Lazard, Inc. 10-K

Item 8. Financial Statements and Supplementary Data Index to Consolidated Financial Statements Page Management’s Report on Internal Control Over Financial Reporting 67 Reports of Independent Registered Public Accounting Firm 68 Consolidated Statements of Financial Condition as of December 31, 2023 and 2022 71 Consolidated Statements of Operations for the years ended December 31, 2023, 2022 and 2021 73 Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2023, 2022 and 2021 74 Consolidated Statements of Cash Flows for the years ended December 31, 2023, 2022 and 2021 75 Consolidated Statements of Changes in Stockholders’ Equity and Redeemable Noncontrolling Interests for the years ended December 31, 2023, 2022 and 2021 77 Notes to Consolidated Financial Statements 80 Supplemental Financial Information 128 Financial Statement Schedules Schedule I—Condensed Financial Information of Registrant (Parent Company Only) Condensed Statements of Financial Condition as of December 31, 2023 and 2022 F- 2 Condensed Statements of Operations for the years ended December 31, 2023, 2022 and 2021 F- 3 Condensed Statements of Comprehensive Income (Loss) for the years ended December 31, 2023, 2022 and 2021 F- 4 Condensed Statements of Cash Flows for the years ended December 31, 2023, 2022 and 2021 F- 5 Notes to Condensed Financial Statements F- 6 66 MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING Management of Lazard, Inc. (formerly Lazard Ltd) and its subsidiaries (the “Company”) is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is a process designed under the supervision of the Company’s principal executive and principal financial officers to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Company’s consolidated financial statements for external purposes in accordance with U.S. generally accepted accounting principles. Our internal control over financial reporting includes those policies and procedures that: • pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; • provide reasonable assurance that transactions are recorded as necessary to permit preparation of consolidated financial statements in accordance with U.S. generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of the Company’s management and directors; and • provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the consolidated financial statements. Management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2023. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework (2013). Based on management’s assessment and those criteria, management concluded that the Company maintained effective internal control over financial reporting as of December 31, 2023. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. The Company’s independent registered public accounting firm, Deloitte & Touche LLP, audited the Company’s internal control over financial reporting as of December 31, 2023, as stated in their report which appears under “Report of Independent Registered Public Accounting Firm.” 67 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the stockholders and the Board of Directors of Lazard, Inc. (formerly Lazard Ltd): Opinion on Internal Control over Financial Reporting We have audited the internal control over financial reporting of Lazard Ltd and subsidiaries (the “Company”) as of December 31, 2023, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements and schedule as listed in the Index at Item 8 as of and for the year ended December 31, 2023, of the Company and our report dated February 23, 2024, expressed an unqualified opinion on those consolidated financial statements and schedule. Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying “Management's Report on Internal Control Over Financial Reporting”. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ Deloitte & Touche LLP New York, New York February 23, 2024 68 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the stockholders and the Board of Directors of Lazard, Inc. (formerly Lazard Ltd): Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated statements of financial condition of Lazard Ltd and subsidiaries (the “Company”) as of December 31, 2023 and 2022, and the related consolidated statements of operations, comprehensive income, cash flows, and changes in stockholders’ equity and redeemable noncontrolling interests for each of the three years in the period ended December 31, 2023, the related notes and the schedule listed in the Index at Item 8 (collectively the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America (U.S. GAAP). We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 23, 2024, expressed an unqualified opinion on the Company’s internal control over financial reporting. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current-period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Investment banking and other advisory fees— Refer to Note 4 Revenue Recognition to the consolidated financial statements Critical Audit Matter Description The Company generally recognizes investment banking and other advisory fees as the benefits of these advisory services are provided to the Company’s clients. These advisory services typically include transaction announcement and transaction completion fees. These fees are not typically recognized until there is an announcement or completion due to the uncertainty associated with those events. However, earlier recognition is appropriate if it is probable that significant reversal of the applicable revenue will not occur. 69 We identified the recognition of investment banking and other advisory fees as a critical audit matter because of the judgment required in determining the appropriate period to recognize transaction announcement and transaction completion fees, including obtaining and evaluating appropriate supporting documentation. As such, auditing these transactions required a high degree of auditor judgment when performing audit procedures and evaluating the results of those procedures. How the Critical Audit Matter Was Addressed in the Audit Our audit procedures related to investment banking and other advisory fees included the following, among others: • We tested the effectiveness of controls over the recognition of investment banking and other advisory fees, including those over the timing of revenue recognition. • We selected a sample of contracts with clients and performed the following: – Evaluated the terms and conditions of the respective contract to verify the Company appropriately identified its performance obligations and the related fees. – Evaluated the accuracy of management’s calculation of investment banking and other advisory fees recognized by recalculating the revenue amounts and comparing our expectation to the amount recorded by management. – Evaluated third party and the Company’s evidence, including, but not limited to, confirmations, court and regulatory approvals, press releases, executed agreements, communications and underlying transaction closing documents, to verify that the revenue recognition criteria were met and revenue was recognized in accordance with U.S. GAAP, including in the appropriate period. • On a sample basis, we performed the above procedures on investment banking and other advisory fees recognized in the subsequent year to determine if such revenue should have been recorded in the current year. /s/ Deloitte & Touche LLP New York, New York February 23, 2024 We have served as the Company’s auditor since 2000. 70 LAZARD LTD CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION DECEMBER 31, 2023 AND 2022 (dollars in thousands, except for per share data) December 31, 2023 2022 ASSETS Cash and cash equivalents $ 971,316 $ 1,234,773 Deposits with banks and short-term investments 219,576 779,246 Restricted cash 34,091 625,381 Receivables (net of allowance for credit losses of $ 28,503 and $ 17,738 at December 31, 2023 and 2022, respectively): Fees 560,552 491,861 Customers and other 201,767 160,897 762,319 652,758 Investments 701,964 698,977 Property (net of accumulated amortization and depreciation of $ 414,547 and $ 395,109 at December 31, 2023 and 2022, respectively, including $ 72,921 of property held for sale at December 31, 2023) 232,516 250,073 Operating lease right-of-use assets 407,213 431,608 Goodwill and other intangible assets (net of accumulated amortization of $ 67,681 and $ 70,118 at December 31, 2023 and 2022, respectively) 394,928 377,330 Deferred tax assets 497,340 407,657 Other assets 414,518 394,758 Total Assets $ 4,635,781 $ 5,852,561 See notes to consolidated financial statements. 71 LAZARD LTD CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION DECEMBER 31, 2023 AND 2022 (dollars in thousands, except for per share data) December 31, 2023 2022 LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND STOCKHOLDERS’ EQUITY Liabilities: Deposits and other customer payables $ 443,262 $ 921,834 Accrued compensation and benefits 781,375 735,576 Operating lease liabilities 485,191 513,688 Tax receivable agreement obligation 115,087 191,189 Senior debt 1,690,200 1,687,714 Deferred tax liabilities 3,857 3,920 Other liabilities 546,947 539,770 Total Liabilities 4,065,919 4,593,691 Commitments and contingencies Redeemable noncontrolling interests 87,675 583,471 STOCKHOLDERS’ EQUITY Preferred stock, par value $ .01 per share; 15,000,000 shares authorized: Series A - no shares issued and outstanding – – Series B - no shares issued and outstanding – – Common stock: Class A, par value $ .01 per share ( 500,000,000 shares authorized; 112,766,091 shares issued at December 31, 2023 and 2022, including shares held by subsidiaries) 1,128 1,128 Additional paid-in-capital 247,204 167,890 Retained earnings 1,402,636 1,676,713 Accumulated other comprehensive loss, net of tax ( 289,950 ) ( 295,854 ) 1,361,018 1,549,877 Class A common stock held by subsidiaries, at cost ( 25,340,287 and 26,814,213 shares at December 31, 2023 and 2022, respectively) ( 937,259 ) ( 993,414 ) Total Lazard Ltd Stockholders’ Equity 423,759 556,463 Noncontrolling interests 58,428 118,936 Total Stockholders’ Equity 482,187 675,399 Total Liabilities, Redeemable Noncontrolling Interests and Stockholders’ Equity $ 4,635,781 $ 5,852,561 See notes to consolidated financial statements. 72 LAZARD LTD CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2023, 2022 AND 2021 (dollars in thousands, except for per share data) Year Ended December 31, 2023 2022 2021 REVENUE Investment banking and other advisory fees $ 1,383,799 $ 1,659,079 $ 1,786,472 Asset management fees 1,077,753 1,125,955 1,354,622 Interest income 42,022 29,457 5,551 Other 89,588 40,602 127,171 Total revenue 2,593,162 2,855,093 3,273,816 Interest expense 77,673 81,522 80,768 Net revenue 2,515,489 2,773,571 3,193,048 OPERATING EXPENSES Compensation and benefits 1,946,010 1,656,451 1,895,859 Occupancy and equipment 131,117 122,251 128,040 Marketing and business development 99,357 83,103 42,755 Technology and information services 189,670 171,702 146,765 Professional services 89,308 69,535 77,702 Fund administration and outsourced services 110,878 109,978 130,502 Amortization and other acquisition-related costs 334 60 60 Provision (benefit) pursuant to tax receivable agreement ( 43,894 ) ( 1,209 ) 2,199 Other 72,666 44,852 45,318 Total operating expenses 2,595,446 2,256,723 2,469,200 OPERATING INCOME (LOSS) ( 79,957 ) 516,848 723,848 Provision (benefit) for income taxes ( 22,650 ) 124,365 181,303 NET INCOME (LOSS) ( 57,307 ) 392,483 542,545 LESS - NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS 18,172 34,966 14,481 NET INCOME (LOSS) ATTRIBUTABLE TO LAZARD LTD $ ( 75,479 ) $ 357,517 $ 528,064 ATTRIBUTABLE TO LAZARD LTD CLASS A COMMON STOCKHOLDERS: WEIGHTED AVERAGE SHARES OF COMMON STOCK OUTSTANDING: Basic 88,993,985 95,664,129 106,035,808 Diluted 88,993,985 100,997,674 113,674,699 NET INCOME (LOSS) PER SHARE OF COMMON STOCK: Basic $ ( 0.90 ) $ 3.68 $ 4.90 Diluted $ ( 0.90 ) $ 3.51 $ 4.63 See notes to consolidated financial statements. 73 LAZARD LTD CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) FOR THE YEARS ENDED DECEMBER 31, 2023, 2022 AND 2021 (dollars in thousands) Year Ended December 31, 2023 2022 2021 NET INCOME (LOSS) $ ( 57,307 ) $ 392,483 $ 542,545 OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX: Currency translation adjustments: Currency translation adjustments before reclassification 31,107 ( 64,778 ) ( 48,099 ) Adjustment for items reclassified to earnings 1,826 32 23,645 Employee benefit plans: Actuarial gain (loss) (net of tax expense (benefit) of $( 7,606 ), $( 5,978 ) and $ 13,263 for the years ended December 31, 2023, 2022 and 2021, respectively) ( 24,510 ) ( 11,413 ) 33,315 Prior service cost (net of tax benefit of $ 2,567 for the year ended December 31, 2023) ( 7,751 ) – – Adjustment for items reclassified to earnings (net of tax expense of $ 1,521 , $ 994 and $ 1,609 for the years ended December 31, 2023, 2022 and 2021, respectively) 5,233 4,152 5,660 OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX 5,905 ( 72,007 ) 14,521 COMPREHENSIVE INCOME (LOSS) ( 51,402 ) 320,476 557,066 LESS - COMPREHENSIVE INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS 18,173 34,966 14,481 COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO LAZARD LTD $ ( 69,575 ) $ 285,510 $ 542,585 See notes to consolidated financial statements. 74 LAZARD LTD CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2023, 2022 AND 2021 (dollars in thousands) Year Ended December 31, 2023 2022 2021 CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $ ( 57,307 ) $ 392,483 $ 542,545 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization of property 42,853 42,336 38,315 Noncash lease expense 63,552 60,624 74,024 Currency translation adjustment reclassification 1,826 32 23,645 Amortization of deferred expenses and share-based incentive compensation 429,523 406,242 394,114 Amortization and other acquisition-related costs 334 60 60 Deferred tax provision (benefit) ( 81,068 ) 42,709 90,643 Provision (benefit) pursuant to tax receivable agreement ( 43,894 ) ( 1,209 ) 2,199 Impairment of equity method investments and other receivables 22,981 – – Impairment of assets associated with cost-saving initiatives 8,801 – – Loss on LGAC liquidation 17,929 – – (Increase) decrease in operating assets and increase (decrease) in operating liabilities: Receivables-net ( 100,501 ) 140,745 ( 81,609 ) Investments ( 145,010 ) 178,025 ( 458,593 ) Other assets ( 47,671 ) ( 55,444 ) ( 33,410 ) Accrued compensation and benefits and other liabilities 52,314 ( 372,619 ) 274,146 Net cash provided by operating activities 164,662 833,984 866,079 CASH FLOWS FROM INVESTING ACTIVITIES: Additions to property ( 28,297 ) ( 49,511 ) ( 39,698 ) Disposals of property 490 573 642 Acquisition of business, net of cash acquired ( 10,516 ) – – Other investing activities – ( 7,500 ) – Net cash used in investing activities ( 38,323 ) ( 56,438 ) ( 39,056 ) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from: Customer deposits, net – – 350,868 LGAC IPO – – 575,000 Contributions from noncontrolling interests 2,077 514 334 Payments for: Customer deposits, net ( 572,025 ) ( 373,044 ) – Distributions to noncontrolling interests ( 5,802 ) ( 32,051 ) ( 11,398 ) Tax receivable agreement ( 32,208 ) ( 21,036 ) ( 10,215 ) LGAC IPO underwriting fees and other offering costs – – ( 9,352 ) Distribution to redeemable noncontrolling interests in connection with LGAC redemption ( 585,891 ) – – Purchase of Class A common stock ( 102,051 ) ( 691,705 ) ( 406,149 ) Class A common stock dividends ( 173,075 ) ( 181,880 ) ( 195,944 ) Settlement of share-based incentive compensation in satisfaction of tax withholding requirements ( 54,529 ) ( 61,916 ) ( 68,013 ) LFI Consolidated Funds redemptions ( 35,238 ) ( 10,020 ) ( 20,915 ) Other financing activities ( 12,452 ) ( 10,897 ) ( 8,380 ) Net cash provided by (used in) financing activities ( 1,571,194 ) ( 1,382,035 ) 195,836 EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS AND RESTRICTED CASH 30,438 ( 186,125 ) ( 161,672 ) NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH ( 1,414,417 ) ( 790,614 ) 861,187 CASH AND CASH EQUIVALENTS AND RESTRICTED CASH— January 1 2,639,400 3,430,014 2,568,827 CASH AND CASH EQUIVALENTS AND RESTRICTED CASH— December 31 $ 1,224,983 $ 2,639,400 $ 3,430,014 See notes to consolidated financial statements. 75 RECONCILIATION OF CASH AND CASH EQUIVALENTS AND RESTRICTED CASH WITHIN THE CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION: December 31, 2023 2022 2021 Cash and cash equivalents $ 971,316 $ 1,234,773 $ 1,465,022 Deposits with banks and short-term investments 219,576 779,246 1,347,544 Restricted cash 34,091 625,381 617,448 TOTAL CASH AND CASH EQUIVALENTS AND RESTRICTED CASH $ 1,224,983 $ 2,639,400 $ 3,430,014 SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid during the year for: Interest $ 73,684 $ 77,441 $ 77,986 Income taxes, net of refunds $ 44,230 $ 144,312 $ 74,095 See notes to consolidated financial statements. 76 LAZARD LTD CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY AND REDEEMABLE NONCONTROLLING INTERESTS FOR THE YEARS ENDED DECEMBER 31, 2023, 2022 AND 2021 (dollars in thousands) Common Stock Additional Paid-In- Capital Retained Earnings Accumulated Other Comprehensive Income (Loss), Net of Tax Class A Common Stock Held By Subsidiaries Total Lazard Ltd Stockholders’ Equity Noncontrolling Interests Total Stockholders’ Equity Redeemable Noncontrolling Interests Shares (*) $ Shares $ Balance - January 1, 2023 112,766,091 $ 1,128 $ 167,890 $ 1,676,713 $ ( 295,854 ) 26,814,213 $ ( 993,414 ) $ 556,463 $ 118,936 $ 675,399 $ 583,471 Comprehensive income (loss): Net income (loss) ( 75,479 ) ( 75,479 ) 6,191 ( 69,288 ) 11,981 Other comprehensive income - net of tax 5,904 5,904 1 5,905 Amortization of share-based incentive compensation 244,931 244,931 5,639 250,570 Dividend equivalents 24,615 ( 25,523 ) ( 908 ) ( 10,692 ) ( 11,600 ) Class A common stock dividends ($ 2.00 per share) ( 173,075 ) ( 173,075 ) ( 173,075 ) Purchase of Class A common stock 2,782,662 ( 102,051 ) ( 102,051 ) ( 102,051 ) Delivery of Class A common stock in connection with share-based incentive compensation and related tax benefit of $ 253 ( 216,762 ) ( 4,220,444 ) 156,822 ( 59,940 ) 5,664 ( 54,276 ) Business acquisitions and related equity transactions: Class A common stock issuable 1,775 1,775 1,775 Delivery of Class A common stock ( 1,533 ) ( 41,384 ) 1,533 – – Distributions to noncontrolling interests, net ( 3,725 ) ( 3,725 ) LFI Consolidated Funds ( 74,164 ) ( 74,164 ) 77,525 Change in redemption value of redeemable noncontrolling interests ( 412 ) ( 412 ) ( 177 ) ( 589 ) 589 LGAC liquidation: Distribution to redeemable noncontrolling interests ( 585,891 ) Reversal to net loss of amounts previously charged to additional paid-in-capital and noncontrolling interests 13,195 13,195 4,734 17,929 Reversal of deferred offering costs liability 14,087 14,087 6,038 20,125 Other ( 582 ) 5,240 ( 149 ) ( 731 ) ( 17 ) ( 748 ) Balance - December 31, 2023 112,766,091 $ 1,128 $ 247,204 $ 1,402,636 $ ( 289,950 ) 25,340,287 $ ( 937,259 ) $ 423,759 $ 58,428 $ 482,187 $ 87,675 See notes to consolidated financial statements. 77 LAZARD LTD CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY AND REDEEMABLE NONCONTROLLING INTERESTS FOR THE YEARS ENDED DECEMBER 31, 2023, 2022 AND 2021 (dollars in thousands) Common Stock Additional Paid-In- Capital Retained Earnings Accumulated Other Comprehensive Income (Loss), Net of Tax Class A Common Stock Held By Subsidiaries Total Lazard Ltd Stockholders’ Equity Noncontrolling Interests Total Stockholders’ Equity Redeemable Noncontrolling Interests Shares (*) $ Shares $ Balance - January 1, 2022 112,766,091 $ 1,128 $ 144,729 $ 1,560,636 $ ( 223,847 ) 12,046,140 $ ( 507,426 ) $ 975,220 $ 102,744 $ 1,077,964 $ 575,000 Comprehensive income (loss): Net income 357,517 357,517 20,954 378,471 14,012 Other comprehensive loss - net of tax ( 72,007 ) ( 72,007 ) ( 72,007 ) Amortization of share-based incentive compensation 227,177 227,177 13,464 240,641 Dividend equivalents 18,026 ( 19,001 ) ( 975 ) ( 9,897 ) ( 10,872 ) Class A common stock dividends ($ 1.94 per share) ( 181,880 ) ( 181,880 ) ( 181,880 ) Purchase of Class A common stock 19,666,798 ( 691,705 ) ( 691,705 ) ( 691,705 ) Delivery of Class A common stock in connection with share-based incentive compensation and related tax benefit of $ 6,441 ( 224,383 ) ( 40,559 ) ( 4,906,386 ) 205,957 ( 58,985 ) 3,508 ( 55,477 ) Distributions to noncontrolling interests, net – ( 31,537 ) ( 31,537 ) LFI Consolidated Funds – 18,279 18,279 Change in redemption value of redeemable noncontrolling interests 3,879 3,879 1,662 5,541 ( 5,541 ) Other ( 1,538 ) 7,661 ( 240 ) ( 1,778 ) ( 241 ) ( 2,019 ) Balance - December 31, 2022 112,766,091 $ 1,128 $ 167,890 $ 1,676,713 $ ( 295,854 ) 26,814,213 $ ( 993,414 ) $ 556,463 $ 118,936 $ 675,399 $ 583,471 See notes to consolidated financial statements. 