Compensation and Benefits

12 Months Ended

Dec. 31, 2019

Share-based Payment Arrangement [Abstract]

Note 10. Compensation and Benefits

Total compensation and benefits consists of the following:


	For the Years Ended December 31,
	2019		2018		2017
Salaries, incentive compensation and benefits ⁽¹⁾	$	358,339	$	360,287	$	341,060
Restricted share-based award compensation expense	42,117		52,879		49,142
Total salaries, incentive compensation and benefits	400,456		413,166		390,202
Pre-offering related compensation - share-based awards	—		—		12,678
Total compensation and benefits	$	400,456	$	413,166	$	402,880
⁽¹⁾ Excluding restricted share-based award compensation expense

Incentive compensation

Cash incentive compensation paid to members of Artisan’s investment teams and members of its distribution teams is generally based on formulas that are tied directly to revenues. These payments are made in the quarter following the quarter in which the incentive was earned with the exception of fourth quarter payments which are paid in the fourth quarter of the year. Cash incentive compensation paid to most other employees is discretionary and subjectively determined based on individual performance and Artisan’s overall results during the applicable year and is generally paid on an annual basis.

Restricted share-based awards

Artisan has registered 14,000,000 shares of Class A common stock for issuance under the 2013 Omnibus Incentive Compensation Plan (the “Plan”). Pursuant to the Plan, APAM has granted a combination of restricted stock awards and restricted stock units (collectively referred to as “restricted share-based awards” or "awards") of Class A common stock to employees. Restricted share-based awards have a pro-rata five year vesting requirement. Certain restricted share-based awards will vest or become eligible to vest only upon a combination of both (1) pro-rata annual time vesting and (2) a qualifying retirement (as defined in the award agreements).

A portion of the restricted share-based awards granted to portfolio managers contain a Franchise Protection Clause, which provides that the number of awards that ultimately vest depends on meeting certain conditions related to client cash flows. If such conditions are not met, compensation cost will be reversed for any awards that do not vest. The fair value, requisite service period and expense recognition for these awards are determined in the same manner as the other restricted share-based awards.

Unvested restricted share-based awards are subject to forfeiture. Grantees are entitled to dividends or dividend equivalents on unvested and vested awards. 5,601,288 shares of Class A common stock were reserved and available for issuance under the Plan as of December 31, 2019.

The following table summarizes the restricted share-based award activity for the years ended December 31, 2019, 2018 and 2017:


	Weighted-Average Grant Date Fair Value		Number of Awards
Unvested at January 1, 2017	$	44.47	3,394,910
Granted	28.30		1,268,500
Forfeited	39.56		(3,628)
Vested	48.06		(645,796)
Unvested at January 1, 2018	$	38.79	4,013,986
Granted	39.32		1,518,974
Forfeited	36.09		(67,255)
Vested	44.50		(787,248)
Unvested at January 1, 2019	$	38.04	4,678,457
Granted	22.92		963,000
Forfeited	34.61		(17,289)
Vested	39.21		(618,746)
Unvested at December 31, 2019	$	35.00	5,005,422

The aggregate vesting date fair value of awards that vested during the years ended December 31, 2019, 2018 and 2017 was approximately $15.9 million, $25.8 million, and $19.8 million, respectively. The unrecognized compensation expense for the unvested restricted share-based awards as of December 31, 2019 was $82.0 million with a weighted average recognition period of 3.2 years remaining.

During the years ended December 31, 2019 and 2018, the Company withheld a total of 82,729 and 77,442 restricted shares, respectively, as a result of net share settlements to satisfy employee tax withholding obligations. The Company paid $2.1 million and $2.6 million in employee tax withholding obligations related to these settlements during the years ended December 31, 2019 and 2018, respectively. These net share settlements had the effect of shares repurchased and retired by the Company, as they reduced the number of shares outstanding.

Pre-offering related compensation - share-based awards

Prior to the IPO, Holdings granted Class B share-based awards to certain employees. These awards vested over a period of five years and became fully vested on July 1, 2017.