Employee compensation plans

The Company maintains various employee compensation plans for the benefit of its employees. Two types of employee compensation are granted under share-based compensation and cash-based compensation plans.

Share-based Compensation Plans

Oppenheimer Holdings Inc. 2014 Incentive Plan

On February 26, 2014, the Company adopted the Oppenheimer Holdings Inc. 2014 Incentive Plan (the "OIP"). Pursuant to the OIP, the Compensation Committee of the Board of Directors of the Company (the "Committee") is permitted to grant options to purchase Class A Stock ("stock options"), Class A Stock awards and restricted Class A Stock (collectively "restricted stock awards") to or for the benefit of employees and non-employee directors of the Company and its subsidiaries as part of their compensation. Stock options are generally granted for a five-year term and generally vest at the rate of 25% of the amount granted on the second anniversary of the grant, 25% on the third anniversary of the grant, 25% on the fourth anniversary of the grant and 25% six months before expiration. Restricted stock awards are generally awarded for a three or five year term and fully vest at the end of the term.

Oppenheimer Holdings Inc. Stock Appreciation Right Plan

Under the Oppenheimer Holdings Inc. Stock Appreciation Right Plan, the Company awards stock appreciation rights ("OARs") to certain employees as part of their compensation package based on a formula reflecting gross production and length of service. These awards are granted once per year in January with respect to the prior year's production. The OARs vest five years from grant date and settle in cash at vesting.

Restricted stock - The Company has granted restricted stock awards pursuant to the OIP. The following table summarizes the status of the Company's non-vested restricted Class A Stock awards under the OIP for the year ended December 31, 2019:



	Number of Class A Shares Subject to Restricted Stock Awards		Weighted Average Fair Value		Remaining Contractual Life
Nonvested at beginning of year	1,289,224		$	18.72	1.8 Years
Granted	379,728		25.32		3.1 Years
Vested	(112,465	)	17.92		—
Forfeited	(22,209	)	23.75		—
Nonvested at end of year	1,534,278		$	20.34	1.4 Years

As of December 31, 2019, all outstanding restricted Class A Stock awards were non-vested. The aggregate intrinsic value of restricted Class A Stock awards outstanding as of December 31, 2019 was $42.2 million. During the year ended December 31, 2019, the Company included $8.1 million ($6.0 million in 2018 and $5.6 million in 2017) of compensation expense in its consolidated statements of income relating to restricted Class A Stock awards.

As of December 31, 2019, there was $12.2 million of total unrecognized compensation cost related to unvested restricted Class A Stock awards. The cost is expected to be recognized over a weighted average period of 1.4 years.

As of December 31, 2019, the number of shares of Class A Stock available under the share-based compensation plans, but not yet awarded, was 450,840.

On January 29, 2020, the Company awarded a total of 409,125 restricted shares of Class A Stock to current employees pursuant to the OIP. Of these restricted shares, 211,575 shares will cliff vest in three years and 197,550 shares will cliff vest in five years. These awards will be expensed over the applicable three or five year vesting period.

Stock options - The Company has granted stock options pursuant to the OIP. There were 14,974 and 15,573 options outstanding as of December 31, 2019 and 2018, respectively.

In the year ended December 31, 2019, the Company included $26,200 ($26,500 in 2018 and $25,700 in 2017) of compensation expense in its consolidated statements of income relating to the expensing of stock options.

On January 29, 2020, the Company awarded a total of 3,142 options to purchase Class A Stock to current employees pursuant to the OIP. These options will be expensed over 4.5 years (the vesting period).