78 LAZARD LTD CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY AND REDEEMABLE NONCONTROLLING INTERESTS FOR THE YEARS ENDED DECEMBER 31, 2023, 2022 AND 2021 (dollars in thousands) Common Stock Additional Paid-In- Capital Retained Earnings Accumulated Other Comprehensive Income (Loss), Net of Tax Class A Common Stock Held By Subsidiaries Total Lazard Ltd Stockholders’ Equity Noncontrolling Interests Total Stockholders’ Equity Redeemable Noncontrolling Interests Shares (*) $ Shares $ Balance - January 1, 2021 112,766,091 $ 1,128 $ 135,439 $ 1,295,386 $ ( 238,368 ) 7,728,387 $ ( 281,813 ) $ 911,772 $ 87,661 $ 999,433 $ - Comprehensive income (loss): Net income (loss) 528,064 528,064 18,146 546,210 ( 3,665 ) Other comprehensive income- net of tax 14,521 14,521 – 14,521 Amortization of share-based incentive compensation 224,692 224,692 9,266 233,958 Dividend equivalents 17,472 ( 18,907 ) ( 1,435 ) ( 6,924 ) ( 8,359 ) Class A common stock dividends ($ 1.88 per share) ( 195,944 ) ( 195,944 ) ( 195,944 ) Purchase of Class A common stock 9,124,295 ( 406,149 ) ( 406,149 ) ( 406,149 ) Delivery of Class A common stock in connection with share-based incentive compensation and related tax expense of $ 1,539 ( 166,301 ) ( 47,902 ) ( 3,788,494 ) 144,651 ( 69,552 ) ( 69,552 ) Business acquisitions and related equity transactions: Delivery of Class A common stock ( 35,885 ) ( 1,018,048 ) 35,885 – – Dividend equivalents 61 ( 61 ) – – Distributions to noncontrolling interests, net – ( 11,064 ) ( 11,064 ) LFI Consolidated Funds – 18,832 18,832 Contribution from redeemable noncontrolling interests, net 534,746 Change in redemption value of redeemable noncontrolling interests ( 30,749 ) ( 30,749 ) ( 13,170 ) ( 43,919 ) 43,919 Other ( 3 ) ( 3 ) Balance - December 31, 2021 112,766,091 $ 1,128 $ 144,729 $ 1,560,636 $ ( 223,847 ) 12,046,140 $ ( 507,426 ) $ 975,220 $ 102,744 $ 1,077,964 $ 575,000 ________________________ (*) Includes 112,766,091 shares of the Company’s Class A common stock issued at December 31, 2023, 2022 and 2021. See notes to consolidated financial statements. 79 LAZARD LTD NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (dollars in thousands, except for per share data, unless otherwise noted) 1 . ORGANIZATION AND BASIS OF PRESENTATION Organization On January 1, 2024, Lazard Ltd completed its conversion (the “Conversion”) from an exempted company incorporated under the laws of Bermuda named Lazard Ltd to a U.S. C-Corporation named Lazard, Inc. Pursuant to the Conversion, each share of Lazard Ltd common stock was converted into one share of Lazard, Inc. common stock. As the Conversion became effective on January 1, 2024, the accompanying consolidated financial statements as of December 31, 2023 and 2022, and for the years ended December 31, 2023, 2022 and 2021 and related notes reflect Lazard as an exempted company incorporated under the laws of Bermuda named Lazard Ltd. Lazard Ltd, a Bermuda holding company, and its subsidiaries (collectively referred to as “Lazard Ltd”, “Lazard”, “we” or the “Company”), including Lazard Ltd’s indirect investment in Lazard Group LLC, a Delaware limited liability company (collectively referred to, together with its subsidiaries, as “Lazard Group”), is one of the world’s preeminent financial advisory and asset management firms that specializes in crafting solutions to the complex financial and strategic challenges of our clients. We serve a diverse set of clients around the world, including corporations, governments, institutions, partnerships and individuals. Lazard Ltd indirectly held 100 % of all outstanding Lazard Group common membership interests as of December 31, 2023 and 2022. Lazard Ltd, through its control of the managing members of Lazard Group, controls Lazard Group, which as of December 31, 2022 was governed by an Amended and Restated Operating Agreement dated as of February 4, 2019. Such operating agreement was subsequently amended and restated effective as of January 1, 2023 (as so amended and restated, the “Operating Agreement”). Lazard Ltd’s primary operating asset is its indirect ownership of the common membership interests of, and managing member interests in, Lazard Group, whose principal operating activities are included in two business segments: • Financial Advisory, which offers corporate, partnership, institutional, government, sovereign and individual clients across the globe a wide array of financial advisory services regarding strategic and mergers and acquisitions (“M&A”) advisory, capital markets advisory, shareholder advisory, restructuring and liability management, sovereign advisory, geopolitical advisory and other strategic advisory matters and capital raising and placement, and • Asset Management, which offers a broad range of global investment solutions and investment and wealth management services in equity and fixed income strategies, asset allocation strategies, alternative investments and private equity funds to corporations, public funds, sovereign entities, endowments and foundations, labor funds, financial intermediaries and private clients. In addition, we record selected other activities in our Corporate segment, including management of cash, investments, deferred tax assets, outstanding indebtedness, certain contingent obligations and certain assets and liabilities associated with a special purpose acquisition company that was sponsored by an affiliate of the Company, Lazard Growth Acquisition Corp. I (“LGAC”). Basis of Presentation The consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The Company’s policy is to consolidate entities in which it has a controlling financial interest. The Company consolidates: • Voting interest entities (“VOEs”) where the Company holds a majority of the voting interest in such VOEs, and • Variable interest entities (“VIEs”) where the Company is the primary beneficiary having the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and the 80 LAZARD LTD NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) (dollars in thousands, except for per share data, unless otherwise noted) obligation to absorb losses of, or receive benefits from, the VIE that could be potentially significant to the VIE (see Note 24). When the Company does not have a controlling interest in an entity, but exerts significant influence over such entity’s operating and financial decisions, the Company either (i) applies the equity method of accounting in which it records a proportionate share of the entity’s net earnings or losses or (ii) elects the option to measure its investment at fair value. Intercompany transactions and balances have been eliminated. The consolidated financial statements include Lazard Ltd, Lazard Group and Lazard Group’s principal operating subsidiaries: Lazard Frères & Co. LLC (“LFNY”), a New York limited liability company, along with its subsidiaries, including Lazard Asset Management LLC and its subsidiaries (collectively referred to as “LAM”); the French limited liability companies Compagnie Financière Lazard Frères SAS (“CFLF”), along with its subsidiaries, Lazard Frères Banque SA (“LFB”) and Lazard Frères Gestion SAS (“LFG”), and Maison Lazard SAS and its subsidiaries; and Lazard & Co., Limited (“LCL”), through Lazard & Co., Holdings Limited (“LCH”), an English private limited company, together with their jointly owned affiliates and subsidiaries. Lazard Growth Acquisition Corp. I In February 2021, LGAC consummated its $ 575,000 initial public offering (the “LGAC IPO”). LGAC was a special purpose acquisition company, that was incorporated as a Cayman Islands exempted company for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses (a “Business Combination”). LGACo 1 LLC, a Delaware series limited liability company and the Company’s subsidiary, was the sponsor of LGAC. LGAC was considered to be a VIE. The Company held a controlling financial interest in LGAC through the sponsor’s ownership of Class B founder shares of LGAC. As a result, both LGAC and the sponsor were consolidated in the Company’s financial statements. The proceeds from the LGAC IPO of $ 575,000 were held in a trust account, until the earlier of: (i) the completion of a Business Combination and (ii) the distribution of the funds in the trust account to the LGAC shareholders in connection with the redemption of LGAC’s Class A ordinary shares, subject to certain conditions. The cash held in the trust account was recorded in “restricted cash” on the consolidated statements of financial condition as of December 31, 2022. Transaction costs, which consisted of a net underwriting fee of $ 8,500 , $ 20,125 of non-cash deferred underwriting fees (included in “other liabilities” on the consolidated statements of financial condition as of December 31, 2022) and $ 852 of other offering costs, were charged against the gross proceeds of the LGAC IPO. “Redeemable noncontrolling interests” of $ 583,471 associated with the publicly held LGAC Class A ordinary shares were recorded on the Company’s consolidated statements of financial condition as of December 31, 2022 at redemption value and classified as temporary equity. Changes in redemption value were recognized immediately as they occurred and adjusted the carrying value of redeemable noncontrolling interests to equal the redemption value at the end of each reporting period. Increases or decreases in the carrying amount of redeemable noncontrolling interests were affected by credits or charges to additional paid-in-capital and noncontrolling interests attributable to certain members of LGACo 1 LLC based on pro rata ownership. The warrants exercisable for LGAC Class A ordinary shares that were issued in connection with the LGAC IPO (the “LGAC Warrants”) met the definition of a liability under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 815 and were classified as derivative liabilities which were remeasured at fair value at each balance sheet date until exercised or cancelled, with changes in fair value reported to earnings. See Note 8. On February 23, 2023, LGAC redeemed all of its outstanding publicly held Class A ordinary shares as a result of LGAC not consummating a Business Combination within the time period required by its amended and restated 81 LAZARD LTD NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) (dollars in thousands, except for per share data, unless otherwise noted) memorandum and articles of association resulting in the distribution of $ 585,891 of the cash held in the trust account to the LGAC shareholders. The Company recognized $ 17,929 of losses on the liquidation of LGAC in “revenue-other” on the consolidated statements of operations for the year ended December 31, 2023. In addition, the $ 20,125 of non-cash deferred underwriting fees noted above was no longer probable of being incurred and therefore was reversed from other liabilities to additional paid-in-capital. There were no redemption rights or liquidating distributions with respect to the LGAC warrants. 2. SIGNIFICANT ACCOUNTING POLICIES The accounting policies below relate to reported amounts and disclosures in the consolidated financial statements. Foreign Currency — The consolidated financial statements are presented in U.S. Dollars. Many of the Company’s non-U.S. subsidiaries have a functional currency ( i.e. , the currency in which operational activities are primarily conducted) that is other than the U.S. Dollar, generally the currency of the country in which such subsidiaries are domiciled. Such subsidiaries’ assets and liabilities are translated into U.S. Dollars at year-end exchange rates, while revenue and expenses are translated at average exchange rates during the year based on the daily closing exchange rates. Adjustments that result from translating amounts from a subsidiary’s functional currency to U.S. Dollars are reported in “accumulated other comprehensive income (loss), net of tax” (“AOCI”). Foreign currency remeasurement gains and losses on transactions in non-functional currencies are included on the consolidated statements of operations. Foreign currency remeasurement gains (losses), net of gains and losses from forward foreign currency exchange rate contracts (see Note 8) amounted to $( 5,574 ), $ 399 and $( 1,234 ) for the years ended December 31, 2023, 2022 and 2021, respectively, and are included in “revenue-other” on the respective consolidated statements of operations. Use of Estimates— The preparation of consolidated financial statements in conformity with U.S. GAAP requires the use of management’s estimates. In preparing the consolidated financial statements, management makes estimates and assumptions regarding: • valuations of assets and liabilities requiring fair value estimates including, but not limited to, investments, derivatives and assumptions used to value pension and other post-retirement plans; • the assessment of probability with respect to recognizing revenue; • the discount rate used to measure operating lease right-of-use assets and operating lease liabilities; • the adequacy of the allowance for credit losses; • the realization of deferred tax assets and adequacy of tax reserves for uncertain tax positions; • the measurement of our tax receivable agreement obligation; • the outcome of litigation; • the carrying amount of goodwill and other intangible assets; • the vesting of share-based and other deferred compensation plan awards; and • other matters that affect the reported amounts and disclosure of contingencies in the consolidated financial statements. Estimates, by their nature, are based on judgment and available information. Therefore, actual results could differ from those estimates and could have a material impact on the consolidated financial statements. Cash and Cash Equivalents— The Company defines cash equivalents as short-term, highly liquid securities and cash deposits with original maturities of 90 days or less when purchased. Deposits with Banks and Short-Term Investments— Represents LFB’s short-term deposits, including with the Banque de France and amounts placed by LFB in short-term, highly liquid securities with original maturities of 90 days or less when purchased. The level of these deposits and investments may be driven by the level of LFB demand deposits (which can fluctuate significantly on a daily basis) and by changes in asset allocation. 82 LAZARD LTD NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) (dollars in thousands, except for per share data, unless otherwise noted) Restricted Cash— Primarily represents LGAC restricted cash (see Note 1) in 2022, escrowed cash balances that the Company cannot access prior to meeting certain requirements and other restricted cash deposits made by the Company, including those to satisfy the requirements of clearing organizations. Receivables and Allowance for Credit Losses— The Company’s receivables represent fee receivables, amounts due from customers and other receivables. The fee receivables are generally due within 60 days from the date of invoice, except as related to certain restructuring services and certain capital raising activities where fees are due upon specified contractual payment terms. For customer loans within customers and other receivables, the Company has elected to apply the practical expedient, in accordance with the current expected credit losses (“CECL”) guidance for financial assets with collateral maintenance provisions, which generally results in no expected credit losses given that these loans are fully collateralized and monitored for counterparty creditworthiness, with such collateral having a fair value in excess of the carrying amount of the loans. Receivables are stated net of an estimated allowance for credit losses determined in accordance with the CECL model, for general credit risk of the overall portfolio and for specific accounts deemed uncollectible, which may include situations where a fee is in dispute. For fee receivables, the allowance for credit losses is determined together for all Financial Advisory fees, except for Private Capital Advisory given the different nature of the business, client composition, and risk characteristics. An allowance for credit losses is determined separately for Private Capital Advisory. In addition, a separate allowance for credit losses is determined for all Asset Management fees. The allowances are measured by the application of an average charge-off rate, determined annually based on historical bad debt charge-off experience, to the fee receivable balance of the respective services, adjusted for the specific allowance recognized based on current conditions of individual clients. The current conditions are considered on a quarterly basis and include the aging of the receivables, the client’s ability to make payments, and the Company’s relationship with the client. In addition, the Company also performs a qualitative assessment on a quarterly basis to monitor economic factors and other uncertainties that may require additional adjustment to the expected credit losses allowance. Financial Advisory and Asset Management fee receivables are generally deemed past due when they are outstanding 60 days from the date of invoice, except for certain transactions that include specific contractual payment terms that may vary from approximately one month to four years following the invoice date (as is the case for certain Private Capital Advisory fees) or may be subject to court approval (as is the case with Restructuring activities that include bankruptcy proceedings). In such cases, receivables are deemed past due when payment is not received by the agreed-upon contractual date or the court approval date, respectively. Financial Advisory and Asset Management fee receivables past due in excess of 180 days and 10 months, respectively, are generally fully provided for unless there is evidence that the balance is collectible. Notwithstanding our policy for receivables past due, any specific receivables that are deemed uncollectible result in specific reserves against such exposures. See Note 5 for additional information regarding the Company’s receivables and allowance for credit losses. Investments— Investments in debt and marketable equity securities held either directly, or indirectly through asset management funds are accounted for at fair value, with any increase or decrease in fair value recorded in earnings. Such amounts are reflected in “revenue-other” in the consolidated statements of operations. Investments also include interests in alternative investment funds and private equity funds, each accounted for at fair value, and investments accounted for under the equity method of accounting. Any increases or decreases in the carrying value of the investments accounted for at fair value and the Company’s share of net income or losses pertaining to its equity method investments are reflected in “revenue-other” in the consolidated statements of operations. Additionally, equity method investments are tested for impairment if circumstances indicate impairment may have occurred. Impairment charges are reflected in “revenue-other” in the consolidated statements of operations. Dividend income is reflected in “revenue-other” in the consolidated statements of operations. Securities transactions and the related revenue and expenses are recorded on a “trade date” basis. 