Question-and-Answer Session
Operator
(Operator Instructions) And your first question comes from William Katz with Buckingham Research.
William Katz - Buckingham Research
Okay. Thank you and good afternoon. A couple of questions, John. Maybe so I'll start where you ended off and just try to look at some of the data points and it looks like your revenues, either sequentially or year-on-year relative to your compensation ledge sharply. I'm just sort of curious, is that a function of relative performance in 2007?
I’m really trying to triangulate the relationship between revenue and expenses on a go forward. Particularly when you mentioned I think, Pat, in your own commentary that incentive accrual still ended the year below target. So, how should we think about that in the construct of your closing remarks that your headcount is mostly behind you at this point? Hello?
John Calamos
Yes, well, I think Pat will get the numbers, but we feel, as I said earlier, that we’ve kind of right sized the firm all year long with the fluctuation in flows and in that type of thing. The big variable has been the accruals on our incentive bonus structure. So that's and as we have been proved over the last four, five, six months or the ending two quarters that impacted the fourth quarter. Pat, do you have any additional comment there?
Pat Dudasik
Not too much, I think in the fourth quarter we moved in much closer to our run rate or our target bonus numbers even though because of flat revenues et cetera. We did not get there that's why we said we’re under target. But again, I think we don't necessarily target compensation expense to revenues on a quarterly basis or anything like that. So, again our total incentive comp comes from a number of measures that they re-buy like the partnering and function. But I think, again, as headcount stabilizes, comp should pretty much stabilize. If performance picks up, we'll see some pick up in comp but it should not be a dramatic pick up.
William Katz - Buckingham Research
Its sort of fourth quarter is more indicative of run rate, so what you are saying?
Pat Dudasik
A little bit, yeah. Again, it's probably still under, if we hit target compensation levels. I'll remind you that first quarter you will see a pickup in expense, because we record FICA expense on our year-end bonuses that are paid in February. So you will see a pick up, I think last year it was about $1.4 million in additional FICA expense that really shows up in the first quarter, but definitely much closer to -- I guess I'll call it the target compensation level.
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