Company: COHN
Filing Date: 2025-03-12
Form Type: 10-K
Source: 0001437749-25-007158
Chunk: 609

Company: Cohen & Co Inc.
Filing Date: 2025-03-12
Form: 10-K
Item: Item 13
Chunk 609
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 are treated as compensation expense.  The Company recognizes the expense over the service period on a straight line basis.  The Company assumes no forfeitures up front and record forfeitures as they occur by reducing expense.  
    
   Third, employees  may invest in the membership interests of consolidated SPAC sponsor entities.  Because these entities are consolidated and the employees are investing in the consolidated company's non-controlling interest, these equity interests fall under ASC 718.  Generally, the employee invests a de minimis amount and receives an allocation of the founder shares held by the sponsor entity.  The investment generally does not have any explicit vesting criteria associated with it.  Generally, the employee's investment will be worthless if the SPAC in which the sponsor entity has invested is liquidated and it will become worth something if the SPAC completes its business combination.  Therefore, the Company treats these grants as having a performance condition (i.e. the completion of the SPAC business combination).  Further, at the time of the investments, the Company treats this performance condition as being non-probable.  The effect of this is that the Company records no expense related to these investments until (and only if) the business combination is completed.  Upon completion of the business combination, the Company records compensation expense in an amount equal to the fair value of the grant.  The fair value of the grant is equal to the public trading price of the SPAC on the date the business combination is completed adjusted for certain sale restrictions imposed on the shares the employee receives (generally, the shares are restricted for sale for some time period and subject to certain hurdle prices before they become freely tradeable).  The Company uses a Monte Carlo simulation model to determine the appropriate discount to place on shares that are subject to hurdle prices.  The compensation amount is recorded with an offsetting credit to non-controlling interest.  From that point forward, the shares received by the employee are treated as part of the non-controlling interest and allocated income, expense, gains, and losses accordingly until the applicable sponsor entity is liquidated or otherwise de-consolidated. 

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   S. Accounting for Income Taxes 
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   Cohen & Company Inc. is treated as a C corporation for United States federal and state income tax purposes.  The Company’s voting-controlled subsidiary, the Operating LLC, is treated as a pass-through entity