83 LAZARD LTD NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) (dollars in thousands, except for per share data, unless otherwise noted) See Notes 6 and 7 for additional information regarding the Company’s investments. Property-net— Property is stated at cost less accumulated depreciation and amortization. Buildings are depreciated on a straight-line basis over their estimated useful lives. Leasehold improvements are capitalized and are amortized over the lesser of the economic useful life of the improvement or the term of the lease. Depreciation of furniture and equipment, including computer hardware and software, is determined on a straight-line basis using estimated useful lives. Depreciation and amortization expenses aggregating $ 42,853 , $ 42,336 and $ 38,315 for the years ended December 31, 2023, 2022 and 2021, respectively, are included on the consolidated statements of operations in “occupancy and equipment” or “technology and information services”, depending on the nature of the underlying asset. Repairs and maintenance are expensed as incurred. Operating Lease Right-of-use Assets and Operating Lease Liabilities— The Company determines if an arrangement is, or contains, a lease at its inception and reevaluates the arrangement if the terms are modified. Operating lease right-of-use assets (“ROU assets”) represent the right to use an underlying asset for the lease term and operating lease liabilities reflect the obligation to make lease payments arising from the lease. At any given time during the lease term, the operating lease liability represents the present value of the remaining lease payments and the operating lease ROU asset is measured at the amount of the lease liability, adjusted for rent prepayments, unamortized initial direct costs and the remaining balance of lease incentives received. Both the operating lease ROU asset and the operating lease liability are reduced to zero at the end of the lease. See Note 10 for additional information regarding the Company’s ROU assets and operating lease liabilities. Goodwill and Other Intangible Assets— Goodwill has an indefinite life and is tested for impairment annually, as of November 1, or more frequently if circumstances indicate impairment may have occurred. The Company performs a qualitative assessment about whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount in lieu of actually calculating the fair value of the reporting unit. If events indicate that it is more likely than not that a reporting unit’s fair value is less than its carrying value, the Company performs a quantitative assessment to determine the fair value of the reporting unit and compares it to its carrying value. If the carrying value of a reporting unit exceeds its fair value, the Company would recognize an impairment loss equal to the excess. Intangible assets that are not deemed to have an indefinite life are amortized over their estimated useful lives and are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. The pattern of amortization reflects the timing of the realization of the economic benefits of such intangible assets. For acquired customer contracts, the period of realization is deemed to be the period when the related revenue is recognized. The impairment analysis is performed by comparing the carrying value of the intangible asset being reviewed for impairment to the current and expected future cash flows expected to be generated from such asset on an undiscounted basis, including eventual disposition. An impairment loss would be measured for the amount by which the carrying amount of the intangible asset exceeds its fair value. See Note 11 with respect to goodwill and other intangible assets. Derivative Instruments— A derivative is typically defined as a financial instrument whose value is “derived” from underlying assets, indices or reference rates, such as a future, forward, swap, warrant or option contract, or other financial instrument with similar characteristics. Derivative contracts often involve future commitments to exchange interest payment streams or currencies based on a notional or contractual amount ( e.g. , interest rate swaps or currency forwards) or to purchase or sell other financial instruments at specified terms on a specified date ( e.g. , options to buy or sell securities or currencies). The Company enters into forward foreign currency exchange rate contracts, interest rate swaps, interest rate futures, total return swap contracts on various equity and debt indices and other derivative contracts to economically hedge exposures to fluctuations in currency exchange rates, interest rates and equity and debt prices. The Company reports its derivative instruments separately as assets and liabilities unless a legal right of set-off exists under a master netting agreement enforceable by law, in which case the Company would net the applicable assets and liabilities and related receivable and payable for net cash collateral under such contracts. The Company’s derivative instruments are recorded at 84 LAZARD LTD NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) (dollars in thousands, except for per share data, unless otherwise noted) their fair value, and are included in “other assets” and “other liabilities” on the consolidated statements of financial condition. Gains and losses on the Company’s derivative instruments are generally included in “interest income” and “interest expense” or “revenue-other”, depending on the nature of the underlying item, in the consolidated statements of operations. In addition to the derivative instruments described above, the Company records derivative liabilities relating to its obligations pertaining to Lazard Fund Interests (“LFI”) and other similar deferred compensation arrangements, the fair value of which is based on the value of the underlying investments, adjusted for estimated forfeitures, and is included in “accrued compensation and benefits” in the consolidated statements of financial condition. Changes in the fair value of the derivative liabilities are included in “compensation and benefits” in the consolidated statements of operations, the impact of which equally offsets the changes in the fair value of investments which are currently expected to be delivered upon settlement of LFI and other similar deferred compensation arrangements, which are reported in “revenue-other” in the consolidated statements of operations. For information regarding LFI and other similar deferred compensation arrangements, see Notes 6, 8 and 16. For information regarding LGAC Warrants that are accounted for as derivative liabilities, see Notes 1 and 8. Deposits and Other Customer Payables— Principally consists of LFB customer-related demand deposits. Securities Sold, Not Yet Purchased— Securities sold, not yet purchased represents liabilities for securities sold for which payment has been received and the obligations to deliver such securities are included within “other liabilities” in the consolidated statements of financial condition. These securities are accounted for at fair value, with any increase or decrease in fair value recorded in earnings in accordance with standard securities industry practices. Such gains and losses are reflected in “revenue-other” in the consolidated statements of operations . Fair Value of Financial Assets and Liabilities— The majority of the Company’s financial assets and liabilities are recorded at fair value or at amounts that approximate fair value. Such assets and liabilities include cash and cash equivalents, deposits with banks and short-term investments, restricted cash, receivables, investments (excluding investments accounted for under the equity method of accounting), derivative instruments, deposits and other customer payables. Redeemable Noncontrolling Interests— See Notes 15 and 24 for information regarding consolidated VIE interests held by employees and Note 1 for information regarding interests in LGAC classified as temporary equity. Investment Banking and Other Advisory Fees — Fees for Financial Advisory services are recorded when: (i) a contract with a client has been identified, (ii) the performance obligations in the contract have been identified, (iii) the fee or other transaction price has been determined, (iv) the fee or other transaction price has been allocated to each performance obligation in the contract, and (v) the Company has satisfied the applicable performance obligation. The expenses that are directly related to such transactions are recorded as incurred and presented within operating expenses when the Company is primarily responsible for fulfilling the promise of the arrangement. Revenues associated with the reimbursement of such expenses are recorded when the Company is contractually entitled to reimbursement and presented within investment banking and other advisory fees. Asset Management Fees —Fees for Asset Management services are primarily comprised of management fees and incentive fees. Management fees are derived from fees for investment management and other services provided to clients. Revenue is recorded in accordance with the same five criteria as Financial Advisory fees, which generally results in management fees being recorded on a daily, monthly or quarterly basis, primarily based on a percentage of client assets managed. Fees vary with the type of assets managed, with higher fees earned on equity assets, alternative investment (such as hedge fund) and private equity funds, and lower fees earned on fixed income and money market products. Expenses that are directly related to the sale or distribution of fund interests are recorded as incurred and presented within operating expenses when the Company is primarily responsible for fulfilling the promise of the arrangement. Revenues associated with the reimbursement of such expenses are recorded when the Company is contractually entitled to reimbursement and presented within asset management fees. 85 LAZARD LTD NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) (dollars in thousands, except for per share data, unless otherwise noted) In addition, the Company earns performance-based incentive fees on various investment products, including traditional products and alternative investment funds such as hedge funds and private equity funds. For hedge funds, incentive fees are calculated based on a specific percentage of a fund’s net appreciation, in some cases in excess of established benchmarks or thresholds. The Company records incentive fees on traditional products and hedge funds when a significant reversal in the amount of the cumulative revenue to be recognized is not probable, which is typically at the end of the relevant performance measurement period. The incentive fee measurement period is generally an annual period (unless an account is terminated during the year). The incentive fees received at the end of the measurement period are not subject to reversal or clawback. Incentive fees on hedge funds generally are subject to loss carryforward provisions in which losses incurred by the hedge funds in any year are applied against certain gains realized by the hedge funds in future periods before any incentive fees can be earned. For private equity funds, incentive fees may be earned in the form of a “carried interest” if profits arising from realized investments exceed a specified threshold. Typically, such carried interest is ultimately calculated on a whole-fund or investment by investment basis and, therefore, clawback of carried interest toward the end of the life of the fund can occur. As a result, the Company recognizes incentive fees earned on our private equity funds only when it is probable that a clawback will not occur. Receivables relating to asset management and incentive fees are reported in “fees receivable” on the consolidated statements of financial condition. Equity-Based Incentive Compensation Awards— Equity-based incentive compensation awards that do not require future service are expensed immediately. Equity-based compensation awards that require future service are expensed over the applicable requisite service period, based on the grant date fair value of the award. Compensation expense recognized for equity-based incentive compensation is determined based on the number of awards that in the Company’s estimate are considered probable of vesting (including as a result of any applicable performance conditions). Equity-based incentive compensation is primarily recognized in “compensation and benefits” expense. Income Taxes— Deferred income taxes reflect the net tax effects of temporary differences between the financial reporting and tax basis of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when such differences are expected to reverse. Such temporary differences are reflected as “deferred tax assets” and “deferred tax liabilities” on the consolidated statements of financial condition. A deferred tax asset is recognized if it is more likely than not (defined as a likelihood of greater than 50%) that a tax benefit will be accepted by the relevant taxing authority. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized and, when necessary, a valuation allowance is established. The ultimate realization of the deferred tax assets is dependent upon the generation of future taxable income during the periods in which temporary differences become deductible. Management considers the following possible sources of taxable income when assessing the realization of deferred tax assets: • future reversals of existing taxable temporary differences; • future taxable income exclusive of reversing temporary differences and carryforwards; • taxable income in prior carryback years; and • tax-planning strategies. The assessment regarding whether a valuation allowance is required or should be adjusted also considers all available information, including the following: • nature, frequency, magnitude and duration of any past losses and current operating results; • duration of statutory carryforward periods; • historical experience with tax attributes expiring unused; and 86 LAZARD LTD NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) (dollars in thousands, except for per share data, unless otherwise noted) • near-term and medium-term financial outlook. The Company records tax positions taken or expected to be taken in a tax return based upon the Company’s estimates regarding the amount that is more likely than not to be realized or paid, including in connection with the resolution of any related appeals or other legal processes. Accordingly, the Company recognizes liabilities for certain unrecognized tax benefits based on the amounts that are more likely than not to be settled with the relevant taxing authority. The Company recognizes interest and/or penalties related to unrecognized tax benefits in “provision for income taxes”. See Note 19 for additional information relating to income taxes. 3. RECENT ACCOUNTING DEVELOPMENTS Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures —In November 2023, the Financial Accounting Standards Board (“FASB”) issued an accounting standard update to improve the disclosures about a public entity’s reportable segments and address requests from investors for additional, more detailed information about reportable segment’s expenses. The amendments include new annual and interim disclosure requirements primarily related to significant segment expenses, reportable segments’ profit or loss, and information on the chief operating decision maker. The new guidance is effective for annual periods beginning after December 15, 2023, and interim periods beginning after December 15, 2024. The amendments shall be applied retrospectively to all prior periods presented in the consolidated financial statements. The Company is currently evaluating the new guidance. Income Taxes (Topic 740): Improvements to Income Tax Disclosures —In December 2023, the FASB issued an accounting standard update to enhance the transparency and decision usefulness of income tax disclosures. The amendments include new annual disclosure requirements related to the rate reconciliation, information about income taxes paid, and disaggregated information on pre-tax income or loss and income tax expense from continuing operations. The amendments also eliminated certain disclosure requirements. The new guidance is effective for annual periods beginning after December 15, 2024, and shall be applied on a prospective basis. The Company is currently evaluating the new guidance. 4. REVENUE RECOGNITION The Company disaggregates revenue based on its business segment results and believes that the following information provides a reasonable representation of how performance obligations relate to the nature, amount, timing and uncertainty of revenue and cash flows: Year Ended December 31, 2023 2022 2021 Net Revenue: Financial Advisory (a) $ 1,385,357 $ 1,666,156 $ 1,764,509 Asset Management: Management fees and other (b) $ 1,121,950 $ 1,137,583 $ 1,304,582 Incentive fees (c) 29,546 67,344 120,403 Total Asset Management $ 1,151,496 $ 1,204,927 $ 1,424,985 ________________________ (a) Financial Advisory is comprised of a wide array of financial advisory services regarding M&A advisory, capital markets advisory, shareholder advisory, restructuring and liability management, sovereign advisory, geopolitical advisory and other strategic advisory and capital raising and placement work for clients. The benefits of these advisory services are generally transferred to the Company’s clients over time, and consideration for these advisory services typically includes transaction completion, transaction announcement and retainer fees. Retainer fees are generally fixed and recognized over the period in which the advisory services are performed. However, transaction announcement and transaction completion fees are variable and subject to constraints, and they are 87 LAZARD LTD NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) (dollars in thousands, except for per share data, unless otherwise noted) typically not recognized until there is an announcement date or a completion date, respectively, due to the uncertainty associated with those events. Therefore, in any given period, advisory fees recognized for certain transactions may relate to services performed in prior periods. The advisory fees that may be unrecognized as of the end of a reporting period, primarily comprised of fees associated with transaction announcements and transaction completions, generally remain unrecognized due to the uncertainty associated with those events. (b) Management fees and other is primarily comprised of management services. The benefits of these management services are transferred to the Company’s clients over time. Consideration for these management services generally includes management fees, which are based on assets under management and recognized over the period in which the management services are performed. The selling or distribution of fund interests is a separate performance obligation within management fees and other, and the benefits of such services are transferred to the Company’s clients at the point in time that such fund interests are sold or distributed. (c) Incentive fees is primarily comprised of management services. The benefits of these management services are transferred to the Company’s clients over time. Consideration for these management services is generally variable and includes performance or incentive fees. The fees allocated to these management services that are unrecognized as of the end of the reporting period are generally amounts that are subject to constraints due to the uncertainty associated with performance targets and clawbacks. In addition to the above, contracts with clients include trade-based commission income, which is recognized at the point in time of execution and presented within other revenue. Such income may be earned by providing trade facilitation, execution, clearance and settlement, custody, and trade administration services to clients. With regard to the disclosure requirement for remaining performance obligations, the Company elected the practical expedients permitted in the guidance to (i) exclude contracts with a duration of one year or less; and (ii) exclude variable consideration, such as transaction completion and transaction announcement fees, that is allocated entirely to unsatisfied performance obligations. Excluded variable consideration typically relates to contracts with a duration of one year or less, and is generally constrained due to uncertainties. Therefore, when applying the practical expedients, amounts related to remaining performance obligations are not material to the Company’s consolidated financial statements. 5. RECEIVABLES AND ALLOWANCE FOR CREDIT LOSSES The Company’s receivables represent fee receivables, amounts due from customers and other receivables. Where applicable, receivables are stated net of an estimated allowance for credit losses determined in accordance with the CECL model. Of the Company’s fee receivables at December 31, 2023 and 2022, $ 113,929 and $ 97,964 , respectively, represented financing receivables for our Private Capital Advisory fees. At December 31, 2023 and 2022, customers and other receivables included $ 86,412 and $ 128,890 , respectively, of customer loans, which are fully collateralized and monitored for counterparty creditworthiness, with such collateral having a fair value in excess of the carrying amount of the loans as of both December 31, 2023 and 2022. The aggregate carrying amount of other fees and customers and other receivables was $ 561,978 and $ 425,904 at December 31, 2023 and 2022, respectively. Activity in the allowance for credit losses for the years ended December 31, 2023, 2022 and 2021 was as follows: Year Ended December 31, 2023 2022 2021 Beginning Balance $ 17,738 $ 33,957 $ 36,649 Bad debt expense, net of reversals 20,875 4,012 3,807 Charge-offs, foreign currency translation and other adjustments ( 10,110 ) ( 20,231 ) ( 6,499 ) Ending Balance $ 28,503 $ 17,738 $ 33,957 88 LAZARD LTD NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) (dollars in thousands, except for per share data, unless otherwise noted) Bad debt expense, net of reversals represents the current period provision of expected credit losses and is included in “operating expenses-other” on the consolidated statements of operations. The allowance for credit losses is substantially all related to Financial Advisory fee receivables and other receivables. 