Lazard, Inc. 10-Q

Item 1. Financial Statements (Unaudited) Page Condensed Consolidated Statements of Financial Condition as of March 31, 2024 and December 31, 2023 2 Condensed Consolidated Statements of Operations for the three month periods ended March 31, 2024 and 2023 4 Condensed Consolidated Statements of Comprehensive Income (Loss) for the three month periods ended March 31, 2024 and 2023 5 Condensed Consolidated Statements of Cash Flows for the three month periods ended March 31, 2024 and 2023 6 Condensed Consolidated Statements of Changes in Stockholders’ Equity and Redeemable Noncontrolling Interests for the three month periods ended March 31, 2024 and 2023 8 Notes to Condensed Consolidated Financial Statements 10 1 LAZARD, INC. CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION MARCH 31, 2024 AND DECEMBER 31, 2023 (UNAUDITED) (dollars in thousands, except for per share data) March 31, 2024 December 31, 2023 ASSETS Cash and cash equivalents $ 923,247 $ 971,316 Deposits with banks and short-term investments 247,847 219,576 Restricted cash 33,558 34,091 Receivables (net of allowance for credit losses of $ 30,086 and $ 28,503 at March 31, 2024 and December 31, 2023, respectively): Fees 459,703 560,552 Customers and other 290,780 201,767 750,483 762,319 Investments 620,615 701,964 Property (net of accumulated amortization and depreciation of $ 419,680 and $ 414,547 at March 31, 2024 and December 31, 2023, respectively, including $ 71,343 and $ 72,921 of property held for sale at March 31, 2024 and December 31, 2023, respectively) 227,539 232,516 Operating lease right-of-use assets 389,884 407,213 Goodwill and other intangible assets (net of accumulated amortization of $ 67,696 and $ 67,681 at March 31, 2024 and December 31, 2023, respectively) 394,113 394,928 Deferred tax assets 506,171 497,340 Other assets 493,513 414,518 Total Assets $ 4,586,970 $ 4,635,781 See notes to condensed consolidated financial statements. 2 LAZARD, INC. CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION MARCH 31, 2024 AND DECEMBER 31, 2023 (UNAUDITED) (dollars in thousands, except for per share data) March 31, 2024 December 31, 2023 LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND STOCKHOLDERS’ EQUITY Liabilities: Deposits and other customer payables $ 536,343 $ 443,262 Accrued compensation and benefits 495,923 781,375 Operating lease liabilities 467,351 485,191 Tax receivable agreement obligation 115,001 115,087 Senior debt 1,851,444 1,690,200 Deferred tax liabilities 2,177 3,857 Other liabilities 581,725 546,947 Total Liabilities 4,049,964 4,065,919 Commitments and contingencies Redeemable noncontrolling interests 88,475 87,675 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: Par value $ 0.01 per share ( 500,000,000 shares authorized; 112,766,091 shares issued at March 31, 2024 and December 31, 2023, including shares held by subsidiaries) 1,128 1,128 Additional paid-in-capital 134,573 247,204 Retained earnings 1,384,829 1,402,636 Accumulated other comprehensive loss, net of tax ( 303,995 ) ( 289,950 ) 1,216,535 1,361,018 Common stock held by subsidiaries, at cost ( 22,248,005 and 25,340,287 shares at March 31, 2024 and December 31, 2023, respectively) ( 823,821 ) ( 937,259 ) Total Lazard Stockholders’ Equity 392,714 423,759 Noncontrolling interests 55,817 58,428 Total Stockholders’ Equity 448,531 482,187 Total Liabilities, Redeemable Noncontrolling Interests and Stockholders’ Equity $ 4,586,970 $ 4,635,781 See notes to condensed consolidated financial statements. 3 LAZARD, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE MONTH PERIODS ENDED MARCH 31, 2024 AND 2023 (UNAUDITED) (dollars in thousands, except for per share data) Three Months Ended March 31, 2024 2023 REVENUE Investment banking and other advisory fees $ 453,027 $ 277,408 Asset management fees 276,849 261,479 Interest income 11,471 12,607 Other 44,134 10,417 Total revenue 785,481 561,911 Interest expense 20,728 19,475 Net revenue 764,753 542,436 OPERATING EXPENSES Compensation and benefits 550,824 449,967 Occupancy and equipment 32,857 31,773 Marketing and business development 23,599 22,762 Technology and information services 44,917 44,040 Professional services 19,880 24,326 Fund administration and outsourced services 26,140 26,576 Amortization and other acquisition-related costs 68 48 Benefit pursuant to tax receivable agreement – ( 40,435 ) Other 11,907 20,303 Total operating expenses 710,192 579,360 OPERATING INCOME (LOSS) 54,561 ( 36,924 ) Provision (benefit) for income taxes 14,337 ( 21,725 ) NET INCOME (LOSS) 40,224 ( 15,199 ) LESS - NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS 4,469 6,973 NET INCOME (LOSS) ATTRIBUTABLE TO LAZARD $ 35,755 $ ( 22,172 ) ATTRIBUTABLE TO LAZARD COMMON STOCKHOLDERS: WEIGHTED AVERAGE SHARES OF COMMON STOCK OUTSTANDING: Basic 91,260,465 87,591,852 Diluted 99,351,769 87,591,852 NET INCOME (LOSS) PER SHARE OF COMMON STOCK: Basic $ 0.38 $ ( 0.27 ) Diluted $ 0.35 $ ( 0.27 ) See notes to condensed consolidated financial statements. 4 LAZARD, INC. CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) FOR THE THREE MONTH PERIODS ENDED MARCH 31, 2024 AND 2023 (UNAUDITED) (dollars in thousands) Three Months Ended March 31, 2024 2023 NET INCOME (LOSS) $ 40,224 $ ( 15,199 ) OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX: Currency translation adjustments ( 16,262 ) 14,539 Employee benefit plans: Actuarial gain (loss) (net of tax expense (benefit) of $ 288 and $( 595 ) for the three months ended March 31, 2024 and 2023, respectively) 815 ( 2,801 ) Adjustment for items reclassified to earnings (net of tax expense of $ 455 and $ 376 for the three months ended March 31, 2024 and 2023, respectively) 1,402 1,160 OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX ( 14,045 ) 12,898 COMPREHENSIVE INCOME (LOSS) 26,179 ( 2,301 ) LESS - COMPREHENSIVE INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS 4,469 6,974 COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO LAZARD $ 21,710 $ ( 9,275 ) See notes to condensed consolidated financial statements. 5 LAZARD, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE MONTH PERIODS ENDED MARCH 31, 2024 AND 2023 (UNAUDITED) (dollars in thousands) Three Months Ended March 31, 2024 2023 CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $ 40,224 $ ( 15,199 ) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization of property 9,134 11,144 Noncash lease expense 16,278 15,155 Amortization of deferred expenses and share-based incentive compensation 121,410 108,254 Amortization and other acquisition-related costs 68 48 Deferred tax provision (benefit) ( 12,836 ) 40,235 Benefit pursuant to tax receivable agreement – ( 40,435 ) Impairment of equity method investments and other receivables – 22,981 Loss on LGAC liquidation – 17,929 (Increase) decrease in operating assets and increase (decrease) in operating liabilities: Receivables-net 6,694 ( 43,689 ) Investments 62,208 ( 160,276 ) Other assets ( 88,231 ) ( 7,717 ) Accrued compensation and benefits and other liabilities ( 244,935 ) ( 359,848 ) Net cash used in operating activities ( 89,986 ) ( 411,418 ) CASH FLOWS FROM INVESTING ACTIVITIES: Additions to property ( 6,619 ) ( 4,612 ) Disposals of property 12 2 Acquisition of business, net of cash acquired – ( 10,516 ) Net cash used in investing activities ( 6,607 ) ( 15,126 ) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from: Issuance of senior debt, net of expenses 396,000 – Customer deposits, net 90,815 – Contributions from noncontrolling interests 181 50 Payments for: Extinguishment of senior debt ( 233,073 ) – Customer deposits, net – ( 239,051 ) Distributions to noncontrolling interests ( 1,189 ) ( 2,042 ) Tax receivable agreement – ( 32,191 ) Distribution to redeemable noncontrolling interests in connection with LGAC redemption – ( 585,891 ) Purchase of common stock ( 22,005 ) ( 98,925 ) Common stock dividends ( 43,715 ) ( 42,524 ) Settlement of share-based incentive compensation in satisfaction of tax withholding requirements ( 55,632 ) ( 45,165 ) LFI Consolidated Funds redemptions ( 26,217 ) ( 21,566 ) Other financing activities ( 6,678 ) ( 5,110 ) Net cash provided by (used in) financing activities 98,487 ( 1,072,415 ) EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS AND RESTRICTED CASH ( 22,225 ) 15,705 NET DECREASE IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH ( 20,331 ) ( 1,483,254 ) CASH AND CASH EQUIVALENTS AND RESTRICTED CASH— January 1 1,224,983 2,639,400 CASH AND CASH EQUIVALENTS AND RESTRICTED CASH—March 31 $ 1,204,652 $ 1,156,146 See notes to condensed consolidated financial statements. 6 RECONCILIATION OF CASH AND CASH EQUIVALENTS AND RESTRICTED CASH WITHIN THE CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION: March 31, 2024 December 31, 2023 Cash and cash equivalents $ 923,247 $ 971,316 Deposits with banks and short-term investments 247,847 219,576 Restricted cash 33,558 34,091 TOTAL CASH AND CASH EQUIVALENTS AND RESTRICTED CASH $ 1,204,652 $ 1,224,983 See notes to condensed consolidated financial statements. 7 LAZARD, INC. CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY AND REDEEMABLE NONCONTROLLING INTERESTS FOR THE THREE MONTH PERIOD ENDED MARCH 31, 2024 (UNAUDITED) (dollars in thousands) Common Stock Additional Paid-In- Capital Retained Earnings Accumulated Other Comprehensive Income (Loss), Net of Tax Common Stock Held By Subsidiaries Total Lazard Stockholders’ Equity Noncontrolling Interests Total Stockholders’ Equity Redeemable Noncontrolling Interests Shares $ Shares $ Balance - January 1, 2024 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 Comprehensive income (loss): Net income 35,755 35,755 1,852 37,607 2,617 Other comprehensive loss - net of tax ( 14,045 ) ( 14,045 ) ( 14,045 ) Amortization of share-based incentive compensation 69,773 69,773 425 70,198 Dividend equivalents 9,441 ( 9,847 ) ( 406 ) ( 5,121 ) ( 5,527 ) Common stock dividends ($ 0.50 per share) ( 43,715 ) ( 43,715 ) ( 43,715 ) Purchase of common stock 564,692 ( 22,005 ) ( 22,005 ) ( 22,005 ) Delivery of common stock in connection with share-based incentive compensation and related tax expense of $ 764 ( 193,080 ) ( 3,656,974 ) 135,443 ( 57,637 ) 1,241 ( 56,396 ) Business acquisitions and related equity transactions: Common stock issuable 1,235 1,235 1,235 Distributions to noncontrolling interests, net – ( 1,008 ) ( 1,008 ) LFI Consolidated Funds – – – ( 1,817 ) Balance - March 31, 2024 112,766,091 $ 1,128 $ 134,573 $ 1,384,829 $ ( 303,995 ) 22,248,005 $ ( 823,821 ) $ 392,714 $ 55,817 $ 448,531 $ 88,475 See notes to condensed consolidated financial statements. 8 LAZARD, INC. CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY AND REDEEMABLE NONCONTROLLING INTERESTS FOR THE THREE MONTH PERIOD ENDED MARCH 31, 2023 (UNAUDITED) (dollars in thousands) Common Stock Additional Paid-In- Capital Retained Earnings Accumulated Other Comprehensive Income (Loss), Net of Tax Common Stock Held By Subsidiaries Total Lazard 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) ( 22,172 ) ( 22,172 ) 776 ( 21,396 ) 6,197 Other comprehensive income - net of tax 12,897 12,897 1 12,898 Amortization of share-based incentive compensation 68,511 68,511 2,023 70,534 Dividend equivalents 7,119 ( 7,367 ) ( 248 ) ( 4,839 ) ( 5,087 ) Common stock dividends ($ 0.50 per share) ( 42,524 ) ( 42,524 ) ( 42,524 ) Purchase of common stock 2,692,161 ( 98,925 ) ( 98,925 ) ( 98,925 ) Delivery of common stock in connection with share-based incentive compensation and related tax expense of $ 392 ( 176,320 ) ( 3,364,092 ) 125,099 ( 51,221 ) 5,664 ( 45,557 ) Business acquisitions and related equity transactions: Common stock issuable 1,775 1,775 1,775 Delivery of common stock ( 1,533 ) ( 41,384 ) 1,533 – – Distributions to noncontrolling interests, net – ( 1,992 ) ( 1,992 ) LFI Consolidated Funds – ( 74,164 ) ( 74,164 ) 85,106 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 cost liability 14,087 14,087 6,038 20,125 Other – ( 17 ) ( 17 ) Balance - March 31, 2023 112,766,091 $ 1,128 $ 94,312 $ 1,604,650 $ ( 282,957 ) 26,100,898 $ ( 965,707 ) $ 451,426 $ 56,983 $ 508,409 $ 89,472 See notes to condensed consolidated financial statements. 9 LAZARD, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (dollars in thousands, except for per share data, unless otherwise noted) 1. ORGANIZATION AND BASIS OF PRESENTATION Organization Lazard, Inc. is one of the world’s preeminent financial advisory and asset management firms, incorporated in Delaware, 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, family offices and individuals. On January 1, 2024, Lazard 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. References to “Lazard” or the “Company” refer to (i) Lazard, Inc. and its subsidiaries following the Conversion and (ii) Lazard Ltd and its subsidiaries prior to the Conversion. As the Conversion became effective on January 1, 2024, the accompanying financial statements and related notes as of December 31, 2023 and for the three months ended March 31, 2023 reflect Lazard as an exempted company incorporated under the laws of Bermuda named Lazard Ltd. Lazard, Inc. indirectly held 100 % of all outstanding common membership interests of Lazard Group LLC, a Delaware limited liability company (collectively referred to, together with its subsidiaries, as “Lazard Group”) as of March 31, 2024 and December 31, 2023. Lazard, Inc., through its control of the managing members of Lazard Group, controls Lazard Group, which is governed by an Amended and Restated Operating Agreement that is effective as of January 1, 2023 (the “Operating Agreement”). Lazard, Inc.’