performance-vesting restricted stock awards and units issued in connection with the Company's ongoing long-term compensation program (“Ongoing RSAs”) is detailed in the table below:



	Year Ended December 31, 2012
	Legacy Units and IPO Options			Ongoing RSAs		Total
Compensation and benefits^(a)	$	(43	)	$	19,141	$	19,098
Acquisition retention expenses	—			2,908		2,908
Selling, general and administrative	65			3,466		3,531
Total	$	22		$	25,515	$	25,537



	Year Ended December 31, 2011
	Legacy Units and IPO Options			Ongoing RSAs		Total
Compensation and benefits^(a)	$	(273	)	$	17,359	$	17,086
Acquisition retention expenses	—			1,054		1,054
Selling, general and administrative	480			3,264		3,744
Total	$	207		$	21,677	$	21,884



	Year Ended December 31, 2010
	Legacy Units and IPO Options		Ongoing RSAs		Total
Compensation and benefits	$	1,308	$	13,583	$	14,891
Acquisition retention expenses	—		11		11
Selling, general and administrative	2,091		3,451		5,542
Total	$	3,399	$	17,045	$	20,444



	_______________
	(a)	The credit to expense is the result of the true-up of estimated to actual forfeitures upon the occurrence of vesting events during the period.

Legacy Units

Immediately prior to the closing of the IPO on October 3, 2007, D&P Acquisitions effectuated certain transactions intended to simplify the capital structure of D&P Acquisitions (the “Recapitalization Transactions”). Prior to the Recapitalization Transactions, D&P Acquisitions' capital structure consisted of seven different classes of membership interests (collectively, “Legacy Units”), each of which had different capital accounts and amounts of aggregate distributions above which its holders share in future distributions. Certain units were issued in conjunction with acquisitions and as long-term incentive compensation to management and independent members of the board of directors.

The net effect of the Recapitalization Transactions was to convert the Legacy Units into a single new class of units called “New Class A Units.” The holders of New Class A Units also own one share of the Company's Class B common stock for each New Class A Unit. Pursuant to an exchange agreement, the New Class A Units are exchangeable on a one-for-one basis for shares of the Company's Class A common stock. In connection with an exchange, a corresponding number of shares of the Company's Class B common stock are cancelled.

The Company accounts for equity-based compensation in accordance with the fair value provisions of FASB ASC 718. As of October 3, 2007, the value used for the purpose of FASB ASC 718 for the above referenced units was based on the price of $16.00 per share of Class A common stock sold in the IPO, which determined the conversion of Legacy Units of D&P Acquisitions into New Class A Units pursuant to the Recapitalization Transactions. In all cases of graded vesting, equity-based compensation expense is being accrued through charges to operations over the respective vesting periods of the equity grants using the accelerated method of amortization.

Generally, Legacy Units were vested upon grant or have certain vesting provisions on each anniversary date over a four to five year requisite service period assuming that the holder remains employed by the Company, as more precisely defined in the individual grant agreements. Accelerated vesting occurs in the case of a sale of the Company or a qualified liquidity event.

The following table summarizes activity for New Class A Units attributable to equity-based compensation:



	New Class A Units Attributable to Equity-Based Compensation
Balance as of December 31, 2009	3,231
Redeemed or exchanged	(1,666	)
Forfeited	(35	)
Balance as of December 31, 2010	1,530
Redeemed or exchanged	(653	)
Forfeited	(10	)
Balance as of December 31, 2011	867
Redeemed or exchanged	(867	)
Forfeited	—
Balance as of December 31, 2012	—

IPO Options and Restricted Stock Awards

The Duff & Phelps Corporation Amended and Restated 2007 Omnibus Incentive Stock Plan (“Omnibus Plan”) permits the grant of 11,150 stock options, stock appreciation rights, deferred stock awards, restricted stock awards, dividend equivalent rights, and any other share-based awards that are valued in whole or in part by reference to the Company's Class A common stock, or any combination of these. This plan is administered and interpreted by the Compensation Committee of the Company's board of directors.

IPO Options

Options were granted in conjunction with the Company's IPO to employees with exercise prices equal to the market value of the Company's Class A common stock on the grant date and expire ten years subsequent to the grant date. Vesting provisions for individual awards are established at the grant date at the discretion of the Compensation Committee of the Company's board of directors. Options granted under the Company's share-based incentive compensation plans vest annually over four years. The Company plans to issue new shares of the Company's Class A common stock whenever stock options are exercised or share awards are granted. The Company did not grant options other than the grant on September 27, 2007. The Company valued the IPO Options using the Black-Scholes method. Asset volatility was based on the historical mean of the Company's closest peer group.