6. INVESTMENTS The Company’s investments consist of the following at December 31, 2023 and 2022: December 31, 2023 2022 Debt $ 4,285 $ – Equities 54,717 43,889 Funds: Alternative investments (a) 61,680 56,947 Debt (a) 191,325 178,556 Equity (a) 343,139 350,282 Private equity 46,818 53,822 642,962 639,607 Investments, at fair value 701,964 683,496 Equity method investments – 15,481 Total investments $ 701,964 $ 698,977 ________________________ (a) Interests in alternative investment funds, debt funds and equity funds include investments, including those held by LFI Consolidated Funds (see Note 24), with fair values of $ 27,454 , $ 175,449 and $ 284,099 , respectively, at December 31, 2023 and $ 24,137 , $ 142,632 and $ 266,528 , respectively, at December 31, 2022, held in order to satisfy the Company’s obligation upon vesting of previously granted LFI and other similar deferred compensation arrangements. LFI represent grants by the Company to eligible employees of interests in a number of Lazard-managed funds, subject to service-based vesting conditions (see Notes 8 and 16). Debt primarily consists of investments in government securities held within separately managed accounts in order to seed strategies in our Asset Management business. Equities primarily consist of investments in marketable equity securities of large-, mid- and small-cap domestic, international and global companies held within separately managed accounts in order to seed strategies in our Asset Management business. Alternative investment funds primarily consist of interests in various Lazard-managed hedge funds, funds of funds and mutual funds. Such amounts primarily consist of investments in funds in order to seed strategies in our Asset Management business, and amounts related to LFI discussed above. Debt funds primarily consist of investments in debt securities in order to seed strategies in our Asset Management business, amounts related to LFI discussed above and an investment in a Lazard-managed debt fund. Equity funds primarily consist of investments in equity securities in order to seed strategies in our Asset Management business, and amounts related to LFI discussed above. Private equity investments include those owned by Lazard and those consolidated but not owned by Lazard. Private equity investments owned by Lazard are primarily comprised of investments in private equity funds. Such investments primarily include (i) Edgewater Growth Capital Partners III, L.P. (“EGCP III”), a fund primarily making 89 LAZARD LTD NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) (dollars in thousands, except for per share data, unless otherwise noted) equity and buyout investments in middle market companies, (ii) a fund targeting significant noncontrolling-stake investments in established private companies and (iii) a seed investment in a fund that invests in sustainable private infrastructure opportunities. Private equity investments consolidated but not owned by Lazard relate to the economic interests that are owned by the management team and other investors in the Edgewater Funds (“Edgewater”). Equity method investments represent certain partnership interests accounted for under the equity method of accounting. During the years ended December 31, 2023, 2022 and 2021, the Company reported in “revenue-other” on its consolidated statements of operations net unrealized investment gains and losses pertaining to equity securities and trading debt securities still held as of the reporting date as follows: Year Ended December 31, 2023 2022 2021 Net unrealized investment gains (losses) $ 54,228 $ ( 92,793 ) $ 14,154 7. FAIR VALUE MEASUREMENTS Fair Value Hierarchy of Investments and Certain Other Assets and Liabilities —Lazard categorizes its investments and certain other assets and liabilities recorded at fair value into a three-level fair value hierarchy as follows: Level 1. Assets and liabilities whose values are based on unadjusted quoted prices for identical assets or liabilities in an active market that Lazard has the ability to access. Level 2. Assets and liabilities whose values are based on (i) quoted prices for similar assets or liabilities in an active market, or quoted prices for identical or similar assets or liabilities in non-active markets, or (ii) inputs other than quoted prices that are directly observable or derived principally from, or corroborated by, market data. Level 3. Assets and liabilities whose values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. These inputs reflect our own assumptions about the assumptions a market participant would use in pricing the asset or liability. Items included in Level 3 include securities or other financial assets whose trading volume and level of activity have significantly decreased when compared with normal market activity and there is no longer sufficient frequency or volume to provide pricing information on an ongoing basis. The fair value of debt is classified as Level 1 when the fair values are based on unadjusted quoted prices in active markets. The fair value of equities is classified as Level 1 or Level 3 as follows: marketable equity securities are classified as Level 1 and are valued based on the last trade price on the primary exchange for that security as provided by external pricing services; equity interests in private companies are generally classified as Level 3. The fair value of investments in alternative investment funds, debt funds and equity funds is classified as Level 1 when the fair values are based on the publicly reported closing price for the fund, or Level 2 when based on one or more quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly. The fair value of investments in certain private equity funds is classified as Level 3 for (i) certain investments that are valued based on the potential transaction value and (ii) when the acquisition price is considered the best measure of fair value. The fair value of securities sold, not yet purchased, is classified as Level 1 when the fair values are based on unadjusted quoted prices in active markets. 90 LAZARD LTD NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) (dollars in thousands, except for per share data, unless otherwise noted) The fair value of the contingent consideration liability is classified as Level 3. The contingent consideration liability is initially recorded at fair value on the acquisition date and is included in “other liabilities” on the consolidated statements of financial condition. The fair value of the contingent consideration liability is remeasured at each reporting period. The inputs used to derive the fair value of the contingent consideration include the application of probabilities when assessing certain performance thresholds for the relevant periods. Any change in the fair value is recognized in “amortization and other acquisition-related costs” in the consolidated statements of operations. Our business acquisitions may involve the potential payment of contingent consideration upon the achievement of certain performance thresholds. The fair value of derivatives classified as Level 1 is based on the listed market price of such instruments. The fair value of derivatives classified as Level 2 is based on the values of the related underlying assets, indices or reference rates as follows: the fair value of forward foreign currency exchange rate contracts is a function of the spot rate and the interest rate differential of the two currencies from the trade date to settlement date; the fair value of total return swaps is based on the change in fair value of the related underlying equity security, financial instrument or index and a specified notional holding; the fair value of interest rate swaps is based on the interest rate yield curve; and the fair value of derivative liabilities related to LFI and other similar deferred compensation arrangements is based on the value of the underlying investments, adjusted for forfeitures. The fair value of derivatives classified as Level 3 is based on a Black-Scholes valuation model that utilizes both observable and unobservable inputs. Unobservable inputs include model adjustments for valuation uncertainty. See Note 8. Investments Measured at Net Asset Value (“NAV”) —As a practical expedient, the Company uses NAV or its equivalent to measure the fair value of certain investments. NAV is primarily determined based on information provided by external fund administrators. The Company’s investments valued at NAV as a practical expedient in (i) alternative investment funds, debt funds and equity funds are redeemable in the near term, and (ii) private equity funds are not redeemable in the near term as a result of redemption restrictions. The following tables present, as of December 31, 2023 and 2022, the classification of (i) investments and certain other assets and liabilities measured at fair value on a recurring basis within the fair value hierarchy and (ii) investments measured at NAV or its equivalent as a practical expedient: December 31, 2023 Level 1 Level 2 Level 3 NAV Total Assets: Investments: Debt $ 4,285 $ – $ – $ – $ 4,285 Equities 54,224 – 493 – 54,717 Funds: Alternative investments 15,676 – – 46,004 61,680 Debt 180,907 10,413 – 5 191,325 Equity 343,094 – – 45 343,139 Private equity – – 273 46,545 46,818 Derivatives – 2,789 – – 2,789 Total $ 598,186 $ 13,202 $ 766 $ 92,599 $ 704,753 Liabilities: Securities sold, not yet purchased $ 4,809 $ – $ – $ – $ 4,809 Contingent consideration liability – – 6,583 – 6,583 Derivatives – 368,673 – – 368,673 Total $ 4,809 $ 368,673 $ 6,583 $ – $ 380,065 91 LAZARD LTD NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) (dollars in thousands, except for per share data, unless otherwise noted) December 31, 2022 Level 1 Level 2 Level 3 NAV Total Assets: Investments: Equities $ 43,243 $ – $ 646 $ – $ 43,889 Funds: Alternative investments 27,073 – – 29,874 56,947 Debt 178,552 – – 4 178,556 Equity 350,242 – – 40 350,282 Private equity – – 18,772 35,050 53,822 Derivatives – 14,554 – – 14,554 Total $ 599,110 $ 14,554 $ 19,418 $ 64,968 $ 698,050 Liabilities: Securities sold, not yet purchased $ 4,651 $ – $ – $ – $ 4,651 Derivatives 115 327,045 – – 327,160 Total $ 4,766 $ 327,045 $ – $ – $ 331,811 The following tables provide a summary of changes in fair value of the Company’s Level 3 assets and liabilities for the years ended December 31, 2023, 2022 and 2021: Year Ended December 31, 2023 Beginning Balance Net Unrealized/ Realized Gains/Losses Included In Earnings (a) Purchases/ Acquisitions/ Issuances Sales/ Settlements/ Transfers (b) Foreign Currency Translation Adjustments Ending Balance Assets: Investments: Equities $ 646 $ 54 $ – $ ( 281 ) $ 74 $ 493 Private equity funds 18,772 – – ( 18,508 ) 9 273 Total Level 3 assets $ 19,418 $ 54 $ – $ ( 18,789 ) $ 83 $ 766 Liabilities: Contingent consideration liability (c) $ – $ 274 $ 7,754 $ ( 1,445 ) $ – $ 6,583 Total Level 3 liabilities $ – $ 274 $ 7,754 $ ( 1,445 ) $ – $ 6,583 92 LAZARD LTD NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) (dollars in thousands, except for per share data, unless otherwise noted) Year Ended December 31, 2022 Beginning Balance Net Unrealized/ Realized Gains/Losses Included In Earnings (a) Purchases/ Issuances Sales/ Settlements Foreign Currency Translation Adjustments Ending Balance Assets: Investments: Equities $ 578 $ 99 $ – $ – $ ( 31 ) $ 646 Private equity funds 293 – 18,000 ( 13 ) 492 18,772 Total Level 3 assets $ 871 $ 99 $ 18,000 $ ( 13 ) $ 461 $ 19,418 Year Ended December 31, 2021 Beginning Balance Net Unrealized/ Realized Gains/Losses Included In Earnings (a) Purchases/ Issuances Sales/ Settlements/ Transfers (b) Foreign Currency Translation Adjustments Ending Balance Assets: Investments: Equities $ 1,671 $ ( 796 ) $ – $ ( 235 ) $ ( 62 ) $ 578 Private equity funds 1,486 951 – ( 2,121 ) ( 23 ) 293 Total Level 3 assets $ 3,157 $ 155 $ – $ ( 2,356 ) $ ( 85 ) $ 871 Liabilities: Derivatives $ – $ – $ 11,500 $ ( 11,500 ) $ – $ – Total Level 3 liabilities $ – $ – $ 11,500 $ ( 11,500 ) $ – $ – _____________________ (a) Earnings recorded in “ other revenue ” for investments in Level 3 assets for the years ended December 31, 2023, 2022 and 2021 include net unrealized gains (losses) of $( 6 ), $ 99 and $ 155 , respectively. Unrealized losses of $ 274 were recorded in “ amortization and other acquisition-related costs ” for the contingent consideration liability for the year ended December 31, 2023. (b) Transfers out of Level 3 private equity funds during the years ended December 31, 2023 and 2021 reflect investments valued at NAV as of December 31, 2023 and 2021. Transfers out of Level 3 derivatives during the year ended December 31, 2021 reflected transfers of derivative liabilities for LGAC Warrants to Level 1 principally due to a change in the inputs used to value these derivatives. (c) For the year ended December 31, 2023, acquisitions represent the initial recognition of the contingent consideration liability (noncash transaction), and settlements represent aggregate cash and noncash settlement of contingent consideration after the acquisition date. There were no other transfers into or out of Level 3 within the fair value hierarchy during the years ended December 31, 2023, 2022 and 2021. 93 LAZARD LTD NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) (dollars in thousands, except for per share data, unless otherwise noted) Financial Instruments Not Measured at Fair Value— The tables below present the carrying value, fair value and fair value hierarchy category of certain financial instruments as of December 31, 2023 and 2022 that are not measured at fair value in the Company’s consolidated statement of financial condition. December 31, 2023 Fair Value Measurements Using: Carrying Value Fair Value Level 1 Level 2 Level 3 Financial Assets: Cash and cash equivalents $ 971,316 $ 971,316 $ 971,316 $ – $ – Deposits with banks and short-term investments 219,576 219,576 219,576 – – Restricted cash 34,091 34,091 34,091 – – Financing receivables 113,929 113,694 – – 113,694 Customer loans 86,412 86,412 – – 86,412 Other fees and customers and other receivables 561,978 561,978 561,978 – – Financial Liabilities: Deposits and other customer payables $ 443,262 $ 443,262 $ 443,262 $ – $ – Senior debt 1,690,200 1,651,726 – 1,651,726 – December 31, 2022 Carrying Value Fair Value Measurements Using: Fair Value Level 1 Level 2 Level 3 Financial Assets: Cash and cash equivalents $ 1,234,773 $ 1,234,773 $ 1,234,773 $ – $ – Deposits with banks and short-term investments 779,246 779,246 779,246 – – Restricted cash 625,381 625,381 625,381 – – Financing receivables 97,964 98,362 – – 98,362 Customer loans 128,890 128,890 – – 128,890 Other fees and customers and other receivables 425,904 425,904 425,904 – – Financial Liabilities: Deposits and other customer payables $ 921,834 $ 921,834 $ 921,834 $ – $ – Senior debt 1,687,714 1,601,917 – 1,601,917 – Cash and cash equivalents are carried at either cost or amortized cost that approximates fair value due to their short-term maturities. The carrying value of deposits with banks and short-term investments, and restricted cash, approximates fair value because of the relatively short period of time between their origination and expected maturity. Fair values of financing receivables were generally determined by discounting both principal and interest cash flows expected to be collected, using a discount rate approximating current market interest rates for comparable financial instruments and based on unobservable inputs. 94 LAZARD LTD NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) (dollars in thousands, except for per share data, unless otherwise noted) The carrying value of customer loans approximates fair value as such loans are fully collateralized and bear interest at rates that regularly reset in accordance with market reference rates. The carrying value of other fees and customers and other receivables and deposits and other customer payables approximates fair value due to their short-term nature. The Company’s senior debt is carried at its principal amount outstanding, net of unamortized debt costs. The fair value of the Company’s senior debt is based on market quotations. The following tables present, at December 31, 2023 and 2022, certain investments that are valued using NAV or its equivalent as a practical expedient in determining fair value: December 31, 2023 Investments Redeemable NAV Unfunded Commitments % of NAV Not Redeemable Redemption Frequency Redemption Notice Period Alternative investment funds: Hedge funds $ 45,324 $ – NA (a) 30 - 60 days Other 680 – NA (b) < 30 - 30 days Debt funds 5 – NA (c) < 30 days Equity funds 45 – NA (d) < 30 - 60 days Private equity funds: Equity growth 46,545 5,505 (e) 100 % (f) NA NA Total $ 92,599 $ 5,505 _____________________ (a) monthly ( 74 %) and quarterly ( 26 %) (b) daily ( 4 %) and monthly ( 96 %) (c) daily ( 100 %) (d) monthly ( 34 %) and annually ( 66 %) (e) Unfunded commitments to private equity investments consolidated but not owned by Lazard of $ 9,605 are excluded. Such commitments are required to be funded by capital contributions from noncontrolling interest holders. (f) Distributions from each fund will be received as the underlying investments of the funds are liquidated. 95 LAZARD LTD NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) (dollars in thousands, except for per share data, unless otherwise noted) December 31, 2022 Investments Redeemable NAV Unfunded Commitments % of NAV Not Redeemable Redemption Frequency Redemption Notice Period Alternative investment funds: Hedge funds $ 29,259 $ – NA (a) 30 - 60 days Other 615 – NA (b) < 30 - 30 days Debt funds 4 – NA (c) < 30 days Equity funds 40 – NA (d) < 30 - 60 days Private equity funds: Equity growth 35,050 5,455 (e) 100 % (f) NA NA Total $ 64,968 $ 5,455 _____________________ (a) monthly ( 68 %) and quarterly ( 32 %) (b) daily ( 5 %) and monthly ( 95 %) (c) daily ( 100 %) (d) monthly ( 35 %) and annually ( 65 %) (e) Unfunded commitments to private equity investments consolidated but not owned by Lazard of $ 8,003 are excluded. Such commitments are required to be funded by capital contributions from noncontrolling interest holders. (f) Distributions from each fund will be received as the underlying investments of the funds are liquidated. 8. DERIVATIVES The tables below present the fair value of the Company’s derivative instruments reported within “other assets” and “other liabilities” and the fair value of the Company’s derivative liabilities relating to its obligations pertaining to LFI and other similar deferred compensation arrangements reported within “accrued compensation and benefits” (see Note 16) on the accompanying consolidated statements of financial condition as of December 31, 2023 and 2022. Notional amounts provide an indication of the volume of the Company's derivative activity. Derivative assets and liabilities, as well as the related cash collateral from the same counterparty, have been netted on the consolidated statements of financial condition where the Company has obtained an appropriate legal opinion with respect to the master netting agreement. Where such a legal opinion has not been either sought or obtained, amounts are not eligible for netting on the consolidated statements of financial condition, and those derivative assets and liabilities are shown separately in the table below. In addition to the cash collateral received and transferred that is presented on a net basis with derivative assets and liabilities, the Company receives and transfers additional securities and cash collateral. These amounts mitigate 96 LAZARD LTD NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) (dollars in thousands, except for per share data, unless otherwise noted) counterparty credit risk associated with the Company’s derivative instruments, but are not eligible for net presentation on the consolidated statements of financial condition. December 31, 2023 Derivative Assets Derivative Liabilities Fair Value Notional Fair Value Notional Forward foreign currency exchange rate contracts $ 3,400 $ 283,635 $ 1,847 $ 170,704 Total return swaps and other 133 4,478 12,290 117,139 LFI and other similar deferred compensation arrangements – – 365,420 352,891 Total gross derivatives 3,533 $ 288,113 379,557 $ 640,734 Counterparty and cash collateral netting: Forward foreign currency exchange rate contracts ( 604 ) ( 603 ) Total return swaps and other ( 140 ) ( 10,281 ) Net derivatives in "other assets" and "other liabilities" 2,789 368,673 Amounts not netted (a): Cash collateral – ( 243 ) Securities collateral – – $ 2,789 $ 368,430 December 31, 2022 Derivative Assets Derivative Liabilities Fair Value Notional Fair Value Notional Forward foreign currency exchange rate contracts $ 1,356 $ 170,103 $ 921 $ 128,098 Total return swaps and other 13,427 155,026 72 1,398 LGAC Warrants – – 115 11,500 LFI and other similar deferred compensation arrangements – – 326,282 338,126 Total gross derivatives 14,783 $ 325,129 327,390 $ 479,122 Counterparty and cash collateral netting: Forward foreign currency exchange rate contracts ( 157 ) ( 158 ) Total return swaps and other ( 72 ) ( 72 ) Net derivatives in "other assets" and "other liabilities" 14,554 327,160 Amounts not netted (a): Cash collateral – – Securities collateral – – $ 14,554 $ 327,160 _____________________ (a) Amounts are subject to master netting arrangements but do not meet the criteria for netting on the consolidated statements of financial condition under U.S. GAAP. For some counterparties, the collateral amounts of securities and cash collateral pledged may exceed the derivative assets and derivative liabilities balances. Where this is the case, the total amount reported is limited to the net derivative assets and net derivative liabilities balances with that counterparty. 