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 and certain contingent obligations. Basis of Presentation The accompanying condensed consolidated financial statements of Lazard have been prepared pursuant to the rules and regulations of the United States Securities and Exchange Commission (the “SEC”) regarding interim financial reporting. Accordingly, they do not include all of the information and notes required by accounting principles generally accepted in the United States of America (“U.S. GAAP”) for complete financial statements and should be read in conjunction with the audited consolidated financial statements and notes thereto included in Lazard, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2023. The accompanying December 31, 2023 unaudited condensed consolidated statement of financial condition data was derived from audited consolidated financial statements, but does not include all disclosures required by U.S. GAAP for annual financial statement purposes. The accompanying condensed consolidated financial statements reflect all adjustments that are, in the opinion of management, necessary for a fair presentation of the financial position, results of operations and cash flows for the interim periods presented. Preparing financial statements requires management to make estimates and assumptions that affect the amounts that are reported in the condensed consolidated financial statements and the accompanying disclosures. For example, 10 LAZARD, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued) (UNAUDITED) (dollars in thousands, except for per share data, unless otherwise noted) discretionary compensation and benefits expense for interim periods is accrued based on the year-to-date amount of revenue earned, and an estimated annual ratio of compensation and benefits expense to revenue, with the applicable amounts adjusted for certain items. Although these estimates are based on management’s knowledge of current events and actions that Lazard may undertake in the future, actual results may differ materially from the estimates. The condensed consolidated results of operations for the three month period ended March 31, 2024 are not indicative of the results to be expected for any future interim or annual period. The condensed consolidated financial statements include Lazard, Inc. and its subsidiaries including 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. 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 obligation to absorb losses of, or receive benefits from, the VIE that could be potentially significant to the VIE (see Note 21). 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. Lazard Growth Acquisition Corp. I In February 2021, Lazard Growth Acquisition Corp. I (“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. “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. 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 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 11 LAZARD, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued) (UNAUDITED) (dollars in thousands, except for per share data, unless otherwise noted) condensed consolidated statement of operations for the three month period ended March 31, 2023. In addition, the $ 20,125 of non-cash deferred underwriting fees 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 . 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 each 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. Compensation – Stock Compensation (Topic 718): Scope Application of Profits Interest and Similar Awards — In March 2024, the FASB issued an accounting standard update that provides guidance in determining whether profits interest and similar awards should be accounted for as share-based arrangements within the scope of Topic 718. The amendments are effective for annual periods beginning after December 15, 2024, and shall be applied either retrospectively or prospectively. The Company is currently evaluating the new guidance. 3. 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: Three Months Ended March 31, 2024 2023 Net Revenue: Financial Advisory (a) $ 453,507 $ 277,574 Asset Management: Management fees and other (b) $ 286,540 $ 278,598 Incentive fees (c) 8,936 5,446 Total Asset Management $ 295,476 $ 284,044 ___________________________________ (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 12 LAZARD, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued) (UNAUDITED) (dollars in thousands, except for per share data, unless otherwise noted) announcement and transaction completion fees are variable and subject to constraints, and they are 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. At March 31, 2024, the Company had deferred revenue of $ 136,272 included in “other liabilities” on the condensed consolidated statements of financial condition. During the three months ended March 31, 2024, the Company recognized $ 5,676 in revenue that was included in the deferred revenue balance as of December 31, 2023 of $ 140,417 . 4. 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 March 31, 2024 and December 31, 2023, $ 98,834 and $ 113,929 , respectively, represented financing receivables for our Private Capital Advisory fees. At March 31, 2024 and December 31, 2023, customers and other receivables included $ 81,911 and $ 86,412 , respectively, of customer loans provided by LFB to high net worth individuals and families , 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 March 31, 2024 and December 31, 2023. The aggregate carrying amount of other fees and customers and other receivables was $ 569,738 and $ 561,978 at March 31, 2024 and December 31, 2023, respectively. 13 LAZARD, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued) (UNAUDITED) (dollars in thousands, except for per share data, unless otherwise noted) Activity in the allowance for credit losses for the three month periods ended March 31, 2024 and 2023 was as follows: Three Months Ended March 31, 2024 2023 Beginning Balance $ 28,503 $ 17,738 Bad debt expense, net of reversals 4,998 7,825 Charge-offs ( 3,223 ) ( 843 ) Foreign currency translation and other adjustments ( 192 ) 209 Ending Balance $ 30,086 $ 24,929 Bad debt expense, net of reversals represents the current period provision of expected credit losses and is included in “operating expenses-other” on the condensed consolidated statements of operations. The allowance for credit losses is substantially all related to Financial Advisory fee receivables and other receivables. 5. INVESTMENTS The Company’s investments consist of the following at March 31, 2024 and December 31, 2023: March 31, 2024 December 31, 2023 Debt $ 546 $ 4,285 Equity 59,148 54,717 Funds: Alternative investments (a) 59,418 61,680 Debt (a) 156,269 191,325 Equity (a) 297,877 343,139 Private equity 47,357 46,818 Total funds 560,921 642,962 Investments, at fair value $ 620,615 $ 701,964 ___________________________________ (a) Interests in alternative investment funds, debt funds and equity funds include investments, including those held by LFI Consolidated Funds (see Note 21), with fair values of $ 23,912 , $ 140,132 and $ 235,299 , respectively, at March 31, 2024 and $ 27,454 , $ 175,449 and $ 284,099 , respectively, at December 31, 2023, held in order to satisfy the Company’s obligation upon vesting of previously granted Lazard Fund Interests (“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 7 and 13). Debt securities primarily consists of investments in government securities held within separately managed accounts in order to seed strategies in our Asset Management business. Equity securities 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. 14 LAZARD, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued) (UNAUDITED) (dollars in thousands, except for per share data, unless otherwise noted) 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 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”). During the three month periods ended March 31, 2024 and 2023, the Company reported in “revenue-other” on its condensed 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: Three Months Ended March 31, 2024 2023 Net unrealized investment gains $ 11,001 $ 24,787 6. 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 securities, including instruments reported as either cash and cash equivalents or investments, is classified as Level 1 when the fair values are based on unadjusted quoted prices in active markets. The fair value of equity securities 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. 