The following table summarizes option activity:



	IPO Options			Weighted Average Grant Date Fair Value
Balance as of December 31, 2009	1,815			$	7.33
Exercised	(18		)	7.33
Forfeited	(136		)	7.33
Balance as of December 31, 2010	1,661			7.33
Exercised	(7		)	7.33
Forfeited	(47		)	7.33
Balance as of December 31, 2011	1,607			7.33
Exercised	(1		)	7.33
Forfeited	(82		)	7.33
Balance as of December 31, 2012	1,524			$	7.33

Vested	1,524
Unvested	—

Weighted average exercise price	$	16.00
Weighted average remaining contractual term	4.75 years
Total intrinsic value of exercised options	$	—
Total fair value of vested options	$	11,173
Aggregate intrinsic value of outstanding options	$	—

Restricted Stock

Restricted stock awards and restricted stock units are granted as a form of incentive compensation and are accounted for similarly. Corresponding expense is recognized based on the fair market value of the Company's Class A common stock on the date of grant over the service period. Restricted stock units are generally contingent on continued employment and are converted to common stock when restrictions on transfer lapse after three years.

Performance-based restricted stock awards and units are granted as a form of incentive compensation and accounted for similarly. Performance-based restricted stock awards and units will become non-forfeitable on the third anniversary of the date of grant if and to the extent certain targets of total shareholder return are attained. Expense for performance-based restricted stock awards and units is recognized based on their calculated fair market value as of the date of grant using a lattice model. They are expensed over a three-year period from the date of grant.

During the year ended December 31, 2012, the Company issued 1,817 Ongoing RSAs related to annual bonus incentive compensation, performance incentive initiatives, promotions and recruiting efforts. The restrictions on transfer and forfeiture provisions are generally eliminated after three years for all awards granted to non-executives with certain exceptions related to retiree eligible employees and termination of employees without cause. Of the 1,817 Ongoing RSAs granted, 237 awards are performance-based restricted stock awards or units and are subject to the vesting provisions described previously.

Of the 1,817 Ongoing RSAs granted, 72 restricted stock awards and 155 performance-based restricted stock awards were granted to executives on March 1, 2012. For grants made to executives, the restrictions on transfer and forfeiture provisions on restricted stock awards are eliminated annually over three years based on ratable vesting. In addition, 39 awards were granted to members of the board of directors on April 19, 2012. The restrictions on transfer and forfeiture provisions are eliminated annually over four years based on ratable vesting.

The following table summarizes award activity:



	Restricted Stock Awards		Weighted Average Grant Date Fair Value		Restricted Stock Units		Weighted Average Grant Date Fair Value
Balance as of December 31, 2009	2,340		$	14.11	173		$	13.43
Granted	1,772		16.66		154		16.92
Converted to Class A common stock upon lapse of restrictions	(429	)	16.37		—		13.84
Forfeited	(251	)	14.35		(24	)	15.54
Balance as of December 31, 2010	3,432		15.13		303		15.03
Granted	2,020		14.95		254		14.87
Converted to Class A common stock upon lapse of restrictions	(931	)	13.46		(88	)	12.84
Forfeited	(302	)	16.22		(19	)	15.64
Balance as of December 31, 2011	4,219		15.33		450		15.29
Granted	1,388		13.84		192		13.80
Converted to Class A common stock upon lapse of restrictions	(1,029	)	14.29		(69	)	13.84
Forfeited	(248	)	15.34		(12	)	15.74
Balance as of December 31, 2012	4,330		$	15.10	561		$	14.94

Vested	—				—
Unvested	4,330				561



	Performance- Based Restricted Stock Awards	Weighted Average Grant Date Fair Value		Performance- Based Restricted Stock Units	Weighted Average Grant Date Fair Value
Balance as of December 31, 2010	—	$	—	—	$	—
Granted	183	7.52		22	7.83
Balance as of December 31, 2011	183	7.52		22	7.83
Granted	213	7.75		24	7.75
Balance as of December 31, 2012	396	$	7.65	46	$	7.79

Vested	—			—
Unvested	396			46

For all equity-based compensation awards, forfeitures are estimated at the time an award is granted and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Pre-vesting forfeitures were estimated to be between 3% and 15% as of December 31, 2012 based on historical experience and future expectations.

The total unamortized compensation cost related to all non-vested awards was $33,406 at December 31, 2012. The Company recognized a tax benefit of $7,310, $5,687 and $2,612 for stock options issued in conjunction with the IPO and Ongoing RSAs for the years ended December 31, 2012, 2011 and 2010, respectively.