97 LAZARD LTD NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) (dollars in thousands, except for per share data, unless otherwise noted) Net gains (losses) with respect to derivative instruments (included in “revenue-other”) and the Company’s derivative liabilities relating to its obligations pertaining to LFI and other similar deferred compensation arrangements (included in “compensation and benefits” expense) as reflected on the accompanying consolidated statements of operations for the years ended December 31, 2023, 2022 and 2021, were as follows: Year Ended December 31, 2023 2022 2021 Forward foreign currency exchange rate contracts $ ( 2,701 ) $ 4,721 $ 11,007 LFI and other similar deferred compensation arrangements ( 41,463 ) 44,261 ( 35,494 ) LGAC Warrants 115 9,890 1,495 Total return swaps and other ( 16,957 ) 23,212 ( 14,460 ) Total $ ( 61,006 ) $ 82,084 $ ( 37,452 ) See Note 1 for additional information on LGAC Warrants. 9. PROPERTY, NET At December 31, 2023 and 2022, property consisted of the following: Estimated Depreciable Life in Years December 31, 2023 2022 Buildings (a) 33 $ 170,830 $ 135,103 Leasehold improvements (a) 3 - 20 233,732 208,323 Furniture and equipment 3 - 10 230,713 236,194 Construction in progress 11,788 65,562 Total 647,063 645,182 Less - Accumulated depreciation and amortization (a) 414,547 395,109 Property, net $ 232,516 $ 250,073 ________________________ (a) The Company classified assets relating to an owned office building as held for sale as of December 31, 2023, the carrying amount of which was $ 72,921 (net of accumulated depreciation). The owned office building is available for immediate sale in its present condition and the Company expects the owned office building to be sold within one year. The property held for sale is reported within the Corporate segment. Effective January 1, 2024, depreciation expense will no longer be recorded on this asset. 10. LEASES The Company as a Lessee The Company leases office space and equipment under non-cancelable lease agreements, which expire on various dates through 2034. Substantially all of these arrangements are operating leases relating to office space. Certain leases have renewal options that can be exercised at the discretion of the Company. The Company only includes renewal options in the lease term when it is reasonably certain to exercise the option. The Company does not record leases with a lease term of 12 months or less on the consolidated statements of financial condition; lease expense for these leases is recognized over the lease term on a straight-line basis. The operating lease liabilities at commencement reflect total lease payments discounted using an incremental borrowing rate (on a collateralized basis) based on the lease term (the “Discount”), as an implicit rate was not readily determinable for any of the Company’s operating leases. The Company determines its Discount with consideration of the Company’s public debt issuances as well as publicly available data for instruments with similar characteristics. 98 LAZARD LTD NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) (dollars in thousands, except for per share data, unless otherwise noted) For office space and equipment leases, the Company accounts for the lease and non-lease components as a single lease component. In addition to rent payments, operating leases for office space generally contain payments for real estate taxes, insurance costs, common area maintenance, and utilities that are not fixed. The Company accounts for these costs as variable payments and does not include them in the lease component. There are certain office leases outside of the U.S. that have annual rent increases based on a year-over-year change in an index that are also accounted for as variable payments and are excluded from the lease component. The following table summarizes the components of operating lease expense reflected on the accompanying consolidated statements of operations for the years ended December 31, 2023, 2022 and 2021: Year Ended December 31, 2023 2022 2021 Operating lease cost $ 80,257 $ 78,482 $ 86,232 Variable lease cost 23,521 21,086 21,193 Sublease income ( 934 ) ( 4,969 ) ( 7,303 ) Total $ 102,844 $ 94,599 $ 100,122 The following table summarizes the supplemental cash flow information and certain other information related to operating leases for the years ended December 31, 2023 and 2022: Year Ended December 31, 2023 2022 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows paid for operating leases $ 81,737 $ 81,415 Operating lease right-of-use assets obtained in exchange for operating lease liabilities $ 35,282 $ 34,559 Weighted average remaining lease term 8 years 9 years Weighted average discount rate 3.9 % 3.7 % Maturities of the operating lease liabilities outstanding at December 31, 2023 for each of the years in the period ending December 31, 2028 and thereafter are set forth in the table below. Year Ending December 31, 2024 $ 82,321 2025 73,201 2026 64,811 2027 63,334 2028 59,863 Thereafter 221,452 Total lease payments 564,982 Less - Discount 79,791 Operating lease liabilities $ 485,191 99 LAZARD LTD NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) (dollars in thousands, except for per share data, unless otherwise noted) In addition, to the table above, the Company had undiscounted future lease payments of $ 119,225 related to an operating lease that was signed but not yet commenced at December 31, 2023. This operating lease will commence in 2024 with a lease term of 15 years. The Company as a Lessor The Company has entered into a lease agreement which provides a third-party the right to use its owned office building. The lease contains options to renew and terminate and is classified as an operating lease. The following table presents the carrying value of the assets subject to leases reported on the consolidated statements of financial condition : Year Ending December 31, 2023 Property, net $ 72,921 Accumulated depreciation $ 104,171 The Company classified the owned office building as held for sale as of December 31, 2023. See Note 9. For the year ended December 31, 2023, the Company’s operating lease income included in “ revenue-other ” on the consolidated statements of operations was $ 6,393 . The following table presents undiscounted future cash inflows under the operating lease as of December 31, 2023: Year Ending December 31, 2024 $ 2,758 2025 8,273 2026 8,273 2027 8,273 2028 8,273 Thereafter 24,820 Total lease payment to be received $ 60,670 11. GOODWILL AND OTHER INTANGIBLE ASSETS The components of goodwill and other intangible assets at December 31, 2023 and 2022 are presented below: December 31, 2023 2022 Goodwill $ 394,898 $ 377,240 Other intangible assets (net of accumulated amortization) 30 90 $ 394,928 $ 377,330 100 LAZARD LTD NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) (dollars in thousands, except for per share data, unless otherwise noted) Changes in the carrying amount of goodwill for the years ended December 31, 2023, 2022 and 2021 are as follows: Year Ended December 31, 2023 2022 2021 Financial Advisory Asset Management Total Financial Advisory Asset Management Total Financial Advisory Asset Management Total Balance, January 1 $ 312,699 $ 64,541 $ 377,240 $ 314,880 $ 64,541 $ 379,421 $ 319,320 $ 64,541 $ 383,861 Acquisition of business – 16,729 16,729 – – – – – – Foreign currency translation adjustments 929 – 929 ( 2,181 ) – ( 2,181 ) ( 4,440 ) – ( 4,440 ) Balance, December 31 $ 313,628 $ 81,270 $ 394,898 $ 312,699 $ 64,541 $ 377,240 $ 314,880 $ 64,541 $ 379,421 The Company tests goodwill for impairment annually or more frequently if circumstances indicate that impairment may have occurred. Pursuant to the Company’s goodwill impairment tests for the years ended December 31, 2023, 2022 and 2021, the Company determined that no impairment existed. Amortization expense of intangible assets, included in “amortization and other acquisition-related costs” in the consolidated statements of operations, for the years ended December 31, 2023, 2022 and 2021 was $ 60 , $ 60 and $ 60 , respectively. 12. OTHER ASSETS AND OTHER LIABILITIES The following table sets forth the Company’s other assets, by type, as of December 31, 2023 and 2022: December 31, 2023 2022 Current income and other tax receivables $ 69,700 $ 73,672 Prepaid compensation (see Note 16) 115,972 112,124 Other advances and prepayments 117,452 105,717 Other 111,394 103,245 Total $ 414,518 $ 394,758 101 LAZARD LTD NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) (dollars in thousands, except for per share data, unless otherwise noted) The following table sets forth the Company’s other liabilities, by type, as of December 31, 2023 and 2022: December 31, 2023 2022 Accrued expenses $ 195,572 $ 196,624 Current income and other taxes payable 138,056 117,308 Employee benefit-related liabilities 23,829 30,580 Unclaimed funds at LFB 16,994 16,435 Deferred revenue (a) 140,417 137,330 Securities sold, not yet purchased 4,809 4,651 Deferred offering costs – 20,125 Other 27,270 16,717 Total $ 546,947 $ 539,770 _____________________ (a) Deferred revenue primarily relates to cash received for carried interest subject to clawback and unearned advisory fees received from private equity investments. Revenue recognized during the year ended December 31, 2023 that was included in the deferred revenue balance as of December 31, 2022 was $ 18,775 . 13. SENIOR DEBT Senior debt is comprised of the following as of December 31, 2023 and 2022: Outstanding as of December 31, 2023 December 31, 2022 Initial Principal Amount Maturity Date Annual Interest Rate(a) Principal Unamortized Debt Costs Carrying Value Principal Unamortized Debt Costs Carrying Value Lazard Group 2025 Senior Notes $ 400,000 2/13/25 3.75 % $ 400,000 $ 531 $ 399,469 $ 400,000 $ 1,003 $ 398,997 Lazard Group 2027 Senior Notes 300,000 3/1/27 3.625 % 300,000 1,235 298,765 300,000 1,625 298,375 Lazard Group 2028 Senior Notes 500,000 9/19/28 4.50 % 500,000 4,012 495,988 500,000 4,864 495,136 Lazard Group 2029 Senior Notes 500,000 3/11/29 4.375 % 500,000 4,022 495,978 500,000 4,794 495,206 Total $ 1,700,000 $ 9,800 $ 1,690,200 $ 1,700,000 $ 12,286 $ 1,687,714 _____________________ (a) The effective interest rates of Lazard Group’s 3.75 % senior notes due February 13, 2025 (the “2025 Notes”), Lazard Group’s 3.625 % senior notes due March 1, 2027 (the “2027 Notes”), Lazard Group’s 4.50 % senior notes due September 19, 2028 (the “2028 Notes”) and Lazard Group’s 4.375 % senior notes due March 11, 2029 (the “2029 Notes”) are 3.87 %, 3.76 %, 4.67 % and 4.53 %, respectively. On June 6, 2023 , Lazard Group entered into a Second Amended and Restated Credit Agreement with a group of lenders for a five-year , $ 200,000 senior revolving credit facility expiring in June 2028 (the “Second Amended and Restated Credit Agreement”). The Second Amended and Restated Credit Agreement amended and restated the three-year , $ 200,000 senior revolving credit facility that was due to expire in July 2023 (the “Previous Credit Agreement”) in its entirety. Borrowings under the Second Amended and Restated Credit Agreement generally will bear interest at adjusted term SOFR plus an applicable margin for specific interest periods determined based on Lazard Group’s highest credit rating from an 102 LAZARD LTD NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) (dollars in thousands, except for per share data, unless otherwise noted) internationally recognized credit agency. The Second Amended and Restated Credit Agreement contains certain covenants, events of default and other customary provisions, including customary benchmark-replacement mechanics. At December 31, 2023 and 2022, no amounts were outstanding under the Second Amended and Restated Credit Agreement and the Previous Credit Agreement, respectively. As of December 31, 2023, the Company had approximately $ 209,400 in unused lines of credit available to it, including the credit facility provided under the Second Amended and Restated Credit Agreement. The Second Amended and Restated Credit Agreement and the indenture and the supplemental indentures relating to Lazard Group’s senior notes contain certain covenants, events of default and other customary provisions, including a customary make-whole provision in the event of early redemption, where applicable. As of December 31, 2023, the Company was in compliance with such provisions. All of the Company’s senior debt obligations are unsecured. Debt maturities relating to senior borrowings outstanding at December 31, 2023 for each of the five years in the period ending December 31, 2028 and thereafter are set forth in the table below. Year Ending December 31, 2024 $ – 2025 400,000 2026 – 2027 300,000 2028 500,000 Thereafter 500,000 Total $ 1,700,000 The Company’s senior debt at December 31, 2023 and 2022 is carried at the principal amount outstanding, net of unamortized debt costs. See Note 7 for information regarding the fair value and fair value hierarchy category of the Company’s senior debt. 14. COMMITMENTS AND CONTINGENCIES Commitments— See Notes 7 and 17 for information regarding commitments relating to investment capital funding commitments and obligations to fund our pension plans, respectively. The fulfillment of the commitments described herein should not have a material adverse effect on the Company’s consolidated financial position or results of operations. Legal— The Company is involved from time to time in judicial, governmental, regulatory and arbitration proceedings and inquiries concerning matters arising in connection with the conduct of our businesses, including proceedings initiated by former employees alleging wrongful termination. The Company reviews such matters on a case-by-case basis and establishes any required accrual if a loss is probable and the amount of such loss can be reasonably estimated. The Company may experience significant variation in its revenue and earnings on an annual basis. Accordingly, the results of any pending matter or matters could be significant when compared to the Company’s earnings in any particular year. The Company believes, however, based on currently available information, that the results of any pending matters, in the aggregate, will not have a material effect on its business or financial condition. 103 LAZARD LTD NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) (dollars in thousands, except for per share data, unless otherwise noted) 15. STOCKHOLDERS’ EQUITY AND REDEEMABLE NONCONTROLLING INTERESTS Share Repurchase Program — The Board of Directors of Lazard authorized the repurchase of Lazard Ltd Class A common stock (“common stock”), the only class of common stock of Lazard outstanding as set forth in the table below. Date Repurchase Authorization Expiration February 2022 $ 300,000 December 31, 2024 July 2022 $ 500,000 December 31, 2024 The Company expects that the share repurchase program will continue to be used to offset a portion of the shares that have been or will be issued under Lazard’s 2018 Incentive Compensation Plan, as amended (the “2018 Plan”). Pursuant to the share repurchase program, purchases have been made in the open market or through privately negotiated transactions. The rate at which the Company purchases shares in connection with the share repurchase program may vary from period to period due to a variety of factors. Purchases with respect to such program are set forth in the table below: Year Ended December 31: Number of Shares Purchased Average Price Per Share 2021 9,124,295 $ 44.51 2022 19,666,798 $ 35.17 2023 2,782,662 $ 36.67 There were 25,340,287 and 26,814,213 shares of our common stock held by our subsidiaries at December 31, 2023 and 2022, respectively. Such shares of common stock are reported, at cost, as “Class A common stock held by subsidiaries” on the accompanying consolidated statements of financial condition. During 2023, 2022 and 2021, certain of our executive officers received common stock in connection with the vesting or settlement of previously-granted deferred equity incentive awards. The vesting or settlement of such equity awards gave rise to a tax payable by the executive officers, and, consistent with our past practice, the Company purchased shares of common stock from certain of our executive officers equal in value to all or a portion of the estimated amount of such tax. In addition, during the years ended December 31, 2023, 2022 and 2021, the Company purchased shares of common stock from certain of our executive officers. The aggregate value of all such purchases in 2023, 2022 and 2021 was approximately $ 11,100 , $ 16,500 and $ 19,800 , respectively. Such shares of common stock are reported at cost, and are included in “Class A common stock held by subsidiaries” on the accompanying consolidated statements of financial condition. As of December 31, 2023, a total of $ 200,095 of share repurchase authorization remaining available under Lazard Ltd’s share repurchase program will expire on December 31, 2024 . During the year ended December 31, 2023, Lazard Ltd had in place trading plans under Rule 10b5-1 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), pursuant to which it effected stock repurchases in the open market. Preferred Stock —Lazard Ltd has 15,000,000 authorized shares of preferred stock, par value $ 0.01 per share, inclusive of its Series A and Series B preferred stock. Series A and Series B preferred shares were issued in connection with certain prior year business acquisitions and were each non-participating securities convertible into common stock, and had no voting or dividend rights. As of December 31, 2023, 2022 and 2021, no shares of Series A or Series B preferred stock were outstanding. 