15 LAZARD, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued) (UNAUDITED) (dollars in thousands, except for per share data, unless otherwise noted) 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. 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 condensed 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 condensed 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 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. See Note 7. 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. 16 LAZARD, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued) (UNAUDITED) (dollars in thousands, except for per share data, unless otherwise noted) The following tables present, as of March 31, 2024 and December 31, 2023, 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: March 31, 2024 Level 1 Level 2 Level 3 NAV Total Assets: Cash and cash equivalents: U.S. treasury securities $ 164,589 $ – $ – $ – $ 164,589 Investments: Debt – 546 – – 546 Equity 58,673 – 475 – 59,148 Funds: Alternative investments 12,263 – – 47,155 59,418 Debt 140,310 15,954 – 5 156,269 Equity 263,067 34,761 – 49 297,877 Private equity – – 267 47,090 47,357 Derivatives – 3,257 – – 3,257 Total $ 638,902 $ 54,518 $ 742 $ 94,299 $ 788,461 Liabilities: Securities sold, not yet purchased $ 6,166 $ – $ – $ – $ 6,166 Contingent consideration liability – – 4,336 – 4,336 Derivatives – 286,036 – – 286,036 Total $ 6,166 $ 286,036 $ 4,336 $ – $ 296,538 December 31, 2023 Level 1 Level 2 Level 3 NAV Total Assets: Investments: Debt $ 4,285 $ – $ – $ – $ 4,285 Equity 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 17 LAZARD, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued) (UNAUDITED) (dollars in thousands, except for per share data, unless otherwise noted) The following tables provide a summary of changes in fair value of the Company’s Level 3 assets and liabilities for the three month periods ended March 31, 2024 and 2023: Three Months Ended March 31, 2024 Beginning Balance Net Unrealized/ Realized Gains/Losses Included In Earnings (a) Purchases/ Issuances Sales/ Settlements Foreign Currency Translation Adjustments Ending Balance Assets: Investments: Equity $ 493 $ – $ – $ – $ ( 18 ) $ 475 Private equity funds 273 – – – ( 6 ) 267 Total Level 3 assets $ 766 $ – $ – $ – $ ( 24 ) $ 742 Liabilities: Contingent consideration liability (b) $ 6,583 $ 53 $ – $ ( 2,300 ) $ – $ 4,336 Total Level 3 liabilities $ 6,583 $ 53 $ – $ ( 2,300 ) $ – $ 4,336 Three Months Ended March 31, 2023 Beginning Balance Net Unrealized/ Realized Gains/Losses Included In Earnings (a) Purchases/Acquisitions/ Issuances Sales/ Settlements Foreign Currency Translation Adjustments Ending Balance Assets: Investments: Equity $ 646 $ 1 $ – $ – $ ( 13 ) $ 634 Private equity funds 18,772 – – – 367 19,139 Total Level 3 assets $ 19,418 $ 1 $ – $ – $ 354 $ 19,773 Liabilities: Contingent consideration liability (b) $ – $ 33 $ 7,754 $ ( 1,445 ) $ – $ 6,342 Total Level 3 liabilities $ – $ 33 $ 7,754 $ ( 1,445 ) $ – $ 6,342 __________________________________ (a) Unrealized losses of $ 53 and $ 33 were recorded in “ amortization and other acquisition-related costs ” for the contingent consideration liability for the three month periods ended March 31, 2024 and 2023, respectively. (b) For the three month period ended March 31, 2023, acquisitions represent the initial recognition of the contingent consideration liability (noncash transaction). Settlements for the three month periods ended March 31, 2024 and 2023 represent aggregate cash and noncash settlement of contingent consideration after the acquisition date. There were no transfers into or out of Level 3 within the fair value hierarchy during the three month periods ended March 31, 2024 and 2023. 18 LAZARD, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued) (UNAUDITED) (dollars in thousands, except for per share data, unless otherwise noted) The following tables present, at March 31, 2024 and December 31, 2023, certain investments that are valued using NAV or its equivalent as a practical expedient in determining fair value: March 31, 2024 Investments Redeemable NAV Unfunded Commitments % of NAV Not Redeemable Redemption Frequency Redemption Notice Period Alternative investment funds: Hedge funds $ 46,475 $ – NA (a) 30 - 60 days Other 680 – NA (b) < 30 - 30 days Debt funds 5 – NA (c) < 30 days Equity funds 49 – NA (d) < 30 - 60 days Private equity funds: Equity growth 47,090 5,487 (e) 100 % (f) NA NA Total $ 94,299 $ 5,487 ___________________________________ (a) monthly ( 75 %) and quarterly ( 25 %) (b) daily ( 4 %) and monthly ( 96 %) (c) daily ( 100 %) (d) monthly ( 31 %) and annually ( 69 %) (e) Unfunded commitments to private equity investments consolidated but not owned by Lazard of $ 9,356 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. 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. 19 LAZARD, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued) (UNAUDITED) (dollars in thousands, except for per share data, unless otherwise noted) 7. 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 13) on the accompanying condensed consolidated statements of financial condition as of March 31, 2024 and December 31, 2023. 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 condensed consolidated statements of financial condition where the Company has a right to set off under an enforceable master netting agreement. 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 counterparty credit risk associated with the Company’s derivative instruments, but are not eligible for net presentation on the condensed consolidated statements of financial condition. March 31, 2024 Derivative Assets Derivative Liabilities Fair Value Notional Fair Value Notional Forward foreign currency exchange rate contracts $ 3,370 $ 157,982 $ 2,320 $ 185,038 Total return swaps and other 115 1,574 9,966 132,962 LFI and other similar deferred compensation arrangements – – 282,148 273,820 Total gross derivatives 3,485 $ 159,556 294,434 $ 591,820 Counterparty and cash collateral netting: Forward foreign currency exchange rate contracts ( 113 ) ( 114 ) Total return swaps and other ( 115 ) ( 8,284 ) Net derivatives in "other assets" and "other liabilities" 3,257 286,036 Amounts not netted on the statement of financial condition (a): Cash collateral – ( 811 ) Securities collateral – – $ 3,257 $ 285,225 20 LAZARD, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued) (UNAUDITED) (dollars in thousands, except for per share data, unless otherwise noted) 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 on the statement of financial condition (a): Cash collateral – ( 243 ) Securities collateral – – $ 2,789 $ 368,430 ___________________________________ (a) Amounts are subject to master netting arrangements but do not meet the criteria for netting on the condensed consolidated statements of financial condition under U.S. GAAP. For some counterparties, the amounts of securities and cash collateral pledged may exceed the derivative assets and derivative liabilities balances. Where this is the case, the amount of collateral offset within net derivatives is limited to the net derivative assets and net derivative liabilities balances with that counterparty. 