11. Restructuring

In May 2010, Legg Mason announced a plan to streamline its business model to drive increased profitability and growth that primarily involved transitioning certain shared services to its investment affiliates which are closer to actual client relationships. This plan involved headcount reductions in operations, technology, and other administrative areas, which were partially offset by headcount increases at the affiliates, and enabled Legg Mason to eliminate a portion of its corporate office space that was primarily dedicated to operations and technology employees. The initiative was completed as of March 31, 2012.

Total transition-related costs were $127,500, including non-cash charges of $30,841, through completion of the plan in March 2012. Of the total transition-related costs incurred, $79,686 were related to charges for employee termination benefits and retention incentives during the transition period, and were recorded in Transition-related compensation in the Consolidated Statements of Income (Loss). The remainder represents other costs, including charges for consolidating leased office space, early contract terminations, asset disposals, and professional fees, which were recorded in the appropriate operating expense classifications. Charges for transition-related costs were $42,311 and $71,169 for the three and nine months ended December 31, 2011, respectively, which primarily represent costs for lease loss accruals and fixed asset accelerated depreciation related to space permanently abandoned, as well as costs for severance and retention incentives.

The table below presents a summary of changes in the transition-related liability from March 31, 2011 through December 31, 2012:



	Severance and retention incentives			Lease loss accruals and other					Total
Balance as of March 31, 2011	$	23,211		$	5,835				$	29,046
Accrued charges	29,096			25,916			(1	)	55,012
Payments	(51,140		)	(16,121		)			(67,261		)
Balance as of March 31, 2012	1,167			15,630					16,797
Payments and other	(1,167		)	(10,304		)			(11,471		)
Balance as of December 31, 2012	$	—		$	5,326				$	5,326


(1)	Includes lease loss accruals of $17,983 for space permanently abandoned.