104 LAZARD LTD NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) (dollars in thousands, except for per share data, unless otherwise noted) Accumulated Other Comprehensive Income (Loss) (“AOCI”), Net of Tax — The tables below reflect the balances of each component of AOCI at December 31, 2023, 2022 and 2021 and activity during the years then ended: Currency Translation Adjustments Employee Benefit Plans Total AOCI Amount Attributable to Noncontrolling Interests Total Lazard Ltd AOCI Balance, January 1, 2023 $ ( 156,924 ) $ ( 138,930 ) $ ( 295,854 ) $ – $ ( 295,854 ) Activity: Other comprehensive income (loss) before reclassifications 31,107 ( 32,261 ) ( 1,154 ) 1 ( 1,155 ) Adjustments for items reclassified to earnings, net of tax 1,826 5,233 7,059 – 7,059 Net other comprehensive income (loss) 32,933 ( 27,028 ) 5,905 1 5,904 Balance, December 31, 2023 $ ( 123,991 ) $ ( 165,958 ) $ ( 289,949 ) $ 1 $ ( 289,950 ) Currency Translation Adjustments Employee Benefit Plans Total AOCI Amount Attributable to Noncontrolling Interests Total Lazard Ltd AOCI Balance, January 1, 2022 $ ( 92,178 ) $ ( 131,669 ) $ ( 223,847 ) $ – $ ( 223,847 ) Activity: Other comprehensive loss before reclassifications ( 64,778 ) ( 11,413 ) ( 76,191 ) – ( 76,191 ) Adjustments for items reclassified to earnings, net of tax 32 4,152 4,184 – 4,184 Net other comprehensive loss ( 64,746 ) ( 7,261 ) ( 72,007 ) – ( 72,007 ) Balance, December 31, 2022 $ ( 156,924 ) $ ( 138,930 ) $ ( 295,854 ) $ – $ ( 295,854 ) Currency Translation Adjustments Employee Benefit Plans Total AOCI Amount Attributable to Noncontrolling Interests Total Lazard Ltd AOCI Balance, January 1, 2021 $ ( 67,724 ) $ ( 170,644 ) $ ( 238,368 ) $ – $ ( 238,368 ) Activity: Other comprehensive income (loss) before reclassifications ( 48,099 ) 33,315 ( 14,784 ) – ( 14,784 ) Adjustments for items reclassified to earnings, net of tax 23,645 5,660 29,305 – 29,305 Net other comprehensive income (loss) ( 24,454 ) 38,975 14,521 – 14,521 Balance, December 31, 2021 $ ( 92,178 ) $ ( 131,669 ) $ ( 223,847 ) $ – $ ( 223,847 ) 105 LAZARD LTD NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) (dollars in thousands, except for per share data, unless otherwise noted) The table below reflects adjustments for items reclassified out of AOCI, by component, for the years ended December 31, 2023, 2022 and 2021: Year Ended December 31, 2023 2022 2021 Currency translation losses (a) $ 1,826 $ 32 $ 23,645 Employee benefit plans: Amortization relating to employee benefit plans (b) 6,754 5,146 7,269 Less - related income taxes 1,521 994 1,609 5,233 4,152 5,660 Total reclassifications, net of tax $ 7,059 $ 4,184 $ 29,305 ________________________ (a) Represents currency translation losses reclassified from AOCI associated with closing certain of our offices. Such amounts are included in “revenue–other” on the consolidated statements of operations. (b) Included in the computation of net periodic benefit cost (see Note 17). Such amounts are included in “operating expenses–other” on the consolidated statements of operations. Noncontrolling Interests— Noncontrolling interests principally represent (i) interests held in Edgewater’s management vehicles that the Company is deemed to control, but does not own, (ii) profits interest participation rights (see Note 16), (iii) LGAC interests (see Note 1) and (iv) consolidated VIE interests held by employees (see Note 24). The tables below summarize net income (loss) attributable to noncontrolling interests for the years ended December 31, 2023, 2022 and 2021 and noncontrolling interests as of December 31, 2023 and 2022 in the Company’s consolidated financial statements: Net Income (Loss) Attributable to Noncontrolling Interests Year Ended December 31, 2023 2022 2021 Edgewater $ 6,051 $ 31,314 $ 10,466 LFI Consolidated Funds 10,150 ( 11,415 ) 7,950 LGAC 1,968 15,064 ( 3,940 ) Other 3 3 5 Total $ 18,172 $ 34,966 $ 14,481 Noncontrolling Interests as of December 31, 2023 2022 Edgewater $ 46,571 $ 44,681 Profits interest participation rights 11,843 10,792 LFI Consolidated Funds – 74,164 LGAC – ( 10,714 ) Other 14 13 Total $ 58,428 $ 118,936 Redeemable Noncontrolling Interests —Redeemable noncontrolling interests principally represent LGAC interests as of December 31, 2022 (see Note 1) and consolidated VIE interests held by employees as of December 31, 2023 (see Note 24). Consolidated VIE interests held by employees (vested LFI awards), which may be redeemed at any time at 106 LAZARD LTD NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) (dollars in thousands, except for per share data, unless otherwise noted) the option of the holder for cash, are recorded on the Company’s consolidated statements of financial position at redemption value and classified as temporary equity. Changes in redemption value are recognized immediately as they occur and will adjust the carrying value of redeemable noncontrolling interests to equal the redemption value at the end of each reporting period. Dividends Declared, January 31, 2024 —On January 31, 2024 , the Board of Directors of Lazard declared a quarterly dividend of $ 0.50 per share on our common stock. The dividend is payable on February 23, 2024 , to stockholders of record on February 12, 2024 . 16. INCENTIVE PLANS Share-Based Incentive Plan Awards A description of the Company’s 2018 Plan and 2008 Incentive Compensation Plan (the “2008 Plan”) and activity with respect thereto during the years ended December 31, 2023, 2022 and 2021 is presented below. Shares Available Under the 2018 Plan and 2008 Plan Total shares available for issuance under incentive compensation plans are primarily from the 2018 Plan, which became effective on April 24, 2018. The aggregate number of shares authorized for issuance under the 2018 Plan is 50,000,000 . Such shares may be issued pursuant to the grant or exercise of stock options, stock appreciation rights, restricted stock units (“RSUs”), performance-based restricted stock units (“PRSUs”), restricted stock awards (“RSAs”), profits interest participation rights (“PIPRs”), and other share-based awards, as further discussed below. The 2008 Plan authorized the issuance of shares of common stock pursuant to the grant or exercise of stock options, stock appreciation rights, RSUs, PRSUs and other share-based awards. The 2008 Plan was terminated on April 24, 2018 , although outstanding deferred stock unit (“DSU”) awards granted under the 2008 Plan before its termination continue to be subject to its terms. Expense The following reflects the expense recorded with respect to share-based incentive plans within “compensation and benefits” expense (with respect to RSUs, PRSUs, RSAs and PIPRs) and “professional services” expense (with respect to DSUs) within the Company’s accompanying consolidated statements of operations: Year Ended December 31, 2023 2022 2021 Share-based incentive awards: RSUs $ 165,435 $ 125,664 $ 124,895 PRSUs 2,488 2,011 6,136 RSAs 25,073 23,923 17,765 PIPRs 55,712 86,810 83,046 DSUs 1,862 2,233 2,116 Total $ 250,570 $ 240,641 $ 233,958 Compensation and benefits expense relating to share-based awards with service and/or performance conditions is reversed if the awards are forfeited due to these conditions not being met. Compensation and benefits expense relating to share-based awards with market-based conditions is not reversed if these awards are forfeited based solely on failing to meet such market-based conditions. The Company periodically assesses forfeiture rates, including as a result of any applicable performance conditions. A change in estimated forfeiture rates or performance results in a cumulative adjustment to compensation and 107 LAZARD LTD NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) (dollars in thousands, except for per share data, unless otherwise noted) benefits expense and also would cause the aggregate amount of compensation expense recognized in future periods to differ from the estimated unrecognized compensation expense described below. The Company’s share-based incentive plans and awards are described below. RSUs, PRSUs and DSUs RSUs generally require future service as a condition for vesting (unless the recipient is then eligible for retirement under the Company’s retirement policy) and convert into shares of common stock on a one-for-one basis after the stipulated vesting periods. The grant date fair value of the RSUs, net of an estimated forfeiture rate, is expensed over the requisite service periods (generally, one-third after two years and the remaining two-thirds after the third year), and is adjusted for actual forfeitures over such period. RSUs generally include a dividend participation right that provides that, during the applicable vesting period, each RSU is attributed additional RSUs equivalent to any dividends paid on common stock during such period. During the year ended December 31, 2023, dividend participation rights required the issuance of 711,673 RSUs and the associated charge to “retained earnings” (with corresponding credits to “additional paid-in-capital”) was $ 21,638 . In connection with RSUs that settled during the year ended December 31, 2023, the Company satisfied its minimum statutory tax withholding requirements in lieu of delivering 1,213,264 shares of common stock during the year. Accordingly, 2,158,820 shares of common stock, respectively, held by the Company were delivered during the year ended December 31, 2023. PRSUs are RSUs that are subject to performance-based and service-based vesting conditions, and beginning with awards granted in February 2021, a market-based condition. The number of shares of common stock that a recipient receives upon vesting of a PRSU is calculated by reference to certain performance-based and market-based metrics that relate to Lazard Ltd’s performance over a three-year period. The target number of shares of common stock subject to each PRSU is one ; however, based on the achievement of both the performance-based and market-based conditions, the number of shares of common stock that may be received will range from zero to 2.4 times the target number. PRSUs vest on a single date approximately three years following the date of the grant, provided the applicable service and performance conditions are satisfied. PRSUs include dividend participation rights that are subject to the same vesting restrictions (including performance conditions) as the underlying PRSUs to which they relate and are settled in cash at the same rate that dividends are paid on common stock. Compensation expense recognized for PRSU awards is determined by multiplying the number of shares of common stock underlying such awards that, based on the Company’s estimate, are considered probable of vesting, by the grant date fair value. Non-executive members of the Board of Directors (“Non-Executive Directors”) receive a portion of their compensation for service on the Board of Directors and its committees in the form of DSUs and can elect to receive the cash-portion of their compensation in DSUs in lieu of cash. Total DSUs granted to Non-Executive Directors during the year ended December 31, 2023 were 62,654 . DSUs are convertible into shares of common stock on a one-for-one basis at the time of cessation of service to the Board of Directors. DSUs include a cash dividend participation right equivalent to dividends paid on common stock. DSU awards are expensed at their fair value on their date of grant. 108 LAZARD LTD NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) (dollars in thousands, except for per share data, unless otherwise noted) The following is a summary of activity relating to RSUs, PRSUs and DSUs for the year ended December 31, 2023: RSUs PRSUs DSUs Units Weighted Average Grant Date Fair Value Units Weighted Average Grant Date Fair Value Units Weighted Average Grant Date Fair Value Balance, January 1, 2023 9,022,917 $ 37.97 94,690 $ 39.27 400,820 $ 37.66 Granted (including 711,673 RSUs relating to dividend participation) 5,700,485 $ 36.49 – $ – 62,654 $ 29.71 Forfeited ( 282,967 ) $ 35.37 – $ – - $ – Settled ( 3,372,084 ) $ 41.65 – $ – ( 134,744 ) $ 36.21 PRSUs performance units earned (a) 30,775 $ 46.63 Balance, December 31, 2023 11,068,351 $ 36.15 125,465 $ 41.07 328,730 $ 36.74 _____________________ (a) Represents PRSUs earned during the fiscal year under the performance conditions of previously-granted PRSU awards in excess of the target payout levels of such awards. The weighted-average grant date fair value of RSUs granted in 2023, 2022 and 2021 was $ 36.49 , $ 33.73 and $ 43.38 , respectively. The weighted-average grant date fair value of PRSUs granted in 2022 and 2021 was $ 35.44 and $ 46.63 , respectively. The weighted-average grant date fair value of DSUs granted in 2023, 2022 and 2021 was $ 29.71 , $ 35.78 and $ 46.75 , respectively. As of December 31, 2023, the total estimated unrecognized compensation expense of RSUs and PRSUs was $ 122,498 and $ 1,185 , respectively. The Company expects to expense such amounts over weighted-average periods of approximately 0.9 and 0.4 years, respectively, subsequent to December 31, 2023. RSAs The following is a summary of activity related to RSAs associated with compensation arrangements during the year ended December 31, 2023: RSAs Weighted Average Grant Date Fair Value Balance, January 1, 2023 1,266,424 $ 36.99 Granted (including 94,985 relating to dividend participation) 670,064 $ 37.60 Forfeited ( 15,897 ) $ 39.14 Settled ( 684,645 ) $ 39.13 Balance, December 31, 2023 1,235,946 $ 36.10 The weighted-average grant date fair value of RSAs granted in 2023, 2022 and 2021 was $ 37.60 , $ 33.37 and $ 43.80 , respectively. In connection with RSAs that settled during the year ended December 31, 2023, the Company satisfied its minimum statutory tax withholding requirements in lieu of delivering 279,385 shares of common stock during the year. Accordingly, 405,260 shares of common stock held by the Company were delivered during the year ended December 31, 2023. 109 LAZARD LTD NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) (dollars in thousands, except for per share data, unless otherwise noted) RSAs generally include a dividend participation right that provides that during the applicable vesting period each RSA is attributed additional RSAs equivalent to any dividends paid on common stock during such period. During the year ended December 31, 2023, dividend participation rights required the issuance of 94,985 RSAs and the associated charge to “retained earnings” (with corresponding credits to “additional paid-in-capital”) was $ 2,977 . At December 31, 2023, estimated unrecognized RSAs expense was $ 15,967 , with such expense to be recognized over a weighted average period of approximately 0.8 years subsequent to December 31, 2023. Profits Interest Participation Rights Profits interest participation rights (“PIPRs”) are equity incentive awards that, subject to certain vesting and other conditions described below, may be exchanged for shares of common stock pursuant to the 2018 Plan. They are a class of membership interests in Lazard Group that are intended to qualify as “profits interests” for U.S. federal income tax purposes and are recorded as noncontrolling interests within stockholders’ equity in the Company’s consolidated statements of financial condition until they are exchanged into common stock, at which time there is a reclassification to additional paid-in-capital. PIPRs,with the exception of Stock Price PIPRs (“SP-PIPRs”), as explained below, generally provide for vesting approximately three years following the grant date, so long as applicable vesting and other conditions have been satisfied. Like outstanding RSUs and similar awards, PIPRs are subject to continued employment and other conditions and restrictions and are forfeited if those conditions and restrictions are not fulfilled. A recipient generally realizes value from PIPRs only to the extent that applicable vesting and other conditions are satisfied, and an amount of economic appreciation in the assets of Lazard Group occurs as necessary to satisfy certain partnership tax rules (referred to as the “Minimum Value Condition”), otherwise the PIPRs will be forfeited. Upon satisfaction of such conditions, PIPRs that are in parity with the value of common stock will be exchanged on a one-for-one basis for shares of common stock. If forfeited based solely on failing to meet the Minimum Value Condition, or, if applicable, common stock price milestones as described below, the associated compensation expense would not be reversed. All PIPR awards are subject to service-based vesting conditions. In addition to PIPR awards with only service-based vesting conditions (“Ordinary PIPRs”) granted to certain of our executive officers and a limited number of employees, the Company has granted the following types of PIPRs to certain of our executive officers, that are subject to additional vesting and market-based conditions: • Performance PIPRs (“P-PIPRs”), which are subject to service-based and performance-based vesting conditions, and beginning in February 2021, incremental market-based conditions. • SP-PIPRs, which are subject to service-based vesting conditions and common stock price milestones and are eligible to vest in three tranches. The number of shares of common stock that a recipient will receive upon the exchange of a P-PIPR award is calculated by reference to applicable performance-based vesting conditions and, beginning with P-PIPRs granted in 2021, incremental market-based conditions and only result in value to the recipient to the extent the vesting and other conditions are satisfied. The target number of shares of common stock subject to each P-PIPR is one . Based on the achievement of performance conditions, as determined and approved by the Compensation Committee, the number of shares of common stock that may be received in connection with the P-PIPR awards granted prior to February 2021 will range from zero to two times the target number. For the P-PIPR awards granted beginning in February 2021, subject to both performance-based and incremental market-based conditions, the number of shares that may be received will range from zero to 2.4 times the target number. Unless applicable vesting and other conditions are satisfied during the three-year performance period, and the Minimum Value Condition is satisfied within five years following the grant date, all P-PIPRs will be forfeited. SP-PIPRs are eligible to vest in three tranches (each, a “Tranche”) based on the achievement of service conditions and Tranche-specific common stock price milestones measured as of a specified anniversary of the date of grant, as 110 LAZARD LTD NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) (dollars in thousands, except for per share data, unless otherwise noted) described below. Their aggregate fair value at the grant date, which based on the estimated probability of achieving the common stock price milestones is approximately $ 33,900 , is expensed over the requisite service periods. SP-PIPRs will vest: • 20 % if, during the three years following the date of grant, the Company’s common stock price has appreciated 25 % above the average trailing 30 consecutive day stock price preceding the date of grant (the “Grant Date Stock Price”); • 40 % if, during the five years following the date of grant, the Company’s common stock price has appreciated 50 % above the Grant Date Stock Price; • 40 % if, during the seven years following the date of grant, the Company’s common stock price has appreciated 100 % above the Grant Date Stock Price. Each Tranche is subject to the executive’s continued employment through the applicable anniversary of the date of grant and requires that the applicable common stock price milestone is sustained for any 30 consecutive day period prior to the anniversary of the date of grant of the applicable Tranche (the “Expiration Date”). If the service conditions and common stock price milestones, as described above, are not achieved as of the Expiration Date, all SP-PIPRs in such Tranche will be forfeited. The following is a summary of activity relating to all PIPRs during the year ended December 31, 2023: Ordinary PIPRs (a) P-PIPRs SP-PIPRs Units Weighted Average Grant Date Fair Value Units Weighted Average Grant Date Fair Value Units Weighted Average Grant Date Fair Value Balance, January 1, 2023 1,684,404 $ 39.96 2,447,224 $ 40.29 – $ – Granted 1,521,458 $ 34.50 – $ – 2,250,000 $ 15.06 Forfeited ( 16,695 ) $ 43.23 – $ – – $ – Settled ( 548,398 ) $ 42.89 ( 973,222 ) $ 41.76 – $ – Performance units earned (b) 484,827 $ 46.63 Balance, December 31, 2023 2,640,769 $ 36.19 1,958,829 $ 41.12 2,250,000 $ 15.06 _____________________ (a) Includes PIPR awards with only service-based vesting conditions. (b) Represents P-PIPRs earned during the fiscal year under the performance conditions of previously-granted P-PIPR awards in excess of the target payout levels of such awards. Fair values shown above represent the weighted average as of grant date. The weighted-average grant date fair value of ordinary PIPRs and SP-PIPRs granted in 2023 was $ 34.50 and $ 15.06 , respectively. The weighted-average grant date fair value of ordinary PIPRs and P-PIPRs granted in 2022 was $ 32.95 and $ 35.44 , respectively. The weighted-average grant date fair value of ordinary PIPRs and P-PIPRs granted in 2021 was $ 43.23 and $ 46.63 , respectively. Compensation expense recognized for ordinary PIPRs and P-PIPRs is determined by multiplying the number of shares of common stock underlying such awards that, based on the Company’s estimate, are considered probable of vesting, by the grant date fair value. Compensation expense recognized for SP-PIPRs is determined by multiplying the number of shares of common stock underlying such awards by the grant date fair value. As of December 31, 2023, the total estimated unrecognized compensation expense of all profits interest participation rights was $ 57,954 and the Company expects to expense such amount over a weighted-average period of approximately 1.8 years subsequent to December 31, 2023. 