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 condensed consolidated statements of operations for the three month periods ended March 31, 2024 and 2023, were as follows: Three Months Ended March 31, 2024 2023 Forward foreign currency exchange rate contracts $ 1,331 $ 94 LFI and other similar deferred compensation arrangements ( 9,373 ) ( 16,453 ) LGAC Warrants – 115 Total return swaps and other ( 6,364 ) ( 6,410 ) Total $ ( 14,406 ) $ ( 22,654 ) 21 LAZARD, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued) (UNAUDITED) (dollars in thousands, except for per share data, unless otherwise noted) 8. PROPERTY, NET At March 31, 2024 and December 31, 2023, property consisted of the following: Estimated Depreciable Life in Years March 31, 2024 December 31, 2023 Buildings (a) 33 $ 167,135 $ 170,830 Leasehold improvements (a) 3 - 20 233,243 233,732 Furniture and equipment 3 - 10 231,961 230,713 Construction in progress 14,880 11,788 Total 647,219 647,063 Less - Accumulated depreciation and amortization (a) 419,680 414,547 Property, net $ 227,539 $ 232,516 ________________________ (a) The Company classified assets relating to an owned office building as held for sale as of March 31, 2024 and December 31, 2023, the carrying amount of which was $ 71,343 and $ 72,921 (net of accumulated depreciation), respectively. The owned office building is available for immediate sale in its present condition and the Company expects the owned office building to be sold during 2024. The property held for sale is reported within the Corporate segment. Effective January 1, 2024, depreciation expense is no longer being recorded on this asset. In addition, a $ 6,550 receivable (included in “other assets”) related to operating lease income on the owned office building is classified as held for sale as of March 31, 2024 and December 31, 2023 . 9. GOODWILL AND OTHER INTANGIBLE ASSETS The components of goodwill and other intangible assets at March 31, 2024 and December 31, 2023 are presented below: March 31, 2024 December 31, 2023 Goodwill $ 394,098 $ 394,898 Other intangible assets (net of accumulated amortization) 15 30 $ 394,113 $ 394,928 Changes in the carrying amount of goodwill for the three month periods ended March 31, 2024 and 2023 are as follows: Three Months Ended March 31, 2024 2023 Financial Advisory Asset Management Total Financial Advisory Asset Management Total Balance, January 1 $ 313,628 $ 81,270 $ 394,898 $ 312,699 $ 64,541 $ 377,240 Acquisition of business – – – – 16,706 16,706 Foreign currency translation adjustments ( 800 ) – ( 800 ) 239 – 239 Balance, March 31 $ 312,828 $ 81,270 $ 394,098 $ 312,938 $ 81,247 $ 394,185 22 LAZARD, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued) (UNAUDITED) (dollars in thousands, except for per share data, unless otherwise noted) 10. SENIOR DEBT Senior debt is comprised of the following as of March 31, 2024 and December 31, 2023: Outstanding as of March 31, 2024 December 31, 2023 Initial Principal Amount Maturity Date Annual Interest Rate(b) Principal Unamortized Debt Costs Carrying Value Principal Unamortized Debt Costs Carrying Value Lazard Group 2025 Senior Notes (a) $ 400,000 2/13/25 3.75 % $ 164,347 $ 170 $ 164,177 $ 400,000 $ 531 $ 399,469 Lazard Group 2027 Senior Notes 300,000 3/1/27 3.625 % 300,000 1,138 298,862 300,000 1,235 298,765 Lazard Group 2028 Senior Notes 500,000 9/19/28 4.50 % 500,000 3,799 496,201 500,000 4,012 495,988 Lazard Group 2029 Senior Notes 500,000 3/11/29 4.375 % 500,000 3,828 496,172 500,000 4,022 495,978 Lazard Group 2031 Senior Notes (a) 400,000 3/15/31 6.00 % 400,000 3,968 396,032 – – – Total $ 1,864,347 $ 12,903 $ 1,851,444 $ 1,700,000 $ 9,800 $ 1,690,200 __________________________ (a) In March 2024, Lazard Group completed an offering of $ 400,000 aggregate principal amount of 6.00 % senior notes due 2031. Interest on the 2031 Notes is payable semi-annually on March 15 and September 15 of each year, beginning September 15, 2024. Lazard Group used a portion of the net proceeds from the 2031 Notes to purchase in a tender offer $ 235,653 aggregate principal amount of the 2025 Notes. (b) The effective interest rates of the 2025 Notes, the 2027 Notes, the 2028 Notes, the 2029 Notes and the 2031 Notes are 3.79 %, 3.76 %, 4.67 %, 4.53 % and 6.14 %, respectively. The Company’s senior debt is carried at its principal amount outstanding, net of unamortized debt costs. At March 31, 2024 and December 31, 2023, the fair value of such senior debt was approximately $ 1,815,000 and $ 1,652,000 , respectively. The fair value of the Company’s senior debt is based on market quotations. The Company’s senior debt would be categorized within Level 2 of the hierarchy of fair value measurements if carried at fair value. 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 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. As of March 31, 2024, the Company had approximately $ 209,200 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 March 31, 2024, the Company was in compliance with such provisions. All of the Company’s senior debt obligations are unsecured. 23 LAZARD, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued) (UNAUDITED) (dollars in thousands, except for per share data, unless otherwise noted) 11. COMMITMENTS AND CONTINGENCIES Commitments —See Notes 6 and 14 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 condensed 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 a quarterly basis. Accordingly, the results of any pending matter or matters could be significant when compared to the Company’s earnings in any particular quarter. 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. 12. STOCKHOLDERS’ EQUITY AND REDEEMABLE NONCONTROLLING INTERESTS Share Repurchase Program —The Board of Directors of Lazard authorized the repurchase of Lazard, Inc. common stock (“common stock”) 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’s purchases under the share repurchase program over time are used to offset most or all 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: Three Months Ended March 31: Number of Shares Purchased Average Price Per Share 2023 2,692,161 $ 36.75 2024 564,692 $ 38.97 During the three month periods ended March 31, 2024 and 2023, 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. The aggregate value of all such purchases during the three month periods ended March 31, 2024 and 2023 was approximately $ 11,200 and $ 11,100 , respectively. Such shares of common stock are reported at cost, and are included in “common stock held by subsidiaries” on the accompanying condensed consolidated statements of financial condition. As of March 31, 2024, a total of $ 178,090 of share repurchase authorization remaining available under Lazard, Inc.’s share repurchase program will expire on December 31, 2024 . 24 LAZARD, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued) (UNAUDITED) (dollars in thousands, except for per share data, unless otherwise noted) During the three month period ended March 31, 2024, Lazard, Inc. 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, Inc. 