OARs - The Company has awarded OARs pursuant to the Oppenheimer Holdings Inc. Stock Appreciation Right Plan. The following table summarizes the status of the Company's outstanding OARs awards as of December 31, 2019:



Grant Date	Number of OARs Outstanding	Strike Price		Remaining Contractual Life	Fair Value as of December 31, 2019
January 9, 2015	405,950	$	21.94	8 Days	$	5.54
January 6, 2016	404,040	15.89		1 Year	11.40
January 6, 2017	387,980	18.90		2 Years	8.81
January 5, 2018	458,010	27.05		3 Years	4.72
January 11, 2019	535,366	26.45		4 Years	6.17
Total OARs Outstanding	2,191,346
Total weighted average values		$	22.46	2.9 Years	$	7.18

The fair value as of December 31, 2019 for each of the OARs was estimated using the Black-Scholes model with the following assumptions:



	Grant Date
	January 9, 2015			January 6, 2016			January 6, 2017			January 5, 2018			January 11, 2019
Expected term ⁽¹⁾	8 Days			1 Year			2 Years			3 Years			4 Years
Expected volatility factor ⁽²⁾	6.6		%	26.0		%	24.9		%	25.7		%	28.7		%
Risk-free interest rate ⁽³⁾	0.7		%	1.6		%	1.6		%	1.6		%	1.7		%
Actual dividends ⁽⁴⁾	$	0.46		$	0.46		$	0.46		$	0.46		$	0.46

(1) The expected term was determined based on the remaining life of the actual awards.

(2) The volatility factor was measured using the weighted average of historical daily price changes of the

Company's Class A Stock over a historical period commensurate to the expected term of the awards.

(3) The risk-free interest rate was based on periods equal to the expected term of the awards based on the

U.S. Treasury yield curve in effect at December 31, 2019.

(4) Actual dividends were used to compute the expected annual dividend yield.

As of December 31, 2019, 2,191,346 of outstanding OARs were unvested and none were vested. As of December 31, 2019, the aggregate intrinsic value of OARs outstanding was $11.0 million. In the year ended December 31, 2019, the Company included $3.7 million ($650,000 in 2018 and $6.9 million in 2017) in compensation expense in its consolidated statements of income relating to OARs awards. The liability related to the OARs was $9.4 million as of December 31, 2019. As of December 31, 2019, there was $6.3 million of total unrecognized compensation cost related to unvested OARs. The cost is expected to be recognized over a weighted average period of 2.9 years.

On January 10, 2020, 547,560 OARs were awarded to Oppenheimer employees related to fiscal 2019 performance. These OARs will be expensed over 5 years (the vesting period).

Cash-based Compensation Plan

Defined Contribution Plan

The Company, through its subsidiaries, maintains a defined contribution plan covering substantially all full-time U.S. employees. The Oppenheimer & Co. Inc. 401(k) Plan provides that Oppenheimer may make discretionary contributions. Eligible Oppenheimer employees could make voluntary contributions which could not exceed $19,000, $18,500 and $18,000 per annum in 2019, 2018 and 2017, respectively. The Company made contributions to the 401(k) Plan of $2.4 million, $1.8 million and $1.5 million in 2019, 2018 and 2017, respectively.

Deferred Compensation Plans

The Company maintains an Executive Deferred Compensation Plan ("EDCP") and a Deferred Incentive Plan ("DIP") in order to offer certain qualified high-performing financial advisers a bonus based upon a formula reflecting years of service, production, net commissions and a valuation of their clients' assets. The bonus amounts resulted in deferrals in fiscal 2019 of $9.3 million ($9.4 million in 2018 and $8.2 million in 2017). These deferrals normally vest after five years. The liability is being recognized on a straight-line basis over the vesting period. The EDCP also includes voluntary deferrals by senior executives that are not subject to vesting. The Company maintains a Company-owned life insurance policy, which is designed to hedge a portion of the EDCP obligation. The EDCP liability is being tracked against the value of a benchmark investment portfolio held for this purpose. As of December 31, 2019, the Company's liability with respect to the EDCP and DIP totaled $51.2 million and is included in accrued compensation on the consolidated balance sheet as of December 31, 2019.

In addition, the Company is maintaining a deferred compensation plan on behalf of certain employees who were formerly employed by CIBC World Markets. The Company hedges this deferred compensation obligation with a portfolio of mutual fund investments. As of December 31, 2019, the Company's liability with respect to this plan totaled $18.8 million.

The total amount expensed in 2019 for the Company's deferred compensation plans was $19.4 million ($6.1 million in 2018 and $17.1 million in 2017).