111 LAZARD LTD NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) (dollars in thousands, except for per share data, unless otherwise noted) LFI and Other Similar Deferred Compensation Arrangements In connection with LFI and other similar deferred compensation arrangements, granted to eligible employees, which generally require future service as a condition for vesting, the Company records a prepaid compensation asset and a corresponding compensation liability on the grant date based upon the fair value of the award. The prepaid asset is amortized on a straight-line basis over the applicable requisite service periods (which are generally similar to the comparable periods for RSUs) and is charged to “compensation and benefits” expense within the Company’s consolidated statements of operations. LFI and similar deferred compensation arrangements that do not require future service are expensed immediately. The related compensation liability is accounted for at fair value as a derivative liability, which contemplates the impact of estimated forfeitures, and is adjusted for changes in fair value primarily related to changes in value of the underlying investments. The following is a summary of activity relating to LFI and other similar deferred compensation arrangements during the year ended December 31, 2023: Prepaid Compensation Asset Compensation Liability Balance, January 1, 2023 $ 112,124 $ 326,282 Granted 159,981 159,981 Settled – ( 171,738 ) Amortization and the impact of forfeitures ( 156,254 ) 8,103 Change in fair value of underlying investments – 41,463 Other 121 1,329 Balance, December 31, 2023 $ 115,972 $ 365,420 The amortization of the prepaid compensation asset will generally be recognized over a weighted average period of approximately 0.8 years subsequent to December 31, 2023. The following is a summary of the impact of LFI and other similar deferred compensation arrangements on “compensation and benefits” expense within the accompanying consolidated statements of operations for the years ended December 31, 2023, 2022 and 2021: Year Ended December 31, 2023 2022 2021 Amortization and the impact of forfeitures $ 164,357 $ 154,878 $ 151,604 Change in the fair value of underlying investments 41,463 ( 44,261 ) 35,494 Total $ 205,820 $ 110,617 $ 187,098 Incentive Awards Granted in the First Quarter of 2024 In the first quarter of 2024, the Company granted approximately $ 374,000 of deferred share-based incentive compensation awards to eligible employees as part of the 2023 year-end compensation process. These grants included: RSUs; PIPRs; and LFI and other similar deferred compensation arrangements. The Company also granted approximately $ 95,000 of cash retention awards that are subject to a required three-year service period subsequent to payment by the Company. If the service requirement is not met, the award is subject to clawback. The cash retention awards will be amortized over the requisite service period beginning on the grant date. 17. EMPLOYEE BENEFIT PLANS The Company provides retirement and other post-retirement benefits to certain of its employees through defined benefit pension plans (the “pension plans”). The Company also offers defined contribution plans to its employees. The 112 LAZARD LTD NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) (dollars in thousands, except for per share data, unless otherwise noted) pension plans generally provide benefits to participants based on average levels of compensation. Expenses related to the Company’s employee benefit plans are included in “compensation and benefits” expense for the service cost component, and “operating expenses–other” for the other components of benefit costs on the consolidated statements of operations. Employer Contributions to Pension Plans —The Company’s funding policy for its U.S. and non-U.S. pension plans is to fund when required or when applicable upon an agreement with the plans’ trustees. Management also evaluates from time to time whether to make voluntary contributions to the plans. Contributions to the non-U.S. pension plans during the year ending December 31, 2024 are not expected to be material. The following table summarizes the changes in the benefit obligations, the fair value of the assets, the funded status and amounts recognized in the consolidated statements of financial condition for the post-retirement plans. The Company uses December 31 as the measurement date for its post-retirement plans. Pension Plans 2023 2022 Change in benefit obligation Benefit obligation at beginning of year $ 440,050 $ 731,978 Service cost 338 543 Interest cost 20,930 11,130 Amendments 10,201 – Actuarial (gain) loss 21,937 ( 203,009 ) Benefits paid ( 25,542 ) ( 29,357 ) Foreign currency translation and other adjustments 22,787 ( 71,235 ) Benefit obligation at end of year 490,701 440,050 Change in plan assets Fair value of plan assets at beginning of year 468,872 782,463 Actual return on plan assets 22,461 ( 215,237 ) Employer contributions 5,673 4,206 Benefits paid ( 25,542 ) ( 29,357 ) Foreign currency translation and other adjustments 24,987 ( 73,203 ) Fair value of plan assets at end of year 496,451 468,872 Funded (deficit) at end of year $ 5,750 $ 28,822 Amounts recognized in the consolidated statements of financial condition at December 31, 2023 and 2022 consist of: Prepaid pension asset (included in “other assets”) $ 10,507 $ 35,268 Accrued benefit liability (included in “other liabilities”) ( 4,757 ) ( 6,446 ) Net amount recognized $ 5,750 $ 28,822 Amounts recognized in AOCI (excluding tax benefits of $ 40,017 and $ 31,365 at December 31, 2023 and 2022, respectively) consist of: Actuarial net loss $ 193,193 $ 167,724 Prior service cost 12,782 2,572 Net amount recognized $ 205,975 $ 170,296 For the years ended December 31, 2023 and 2022, the change in the benefit obligation related to the actuarial (gain) loss is principally attributable to changes in the discount rates. 113 LAZARD LTD NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) (dollars in thousands, except for per share data, unless otherwise noted) The following table summarizes the fair value of plan assets, the accumulated benefit obligation and the projected benefit obligation at December 31, 2023 and 2022: U.S. Pension Plans As Of December 31, Non-U.S. Pension Plans As Of December 31, Total As Of December 31, 2023 2022 2023 2022 2023 2022 Fair value of plan assets $ 15,511 $ 14,983 $ 480,940 $ 453,889 $ 496,451 $ 468,872 Accumulated benefit obligation $ 19,999 $ 20,518 $ 470,702 $ 419,532 $ 490,701 $ 440,050 Projected benefit obligation $ 19,999 $ 20,518 $ 470,702 $ 419,532 $ 490,701 $ 440,050 The following table summarizes the components of net periodic benefit cost (credit), the return on the Company’s post-retirement plan assets, benefits paid, contributions and other amounts recognized in AOCI for the years ended December 31, 2023, 2022 and 2021: Pension Plans For The Year Ended December 31, 2023 2022 2021 Components of Net Periodic Benefit Cost (Credit): Service cost $ 338 $ 543 $ 876 Interest cost 20,930 11,130 8,679 Expected return on plan assets ( 23,942 ) ( 24,482 ) ( 26,077 ) Amortization of: Prior service cost 107 106 118 Net actuarial loss 6,647 5,040 7,151 Settlement loss – – 1,056 Net periodic benefit cost (credit) $ 4,080 $ ( 7,663 ) $ ( 8,197 ) Actual return on plan assets $ 22,461 $ ( 215,237 ) $ 26,046 Employer contributions $ 5,673 $ 4,206 $ 4,493 Benefits paid $ 25,542 $ 29,357 $ 29,327 Other changes in plan assets and benefit obligations recognized in AOCI (excluding tax expense (benefit) of $( 8,652 ), $( 4,984 ) and $ 14,872 during the years ended December 31, 2023, 2022 and 2021, respectively): Net actuarial (gain) loss $ 23,521 $ 31,174 $ ( 40,717 ) Prior service cost 10,172 – – Reclassification of prior service (cost) credit to earnings ( 107 ) ( 106 ) ( 118 ) Reclassification of actuarial gain (loss) to earnings ( 6,647 ) ( 5,040 ) ( 7,151 ) Currency translation and other adjustments 8,740 ( 13,783 ) ( 5,860 ) Total recognized in AOCI $ 35,679 $ 12,245 $ ( 53,846 ) Net amount recognized in total periodic benefit cost and AOCI $ 39,759 $ 4,582 $ ( 62,043 ) 114 LAZARD LTD NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) (dollars in thousands, except for per share data, unless otherwise noted) The assumptions used to develop actuarial present value of the projected benefit obligation and net periodic pension cost as of or for the years ended December 31, 2023, 2022 and 2021 are set forth below: Pension Plans December 31, 2023 2022 2021 Weighted average assumptions used to determine benefit obligations: Discount rate 4.4 % 4.7 % 1.8 % Weighted average assumptions used to determine net periodic benefit cost: Discount rate 4.3 % 2.1 % 1.1 % Expected long-term rate of return on plan assets 5.1 % 3.4 % 3.3 % Generally, the Company determined the discount rates for its defined benefit plans by utilizing indices for long-term, high-quality bonds and ensuring that the discount rate does not exceed the yield reported for those indices after adjustment for the duration of the plans’ liabilities. In selecting the expected long-term rate of return on plan assets, the Company considered the average rate of earnings expected on the funds invested or to be invested to provide for the benefits of the plan, giving consideration to expected returns on different asset classes held by the plans in light of prevailing economic conditions as well as historical returns. This basis is consistent for all years presented. Expected Benefit Payments — The following table summarizes the expected benefit payments for the Company’s pension plans for each of the next five fiscal years and in the aggregate for the five fiscal years thereafter: Pension Plans 2024 $ 28,564 2025 27,844 2026 28,130 2027 28,654 2028 29,105 2029-2033 146,096 115 LAZARD LTD NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) (dollars in thousands, except for per share data, unless otherwise noted) Plan Assets — The following tables present the categorization of our pension plans’ assets as of December 31, 2023 and 2022, measured at fair value, into a fair value hierarchy and investments measured at NAV or its equivalent as a practical expedient in accordance with fair value measurement disclosure requirements: As of December 31, 2023 Level 1 Level 2 Level 3 NAV (a) Total Assets: Cash $ 9,286 $ – $ – $ – $ 9,286 Debt 41,215 – – – 41,215 Equities 11,496 – – – 11,496 Funds: Alternative investments – – – 6,640 6,640 Debt 7,268 58,876 – 236,553 302,697 Equity 58,773 55,692 – 6,434 120,899 Other – 4,218 – – 4,218 Total $ 128,038 $ 118,786 $ – $ 249,627 $ 496,451 As of December 31, 2022 Level 1 Level 2 Level 3 NAV (a) Total Assets: Cash $ 18,084 $ – $ – $ – $ 18,084 Debt 79,505 – – – 79,505 Equities 15,480 – – – 15,480 Funds: Alternative investments – – – 9,113 9,113 Debt 6,350 – – 220,141 226,491 Equity 49,041 49,297 – 7,138 105,476 Other – 14,723 – – 14,723 Total $ 168,460 $ 64,020 $ – $ 236,392 $ 468,872 _____________________ (a) Represents certain investments measured at NAV or its equivalent as a practical expedient in determining fair value. In accordance with current accounting guidance, these investments have not been classified in the fair value hierarchy. Included in equity funds are $ 63,927 and $ 54,810 as of December 31, 2023 and 2022, respectively, that are invested in funds managed by the Company. Consistent with the plans’ investment strategies, at December 31, 2023 and 2022, the Company’s U.S. pension plan had 50 % and 57 %, respectively, of the plans’ assets invested in equity funds in Level 1 and measured at NAV or its equivalent as a practical expedient, 47 % and 42 %, respectively, invested in Level 1 debt funds, and at December 31, 2023 and 2022, 3 % and 1 %, respectively, invested in cash, which is a Level 1 asset. The Company’s non-U.S. pension plans at December 31, 2023 and 2022 had 26 % and 25 %, respectively, of the plans’ assets invested in equities and equity funds that are primarily Level 1 and Level 2 assets; 70 % and 66 %, respectively, of the plans’ assets invested in debt and debt funds that are Level 1, Level 2 and measured at NAV or its equivalent as a practical expedient, and 4 % and 9 %, respectively, of the plans’ assets invested in cash, which is a Level 1 asset, other investments, which is a Level 2 asset, or in alternative investment funds that are primarily measured at NAV. 116 LAZARD LTD NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) (dollars in thousands, except for per share data, unless otherwise noted) Investment Policies and Strategies —The primary investment goal is to ensure that the pension plans remain well funded, taking account of the likely future risks to investment returns and contributions. As a result, a portfolio of assets is maintained with appropriate liquidity and diversification that can be expected to generate long-term future returns that minimize the long-term costs of the pension plans without exposing the plans to an unacceptable risk of under-funding. The Company’s likely future ability to pay such contributions as are required to maintain the funded status of the plans over a reasonable time period is considered when determining the level of risk that is appropriate. The fair value of plan investments classified as Level 1 assets are based on market quotes. The fair value of plan investments classified as Level 2 assets are based on (i) quoted prices for similar assets or liabilities in an active market, or quoted prices for identical or similar assets or liabilities in non-active markets, or (ii) inputs other than quoted prices that are directly observable or derived principally from, or corroborated by, market data. The fair value of plan investments measured at NAV or its equivalent as a practical expedient is determined based on information provided by external fund administrators and such investments are redeemable in the near term. Defined Contribution Plans —Pursuant to certain matching contributions, the Company contributes to employer sponsored defined contribution plans. Such contributions amounted to $ 22,190 , $ 19,692 and $ 17,864 for the years ended December 31, 2023, 2022 and 2021, respectively, which are included in “compensation and benefits” expense on the consolidated statements of operations. 18. COST-SAVING INITIATIVES The Company conducted firm-wide cost-saving initiatives that will continue through the first quarter of 2024. Expenses and losses associated with the cost-saving initiatives for the year ended December 31, 2023 consisted of the following: Year Ended December 31, 2023 Financial Advisory Asset Management Corporate Total Severance and other employee termination expenses (included in "compensation and benefits" expense) $ 98,219 $ 49,152 $ 34,732 $ 182,103 Technology asset impairments (included in "technology and information services") 144 7,877 – 8,021 Foreign exchange related losses associated with closing of certain offices (included in "revenue-other") 1,824 – 3,054 4,878 Other 2,241 470 2,291 5,002 Total $ 102,428 $ 57,499 $ 40,077 $ 200,004 117 LAZARD LTD NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) (dollars in thousands, except for per share data, unless otherwise noted) Additional compensation and benefits expense of approximately $ 40,000 was incurred in the first quarter of 2024. Activity related to the obligations pursuant to the cost-saving initiatives during the year ended December 31, 2023 was as follows: Accrued Compensation and Benefits Other Total Balance, January 1, 2023 $ – $ – $ – Total expenses 182,103 17,901 200,004 Less: Noncash expenses (a) 33,790 10,626 44,416 Payments and settlements 96,967 6,323 103,290 Balance, December 31, 2023 $ 51,346 $ 952 $ 52,298 ___________________________________ (a) Noncash expenses reflected in “accrued compensation and benefits” activity principally represents accelerated amortization of deferred incentive compensation awards. Noncash expenses reflected in “other” activity principally relates to technology asset impairments and certain foreign exchange related losses. 19. INCOME TAXES Lazard Ltd, through its subsidiaries, is subject to U.S. federal income taxes on all of its U.S. operating income, as well as on the portion of non-U.S. income attributable to its U.S. subsidiaries. In addition, Lazard Ltd, through its subsidiaries, is subject to state and local taxes on its income apportioned to various state and local jurisdictions. Outside the U.S., Lazard Group operates principally through subsidiary corporations that are subject to local income taxes in foreign jurisdictions. Lazard Group is also subject to Unincorporated Business Tax (“UBT”) attributable to its operations apportioned to New York City. See Note 1 for information on Lazard’s Conversion to a U.S. C-Corporation on January 1, 2024. 118 LAZARD LTD NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) (dollars in thousands, except for per share data, unless otherwise noted) The components of the Company’s provision (benefit) for income taxes for the years ended December 31, 2023, 2022 and 2021, and a reconciliation of the U.S. federal statutory income tax rate to the Company’s effective tax rates for such years, are shown below. Year Ended December 31, 2023 2022 2021 Current: Federal $ 96 $ 2,081 $ ( 12,772 ) Foreign 55,513 73,410 100,235 State and local 2,809 6,165 3,197 Total current 58,418 81,656 90,660 Deferred: Federal ( 58,600 ) 31,980 69,633 Foreign ( 5,123 ) 3,960 6,709 State and local ( 17,345 ) 6,769 14,301 Total deferred ( 81,068 ) 42,709 90,643 Total $ ( 22,650 ) $ 124,365 $ 181,303 Year Ended December 31, 2023 2022 2021 U.S. federal statutory income tax rate 21.0 % 21.0 % 21.0 % BEAT and GILTI tax – – 0.4 Foreign source income not subject to U.S. income tax 1.0 ( 0.4 ) ( 2.6 ) Change in U.S. federal valuation allowance 4.3 2.0 1.1 Share-based incentive compensation ( 4.5 ) 0.2 0.1 Foreign taxes ( 20.9 ) 4.0 6.1 Foreign tax credits 5.0 ( 3.7 ) ( 3.6 ) State and local taxes 19.2 2.3 2.6 Income attributable to noncontrolling interests 5.7 ( 1.4 ) ( 0.3 ) Uncertain tax positions ( 0.3 ) ( 0.1 ) ( 0.6 ) Other ( 2.2 ) 0.2 0.8 Effective income tax rate 28.3 % 24.1 % 25.0 % See Note 23 regarding “operating income (loss)” by geographic region. 