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 both March 31, 2024 and December 31, 2023, no shares of Series A or Series B preferred stock were outstanding. Accumulated Other Comprehensive Income (Loss) (“AOCI”), Net of Tax —The tables below reflect the balances of each component of AOCI at March 31, 2024 and 2023 and activity during the three month periods then ended: Three Months Ended March 31, 2024 Currency Translation Adjustments Employee Benefit Plans Total AOCI Amount Attributable to Noncontrolling Interests Total Lazard, Inc. AOCI Balance, January 1, 2024 $ ( 123,991 ) $ ( 165,958 ) $ ( 289,949 ) $ 1 $ ( 289,950 ) Activity: Other comprehensive income (loss) before reclassifications ( 16,262 ) 815 ( 15,447 ) – ( 15,447 ) Adjustments for items reclassified to earnings, net of tax – 1,402 1,402 – 1,402 Net other comprehensive income (loss) ( 16,262 ) 2,217 ( 14,045 ) – ( 14,045 ) Balance, March 31, 2024 $ ( 140,253 ) $ ( 163,741 ) $ ( 303,994 ) $ 1 $ ( 303,995 ) Three Months Ended March 31, 2023 Currency Translation Adjustments Employee Benefit Plans Total AOCI Amount Attributable to Noncontrolling Interests Total Lazard, Inc. AOCI Balance, January 1, 2023 $ ( 156,924 ) $ ( 138,930 ) $ ( 295,854 ) $ – $ ( 295,854 ) Activity: Other comprehensive income (loss) before reclassifications 14,539 ( 2,801 ) 11,738 1 11,737 Adjustments for items reclassified to earnings, net of tax – 1,160 1,160 – 1,160 Net other comprehensive income (loss) 14,539 ( 1,641 ) 12,898 1 12,897 Balance, March 31, 2023 $ ( 142,385 ) $ ( 140,571 ) $ ( 282,956 ) $ 1 $ ( 282,957 ) 25 LAZARD, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued) (UNAUDITED) (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 three month periods ended March 31, 2024 and 2023: Three Months Ended March 31, 2024 2023 Employee benefit plans: Amortization relating to employee benefit plans (a) $ 1,857 $ 1,536 Less - related income taxes 455 376 Total reclassifications, net of tax $ 1,402 $ 1,160 __________________________ (a) Included in the computation of net periodic benefit cost (see Note 14). Such amounts are included in “operating expenses–other” on the condensed 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 13), (iii) LGAC interests (see Note 1) and (iv) consolidated VIE interests held by employees (see Note 21). The tables below summarize net income attributable to noncontrolling interests for the three month periods ended March 31, 2024 and 2023 and noncontrolling interests as of March 31, 2024 and December 31, 2023 in the Company’s condensed consolidated financial statements: Net Income Attributable to Noncontrolling Interests Three Months Ended March 31, 2024 2023 Edgewater $ 1,852 $ 639 LGAC – 136 Other – 1 Total noncontrolling interests (nonredeemable) 1,852 776 LFI Consolidated Funds 2,617 4,365 LGAC – 1,832 Total noncontrolling interests (redeemable) 2,617 6,197 Total noncontrolling interests $ 4,469 $ 6,973 Noncontrolling Interests as of March 31, 2024 December 31, 2023 Edgewater $ 47,386 $ 46,571 Profits interest participation rights 8,418 11,843 Other 13 14 Total $ 55,817 $ 58,428 Redeemable Noncontrolling Interests —Redeemable noncontrolling interests principally represent consolidated VIE interests held by employees (vested LFI awards), which may be redeemed at any time at the option of the holder for cash, are recorded on the Company’s condensed 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 26 LAZARD, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued) (UNAUDITED) (dollars in thousands, except for per share data, unless otherwise noted) carrying value of redeemable noncontrolling interests to equal the redemption value at the end of each reporting period (see Note 21). Dividends Declared, April 24, 2024 —On April 24, 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 May 17, 2024 , to stockholders of record on May 6, 2024 . 13. INCENTIVE PLANS Share-Based Incentive Plan Awards A description of the 2018 Plan and Lazard’s 2008 Incentive Compensation Plan (the “2008 Plan”) and activity with respect thereto during the three month periods ended March 31, 2024 and 2023 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 condensed consolidated statements of operations for the three month periods ended March 31, 2024 and 2023: Three Months Ended March 31, 2024 2023 Share-based incentive awards: RSUs $ 57,100 $ 43,576 PRSUs 405 789 RSAs 3,903 6,926 PIPRs 8,673 19,062 DSUs 117 181 Total $ 70,198 $ 70,534 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 27 LAZARD, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued) (UNAUDITED) (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 three month period ended March 31, 2024, dividend participation rights required the issuance of 230,377 RSUs and the associated charge to “retained earnings” (with corresponding credits to “additional paid-in-capital”) was $ 8,814 . In connection with RSUs and PRSUs that settled during the three month period ended March 31, 2024, the Company satisfied its minimum statutory tax withholding requirements in lieu of delivering 1,240,025 and 29,690 shares, respectively, of common stock during such three month period. Accordingly, 1,788,672 and 33,479 shares, respectively, of common stock held by the Company were delivered during the three month period ended March 31, 2024. 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, Inc.’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 three month period ended March 31, 2024 were 3,146 . 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. 28 LAZARD, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued) (UNAUDITED) (dollars in thousands, except for per share data, unless otherwise noted) The following is a summary of activity relating to RSUs, PRSUs and DSUs during the three month period ended March 31, 2024: 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, 2024 11,068,351 $ 36.15 125,465 $ 41.07 328,730 $ 36.74 Granted (including 230,377 RSUs relating to dividend participation) 8,012,750 $ 38.75 – $ – 3,146 $ 37.22 Forfeited ( 40,438 ) $ 37.53 – $ – – $ – Settled ( 3,028,697 ) $ 38.45 ( 63,169 ) $ 46.63 – $ – Balance, March 31, 2024 16,011,966 $ 37.01 62,296 $ 35.44 331,876 $ 36.74 The weighted-average grant date fair value of RSUs granted in the three month periods ended March 31, 2024 and 2023 was $ 38.75 and $ 37.44 , respectively. The weighted-average grant date fair value of DSUs granted in the three month periods ended March 31, 2024 and 2023 was $ 37.22 and $ 37.85 , respectively. As of March 31, 2024, the total estimated unrecognized compensation expense of RSUs and PRSUs was $ 365,760 and $ 704 , respectively. The Company expects to expense such amounts over weighted-average periods of approximately 1.1 and 0.2 years, respectively, subsequent to March 31, 2024. RSAs The following is a summary of activity related to RSAs associated with compensation arrangements during the three month period ended March 31, 2024: RSAs Weighted Average Grant Date Fair Value Balance, January 1, 2024 1,235,946 $ 36.10 Granted (including 16,268 relating to dividend participation) 16,268 $ 36.13 Forfeited ( 4,376 ) $ 37.77 Settled ( 411,988 ) $ 37.40 Balance, March 31, 2024 835,850 $ 35.45 The weighted-average grant date fair value of RSAs granted in the three month periods ended March 31, 2024 and 2023 was $ 36.13 and $ 37.75 , respectively. In connection with RSAs that settled during the three month period ended March 31, 2024, the Company satisfied its minimum statutory tax withholding requirements in lieu of delivering 173,767 shares of common stock during such three month period. Accordingly, 238,221 shares of common stock held by the Company were delivered during the three month period ended March 31, 2024. RSAs granted in 2024 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 three month period ended March 31, 2024, dividend participation rights required the issuance of 16,268 RSAs and the associated charge to “retained earnings” (with corresponding credits to “additional paid-in-capital”) was $ 627 . 29 LAZARD, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued) (UNAUDITED) (dollars in thousands, except for per share data, unless otherwise noted) At March 31, 2024, estimated unrecognized RSAs expense was $ 11,912 , with such expense to be recognized over a weighted average period of approximately 0.7 years subsequent to March 31, 2024. 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 condensed 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 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 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”); 30 LAZARD, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued) (UNAUDITED) (dollars in thousands, except for per share data, unless otherwise noted) • 40 % if, during the five years following the date of grant, the common stock price has appreciated 50 % above the Grant Date Stock Price; • 40 % if, during the seven years following the date of grant, the 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 three month period ended March 31, 2024: 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, 2024 2,640,769 $ 36.19 1,958,829 $ 41.12 2,250,000 $ 15.06 Granted 1,368,964 $ 38.26 – $ – – $ – Forfeited – $ – – $ – – $ – Settled ( 601,433 ) $ 43.23 ( 995,169 ) $ 46.63 – $ – Balance, March 31, 2024 3,408,300 $ 35.78 963,660 $ 35.44 2,250,000 $ 15.06 __________________________ (a) Includes PIPR awards with only service-based vesting conditions. Fair values shown above represent the weighted average as of grant date. The weighted-average grant date fair value of ordinary PIPRs granted in the three month periods ended March 31, 2024 and 2023 was $ 38.26 and $ 35.94 , 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 March 31, 2024, the total estimated unrecognized compensation expense of all profits interest participation rights was $ 100,467 and the Company expects to expense such amount over a weighted-average period of approximately 1.3 years subsequent to March 31, 2024. 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 condensed 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. 31 LAZARD, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued) (UNAUDITED) (dollars in thousands, except for per share data, unless otherwise noted) The following is a summary of activity relating to LFI and other similar deferred compensation arrangements during the three month period ended March 31, 2024: Prepaid Compensation Asset Compensation Liability Balance, January 1, 2024 $ 115,972 $ 365,420 Granted 39,318 39,318 Settled – ( 133,152 ) Amortization and the impact of forfeitures ( 33,031 ) 2,668 Change in fair value of underlying investments – 9,373 Other ( 24 ) ( 1,479 ) Balance, March 31, 2024 $ 122,235 $ 282,148 The amortization of the prepaid compensation asset will generally be recognized over a weighted average period of approximately 0.8 years subsequent to March 31, 2024. The following is a summary of the impact of LFI and other similar deferred compensation arrangements on “compensation and benefits” expense within the accompanying condensed consolidated statements of operations for the three month periods ended March 31, 2024 and 2023: Three Months Ended March 31, 2024 2023 Amortization and the impact of forfeitures $ 35,699 $ 34,528 Change in the fair value of underlying investments 9,373 16,453 Total $ 45,072 $ 50,981 Cash Retention Awards In the first quarter of 2024, the Company granted and paid approximately $ 92,000 of cash retention awards that are subject to repayment in full in connection with a termination of employment for cause or resignation without good reason on or prior to the three-year service period. In connection with these awards, the Company recorded a prepaid compensation asset on the grant date based upon the amount paid. The prepaid compensation asset is amortized over the requisite service period beginning on the grant date and is charged to “compensation and benefits” expense in the condensed consolidated statements of operations. Amortization expense for the three months ended March 31, 2024 was approximately $ 11,000 . The remaining prepaid compensation asset was approximately $ 81,000 as of March 31, 2024. 14. 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 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 condensed consolidated statements of operations. 32 LAZARD, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued) (UNAUDITED) (dollars in thousands, except for per share data, unless otherwise noted) 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. The following table summarizes the components of net periodic benefit cost (credit) related to the Company’s pension plans for the three month periods ended March 31, 2024 and 2023: Pension Plans Three Months Ended March 31, 2024 2023 Components of Net Periodic Benefit Cost (Credit): Service cost $ 83 $ 98 Interest cost 5,192 5,152 Expected return on plan assets ( 6,511 ) ( 5,816 ) Amortization of: Prior service cost 133 26 Net actuarial loss (gain) 1,724 1,510 Settlement loss – 759 Net periodic benefit cost (credit) $ 621 $ 1,729 15. COST-SAVING INITIATIVES The Company conducted firm-wide cost-saving initiatives over the course of 2023 and during the first quarter of 2024. Expenses and losses associated with the cost-saving initiatives for the three month periods ended March 31, 2024 and 2023 consisted of the following: Three Months Ended March 31, 2024 Financial Advisory Asset Management Corporate Total Severance and other employee termination expenses (included in "compensation and benefits" expense) $ 32,773 $ 11,545 $ 2,292 $ 46,610 Other 708 14 1,397 2,119 Total $ 33,481 $ 11,559 $ 3,689 $ 48,729 Three Months Ended March 31, 2023 Financial Advisory Asset Management Corporate Total Severance and other employee termination expenses (included in "compensation and benefits" expense) $ 8,777 $ 11,235 $ 728 $ 20,740 Total $ 8,777 $ 11,235 $ 728 $ 20,740 33 LAZARD, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued) (UNAUDITED) (dollars in thousands, except for per share data, unless otherwise noted) Activity related to the obligations pursuant to the cost-saving initiatives during the three month period ended March 31, 2024 was as follows: Accrued Compensation and Benefits Other Total Balance, January 1, 2024 $ 51,346 $ 952 $ 52,298 Total expenses 46,610 2,119 48,729 Less: Noncash expenses (a) 9,111 2,999 12,110 Payments and settlements 52,349 16 52,365 Balance, March 31, 2024 $ 36,496 $ 56 $ 36,552 ___________________________________ (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 impairments of certain operating lease right-of-use assets and certain foreign exchange related losses. 