119 LAZARD LTD NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) (dollars in thousands, except for per share data, unless otherwise noted) Deferred income taxes are provided for the effects of temporary differences between the tax basis of an asset or liability and its reported amount in the consolidated statements of financial condition. These temporary differences result in taxable or deductible amounts in future years. Details of the Company’s deferred tax assets and liabilities are as follows: December 31, 2023 2022 Deferred Tax Assets: Basis adjustments (a) $ 96,534 $ 131,353 Compensation and benefits 199,989 173,047 Net operating loss and tax credit carryforwards 277,103 227,280 Depreciation and amortization 30,530 11,777 Interest carryover - Section 163(j) limitation 42,581 21,150 Other 41,969 31,056 Gross deferred tax assets 688,706 595,663 Valuation allowance ( 99,600 ) ( 88,239 ) Deferred tax assets (net of valuation allowance) 589,106 507,424 Deferred Tax Liabilities: Depreciation and amortization 9,221 10,074 Compensation and benefits 22,129 23,631 Goodwill 46,686 43,448 Other 17,587 26,534 Deferred tax liabilities 95,623 103,687 Net deferred tax assets $ 493,483 $ 403,737 _____________________ (a) The basis adjustments recorded as of December 31, 2023 and 2022 are primarily the result of additional basis from acquisitions of interests, including the impact of the tax receivable agreement obligation. The historical profitability of each tax-paying entity is an important factor in determining whether to record a valuation allowance and when to release any such allowance. Certain of our tax-paying entities have individually experienced losses on a cumulative three year basis or have tax attributes that may expire unused. In addition, some of our tax-paying entities have recorded a valuation allowance on substantially all of their deferred tax assets due to the combined effect of operating losses in certain subsidiaries of these entities as well as foreign taxes that together substantially offset any U.S. tax liability. Taking into account all available information, we cannot determine that it is more likely than not that deferred tax assets held by these entities will be realized. Consequently, we have recorded valuation allowances on $ 99,600 and $ 88,239 of deferred tax assets held by these entities as of December 31, 2023 and 2022, respectively. Changes in the deferred tax assets valuation allowance for the years ended December 31, 2023, 2022 and 2021 was as follows: Year Ended December 31, 2023 2022 2021 Beginning Balance $ 88,239 $ 88,953 $ 82,210 Charged (credited) to provision for income taxes 11,354 5,220 8,742 Charged (credited) to other comprehensive income and other 7 ( 5,934 ) ( 1,999 ) Ending Balance $ 99,600 $ 88,239 $ 88,953 120 LAZARD LTD NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) (dollars in thousands, except for per share data, unless otherwise noted) The Company had net operating loss and tax credit carryforwards for which related deferred tax assets of $ 277,103 were recorded at December 31, 2023 primarily relating to: (i) indefinite-lived net operating loss carryforwards (subject to various limitations) of approximately $ 92,000 in Australia, Germany, Hong Kong, Saudi Arabia, Singapore and the U.S.; and (ii) carryforwards of approximately $ 156,000 that expire in different periods, including U.S. foreign tax credits of $ 5,600 that begin to expire in 2024 and are fully offset by a valuation allowance. With few exceptions, the Company is no longer subject to income tax examination by foreign tax authorities and by U.S. federal, state and local tax authorities for years prior to 2017. While the Company is under examination in various tax jurisdictions with respect to certain open years, the Company does not expect that the result of any final determination related to these examinations will have a material impact on its financial statements. Developments with respect to such examinations are monitored on an ongoing basis and adjustments to tax liabilities are made as appropriate. A reconciliation of the beginning to the ending amount of gross unrecognized tax benefits (excluding interest and penalties) for the years ended December 31, 2023, 2022 and 2021 is as follows: Year Ended December 31, 2023 2022 2021 Balance, January 1 (excluding interest and penalties of $ 17,992 , $ 18,579 and $ 18,882 , respectively) $ 77,701 $ 77,617 $ 80,954 Increases in gross unrecognized tax benefits relating to tax positions taken during: Prior years 615 341 273 Current year 18,604 19,193 17,829 Decreases in gross unrecognized tax benefits relating to: Tax positions taken during prior years ( 836 ) ( 2,052 ) ( 5,774 ) Settlements with tax authorities ( 243 ) ( 43 ) ( 134 ) Lapse of the applicable statute of limitations ( 16,261 ) ( 17,355 ) ( 15,531 ) Balance, December 31 (excluding interest and penalties of $ 18,501 , $ 17,992 and $ 18,579 , respectively) $ 79,580 $ 77,701 $ 77,617 Additional information with respect to unrecognized tax benefits is as follows: Year Ended December 31, 2023 2022 2021 Unrecognized tax benefits at the end of the year that, if recognized, would favorably affect the effective tax rate (includes interest and penalties of $ 18,501 , $ 17,992 and $ 18,579 , respectively) $ 80,346 $ 80,094 $ 81,046 Unrecognized tax benefits that, if recognized, would not affect the effective tax rate $ 17,735 $ 15,599 $ 15,150 Interest and penalties recognized in current income tax expense (after giving effect to the reversal of interest and penalties of $ 5,528 , $ 6,344 and $ 5,210 , respectively) $ 509 $ ( 587 ) $ ( 303 ) The Company anticipates that it is reasonably possible that approximately $ 14,500 of unrecognized tax benefits, including interest and penalties recorded at December 31, 2023, may be recognized within 12 months as a result of the lapse of the statute of limitations in various tax jurisdictions. 121 LAZARD LTD NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) (dollars in thousands, except for per share data, unless otherwise noted) 20. NET INCOME (LOSS) PER SHARE OF COMMON STOCK The Company is required to utilize the “two-class” method of computing basic and diluted net income per share because the Company issued certain PIPRs, including certain P-PIPRs, which are treated as participating securities. The Company’s basic and diluted net income (loss) per share calculations using the “two-class” method for the years ended December 31, 2023, 2022, and 2021 are presented below: Year Ended December 31, 2023 2022 2021 Net income (loss) attributable to Lazard Ltd $ ( 75,479 ) $ 357,517 $ 528,064 Add - adjustment for earnings attributable to participating securities ( 4,440 ) ( 5,732 ) ( 8,647 ) Net income (loss) attributable to Lazard Ltd - basic ( 79,919 ) 351,785 519,417 Add - adjustment for earnings attributable to participating securities – 2,641 7,068 Net income (loss) attributable to Lazard Ltd - diluted $ ( 79,919 ) $ 354,426 $ 526,485 Weighted average number of shares of common stock outstanding 86,751,822 93,994,663 104,166,347 Add - adjustment for shares of common stock issuable on a non-contingent basis 2,242,163 1,669,466 1,869,461 Weighted average number of shares of common stock outstanding - basic 88,993,985 95,664,129 106,035,808 Add - dilutive effect, as applicable, of: Weighted average number of incremental shares of common stock issuable from share-based incentive compensation (a) – 5,333,545 7,638,891 Weighted average number of shares of common stock outstanding - diluted 88,993,985 100,997,674 113,674,699 Net income (loss) attributable to Lazard Ltd per share of common stock: Basic $ ( 0.90 ) $ 3.68 $ 4.90 Diluted $ ( 0.90 ) $ 3.51 $ 4.63 _____________________ (a) The aggregate weighted average number of incremental shares of common stock issuable from RSUs, PRSUs and PIPRs for the year ended December 31, 2023 of 4,779,627 , that could be potentially dilutive in future periods, have been excluded from the computation of diluted net loss per share as the effect would be antidilutive in the current periods. 21. RELATED PARTIES Sponsored Funds The Company serves as an investment advisor for certain affiliated investment companies and fund entities and receives management fees and, for the alternative investment funds, performance-based incentive fees for providing such services. Asset management fees relating to such services were $ 538,457 , $ 592,985 and $ 708,900 for the years ended December 31, 2023, 2022 and 2021, respectively, and are included in “asset management fees” on the consolidated statements of operations. Of such amounts, $ 67,598 and $ 57,283 remained as receivables at December 31, 2023 and 2022, respectively, and are included in “fees receivable” on the consolidated statements of financial condition. Tax Receivable Agreement The Second Amended and Restated Tax Receivable Agreement, dated as of October 26, 2015 (the “TRA”), between Lazard and LTBP Trust, a Delaware statutory trust (the “Trust”), provides for the payment by our subsidiaries to the Trust of (i) approximately 45 % of the amount of cash savings, if any, in U.S. federal, state and local income tax or 122 LAZARD LTD NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) (dollars in thousands, except for per share data, unless otherwise noted) franchise tax that we actually realize as a result of the increases in the tax basis of certain assets and of certain other tax benefits related to the TRA, and (ii) an amount that we currently expect will equal 85 % of the cash tax savings that may arise from tax basis increases attributable to payments under the TRA. Our subsidiaries expect to benefit from the balance of cash savings, if any, in income tax that our subsidiaries realize from such tax basis increases. Any amount paid by our subsidiaries to the Trust will generally be distributed pro rata to the owners of the Trust, who include certain of our executive officers. For purposes of the TRA, cash savings in income and franchise tax will be computed by comparing our subsidiaries’ actual income and franchise tax liability to the amount of such taxes that our subsidiaries would have been required to pay had there been no increase in the tax basis of certain assets of Lazard Group and had our subsidiaries not entered into the TRA. The term of the TRA will continue until approximately 2033 or, if earlier, until all relevant tax benefits have been utilized or expired. The amount of the TRA liability is an undiscounted amount based upon current tax laws and the structure of the Company and various assumptions regarding potential future operating profitability. The assumptions reflected in the estimate involve significant judgment and if our structure or income assumptions were to change, we could be required to accelerate payments under the TRA. As such, the actual amount and timing of payments under the TRA could differ materially from our estimates. Any changes in the amount of the estimated liability would be recorded as a non-compensation expense in the consolidated statements of operations. Adjustments, if necessary, to the related deferred tax assets would be recorded through the “provision (benefit) for income taxes”. Pursuant to the periodic revaluation of the TRA liability and the assumptions reflected in the estimate, the revaluation had the effect in the year ended December, 31 2023 of reducing the estimated liability under the TRA. For the years ended December 31, 2023, 2022 and 2021, the Company recorded a “provision (benefit) pursuant to tax receivable agreement” on the consolidated statements of operations of $( 43,894 ), $( 1,209 ) and $ 2,199 , respectively. In addition, the Company made a payment under the TRA in the year ended December 31, 2023 of $ 32,208 . The cumulative liability relating to our obligations under the TRA as of December 31, 2023 and 2022 was $ 115,087 and $ 191,189 , respectively, and is recorded in “tax receivable agreement obligation” on the consolidated statements of financial condition. Other See Note 15 for information regarding related party transactions pertaining to shares repurchased from certain of our executive officers. 22. REGULATORY AUTHORITIES LFNY is a U.S. registered broker-dealer and is subject to the net capital requirements of Rule 15c3-1 under the Exchange Act. Under the basic method permitted by this rule, the minimum required net capital, as defined, is a specified fixed percentage (6 2/3%) of total aggregate indebtedness recorded in LFNY’s Financial and Operational Combined Uniform Single (“FOCUS”) report filed with the Financial Industry Regulatory Authority (“FINRA”), or $ 5 , whichever is greater. In addition, the ratio of aggregate indebtedness (as defined) to net capital may not exceed 15:1. At December 31, 2023, LFNY exceeded its minimum requirement for regulatory net capital of $ 6,529 , and was in compliance with its aggregate indebtedness to net capital ratio requirement. Certain U.K. subsidiaries of the Company, including LCL, Lazard Fund Managers Limited and Lazard Asset Management Limited (collectively, the “U.K. Subsidiaries”) are regulated by the Financial Conduct Authority. At December 31, 2023, the aggregate regulatory net capital of the U.K. Subsidiaries was $ 220,204 , which exceeded the minimum requirement by $ 154,383 . CFLF, under which asset management and commercial banking activities are carried out in France, is subject to regulation by the Autorité de Contrôle Prudentiel et de Résolution (“ACPR”) for its banking activities conducted through its subsidiary, LFB. LFB, as a registered bank, is engaged primarily in commercial and private banking services for clients 123 LAZARD LTD NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) (dollars in thousands, except for per share data, unless otherwise noted) and funds managed by LFG (asset management) and other clients, and asset-liability management. The investment services activities exercised through LFB and other subsidiaries of CFLF, primarily LFG, also are subject to regulation and supervision by the Autorité des Marchés Financiers. At December 31, 2023, the consolidated regulatory net capital of CFLF was $ 156,703 , which exceeded the minimum requirement set for regulatory capital levels by $ 62,519 . In addition, pursuant to the consolidated supervision rules in the European Union, LFB, in particular, as a French credit institution, is required to be supervised by a regulatory body, either in the U.S. or in the European Union. In 2013, the Company and the ACPR agreed on terms for the consolidated supervision of LFB and certain other non-Financial Advisory European subsidiaries of the Company (referred to herein, on a combined basis, as the “combined European regulated group”) under such rules. Under this supervision, the combined European regulated group is required to comply with minimum requirements for regulatory net capital. At December 31, 2023, the regulatory net capital of the combined European regulated group was $ 181,665 , which exceeded the minimum requirement set for regulatory capital levels by $ 78,796 . Additionally, the combined European regulated group, together with our European Financial Advisory entities, is required to perform an annual risk assessment and provide certain other information on a periodic basis. Certain other U.S. and non-U.S. subsidiaries are subject to various capital adequacy requirements promulgated by various regulatory and exchange authorities in the countries in which they operate. At December 31, 2023, for those subsidiaries with regulatory capital requirements, their aggregate net capital was $ 143,682 , which exceeded the minimum required capital by $ 120,239 . At December 31, 2023, each of these subsidiaries individually was in compliance with its regulatory capital requirements. 23. SEGMENT INFORMATION The Company’s reportable segments offer different products and services and are managed separately, as different levels and types of expertise are required to effectively manage the segments’ transactions. Each segment is reviewed to determine the allocation of resources and to assess its performance. The Company’s principal operating activities are included in its Financial Advisory and Asset Management business segments as described in Note 1. In addition, as described in Note 1, the Company records selected other activities in its Corporate segment. The Company’s segment information for the years ended December 31, 2023, 2022 and 2021 is prepared using the following methodology: • Revenue and expenses directly associated with each segment are included in determining operating income. • Expenses not directly associated with specific segments are allocated based on the most relevant measures applicable, including revenue, headcount, square footage and other factors. • Segment assets are based on those directly associated with each segment, and include an allocation of certain assets relating to various segments, based on the most relevant measures applicable, including headcount, square footage and other factors. The Company records other revenue, interest income and interest expense among the various segments based on the segment in which the underlying asset or liability is reported. Each segment’s operating expenses include (i) compensation and benefits expenses incurred directly in support of the businesses and (ii) other operating expenses, which include directly incurred expenses for occupancy and equipment, marketing and business development, technology and information services, professional services, fund administration and outsourced services and indirect support costs (including compensation and other operating expenses related thereto) for administrative services. Such administrative services include, but are not limited to, accounting, tax, human resources, legal, information technology, facilities management and senior management activities. For the years ended December 31, 2023, 2022 and 2021, no individual client constituted more than 10% of the net revenue of any of the Company’s business segments. 124 LAZARD LTD NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) (dollars in thousands, except for per share data, unless otherwise noted) Management evaluates segment results based on net revenue and operating income (loss) and believes that the following information provides a reasonable representation of each segment’s contribution with respect to net revenue, operating income (loss) and total assets: Year Ended December 31, 2023 2022 2021 Financial Advisory Net Revenue $ 1,385,357 $ 1,666,156 $ 1,764,509 Operating Expenses (a) 1,489,862 1,304,715 1,356,567 Operating Income (Loss) $ ( 104,505 ) $ 361,441 $ 407,942 Asset Management Net Revenue $ 1,151,496 $ 1,204,927 $ 1,424,985 Operating Expenses (a) 1,011,574 963,640 1,032,825 Operating Income $ 139,922 $ 241,287 $ 392,160 Corporate Net Revenue (Loss) $ ( 21,364 ) $ ( 97,512 ) $ 3,554 Operating Expenses (Credit) (a) 94,010 ( 11,632 ) 79,808 Operating Loss $ ( 115,374 ) $ ( 85,880 ) $ ( 76,254 ) Total Net Revenue $ 2,515,489 $ 2,773,571 $ 3,193,048 Operating Expenses (a) 2,595,446 2,256,723 2,469,200 Operating Income (Loss) $ ( 79,957 ) $ 516,848 $ 723,848 _____________________ (a) Operating expenses include depreciation and amortization of property as set forth in table below. Year Ended December 31, 2023 2022 2021 Financial Advisory $ 8,517 $ 8,968 $ 8,480 Asset Management 6,476 9,390 5,618 Corporate 27,860 23,978 24,217 Total $ 42,853 $ 42,336 $ 38,315 December 31, 2023 2022 Total Assets Financial Advisory $ 1,154,483 $ 1,099,921 Asset Management (b) 1,232,364 1,786,830 Corporate (b) 2,248,934 2,965,810 Total $ 4,635,781 $ 5,852,561 _____________________ (b) Effective December 31, 2023, certain assets, primarily “deposits with banks and short-term investments”, previously reported in the Corporate segment are reported in the Asset Management segment resulting from a change in the segment in which such assets are managed. Comparable prior year information has been recast to reflect the updated presentation. 125 LAZARD LTD NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) (dollars in thousands, except for per share data, unless otherwise noted) Geographic Information Due to the highly integrated nature of international financial markets, the Company manages its business based on the profitability of the enterprise as a whole, not by geographic region. The Company’s revenue and total assets are generally allocated based on the country or domicile of the legal entity providing the service. The following table sets forth the net revenue from, and total assets for, the Company and its consolidated subsidiaries by geographic region allocated on the basis described above. In the table below, Americas principally includes the U.S., EMEA principally includes the U.K. and France, and Asia Pacific principally includes Australia. Year Ended December 31, 2023 2022 2021 Net Revenue: Americas $ 1,193,056 $ 1,487,056 $ 1,780,815 EMEA 1,162,052 1,136,636 1,251,058 Asia Pacific 160,381 149,879 161,175 Total $ 2,515,489 $ 2,773,571 $ 3,193,048 Operating Income: Americas $ ( 224,857 ) $ 235,640 $ 399,916 EMEA 108,058 248,404 295,991 Asia Pacific 36,842 32,804 27,941 Total $ ( 79,957 ) $ 516,848 $ 723,848 December 31, 2023 2022 Total Assets: Americas $ 2,808,962 $ 3,458,250 EMEA 1,679,644 2,218,136 Asia Pacific 147,175 176,175 Total $ 4,635,781 $ 5,852,561 24. CONSOLIDATED VIEs The Company’s consolidated VIEs as of December 31, 2022 include LGAC (see Note 1) and as of December 31, 2023 and 2022 include certain funds (“LFI Consolidated Funds”) that were established for the benefit of employees participating in the Company’s existing LFI deferred compensation arrangement. Lazard invests in these funds and is the investment manager and is therefore deemed to have both the power to direct the most significant activities of the funds and the right to receive benefits (or the obligation to absorb losses) that could potentially be significant to these funds. The assets of LFI Consolidated Funds, except as it relates to $ 113,174 and $ 115,666 of LFI held by Lazard Group as of December 31, 2023 and 2022, respectively, can only be used to settle the obligations of LFI Consolidated Funds. The 126 LAZARD LTD NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) (dollars in thousands, except for per share data, unless otherwise noted) Company’s consolidated VIE assets and liabilities for LFI Consolidated Funds as reflected in the consolidated statements of financial condition consist of the following at December 31, 2023 and 2022. December 31, 2023 2022 ASSETS Cash and cash equivalents $ 4,627 $ 3,644 Customers and other receivables 23,277 240 Investments 196,112 186,300 Other assets 683 622 Total assets $ 224,699 $ 190,806 LIABILITIES Deposits and other customer payables $ 23,498 $ 528 Other liabilities 353 448 Total liabilities $ 23,851 $ 976 127 SUPPLEMENTAL FINANCIAL INFORMATION Not applicable. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosures There were no changes in or disagreements with accountants on accounting and financial disclosure during the last two fiscal years.