16. INCOME TAXES Following the Conversion on January 1, 2024, Lazard, Inc. is subject to U.S. federal income taxes on all its operating income and, through its subsidiaries, is also subject to state and local taxes on its income apportioned to various state and local jurisdictions. Lazard Group operates principally through subsidiary corporations including those domiciled outside the U.S. that are subject to local income taxes in foreign jurisdictions. In addition, Lazard Group is subject to Unincorporated Business Tax (“UBT”) attributable to its operations apportioned to New York City. The Company recorded an income tax provision of $ 14,337 and an income tax benefit of $ 21,725 for the three month periods ended March 31, 2024 and 2023, respectively, representing effective tax rates of 26.3 % and 58.8 %, respectively. The difference between the U.S. federal statutory rate of 21.0 % and the effective tax rates reflected above principally relates to (i) the tax impact of differences in the value of share based incentive compensation and other discrete items, (ii) foreign source income (loss) not subject to U.S. income taxes, (iii) taxes payable to foreign jurisdictions that are not offset against U.S. income taxes, (iv) change in the U.S. federal valuation allowance affecting the provision for income taxes and (v) U.S. state and local taxes, which are incremental to the U.S. federal statutory tax rate. 17. 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. 34 LAZARD, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued) (UNAUDITED) (dollars in thousands, except for per share data, unless otherwise noted) The Company’s basic and diluted net income (loss) per share calculations using the “two-class” method for the three month periods ended March 31, 2024 and 2023 are presented below: Three Months Ended March 31, 2024 2023 Net income (loss) attributable to Lazard $ 35,755 $ ( 22,172 ) Adjustment for earnings attributable to participating securities ( 1,279 ) ( 1,125 ) Net income (loss) attributable to Lazard - basic 34,476 ( 23,297 ) Adjustment for earnings attributable to participating securities 195 – Net income (loss) attributable to Lazard - diluted $ 34,671 $ ( 23,297 ) Weighted average number of shares of common stock outstanding 88,547,757 85,734,443 Weighted average number of shares of common stock issuable on a non-contingent basis 2,712,708 1,857,409 Weighted average number of shares of common stock outstanding - basic 91,260,465 87,591,852 Weighted average number of incremental shares of common stock issuable from share-based incentive compensation (a) 8,091,304 – Weighted average number of shares of common stock outstanding - diluted 99,351,769 87,591,852 Net income (loss) attributable to Lazard per share of common stock: Basic $ 0.38 $ ( 0.27 ) Diluted $ 0.35 $ ( 0.27 ) ___________________________________ (a) The aggregate weighted average number of incremental shares of common stock issuable from PIPRs for the three month period ended March 31, 2024 of 2,167,520 and from RSUs, PRSUs and PIPRs for the three month period ended March 31, 2023 of 6,046,499 , that could be potentially dilutive in future periods, have been excluded from the computation of diluted net income (loss) per share as the effect would be antidilutive in the respective periods. 18. 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 $ 134,220 and $ 133,523 for the three month periods ended March 31, 2024 and 2023, respectively, and are included in “asset management fees” on the condensed consolidated statements of operations. Of such amounts, $ 56,134 and $ 67,598 remained as receivables at March 31, 2024 and December 31, 2023, respectively, and are included in “fees receivable” on the condensed 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 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 35 LAZARD, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued) (UNAUDITED) (dollars in thousands, except for per share data, unless otherwise noted) 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, the current 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 actual income are different than our assumptions, 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 condensed 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 three months ended March 31, 2023 of reducing the estimated liability under the TRA. As a result, the Company recorded a “benefit pursuant to tax receivable agreement” of $ 40,435 on the condensed consolidated statements of operations. The cumulative liability relating to our obligations under the TRA as of March 31, 2024 and December 31, 2023 was $ 115,001 and $ 115,087 , respectively, and is recorded in “tax receivable agreement obligation” on the condensed consolidated statements of financial condition. Other See Note 12 for information regarding related party transactions pertaining to shares repurchased from certain of our executive officers. 19. 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 March 31, 2024, LFNY’s regulatory net capital was $ 117,818 , which exceeded the minimum requirement by $ 114,006 . LFNY’s aggregate indebtedness to net capital ratio was 0.49 :1 as of March 31, 2024. 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 March 31, 2024, the aggregate regulatory net capital of the U.K. Subsidiaries was $ 179,432 , which exceeded the minimum requirement by $ 113,985 . 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 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. LFB and certain other non-Financial Advisory subsidiaries of the Company in the European Union (referred to herein, on a combined basis, as the “combined European regulated group”) is subject to consolidated supervision based on an agreement with the ACPR and under such rules 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 36 LAZARD, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued) (UNAUDITED) (dollars in thousands, except for per share data, unless otherwise noted) set for regulatory capital levels by $ 78,796 . Additionally, the combined European regulated group, together with our Financial Advisory entities in the European Union, 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 March 31, 2024, for those subsidiaries with regulatory capital requirements, their aggregate net capital was $ 101,442 , which exceeded the minimum required capital by $ 78,564 . At March 31, 2024, each of these subsidiaries individually was in compliance with its regulatory capital requirements. 20. 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 three month periods ended March 31, 2024 and 2023 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. 37 LAZARD, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued) (UNAUDITED) (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: Three Months Ended March 31, 2024 2023 Financial Advisory Net Revenue $ 453,507 $ 277,574 Operating Expenses 428,008 328,735 Operating Income (Loss) $ 25,499 $ ( 51,161 ) Asset Management Net Revenue $ 295,476 $ 284,044 Operating Expenses 261,680 248,051 Operating Income $ 33,796 $ 35,993 Corporate Net Revenue (Loss) $ 15,770 $ ( 19,182 ) Operating Expenses 20,504 2,574 Operating Loss $ ( 4,734 ) $ ( 21,756 ) Total Net Revenue $ 764,753 $ 542,436 Operating Expenses 710,192 579,360 Operating Income (Loss) $ 54,561 $ ( 36,924 ) As Of March 31, 2024 December 31, 2023 Total Assets Financial Advisory $ 1,026,444 $ 1,154,483 Asset Management 1,275,371 1,232,364 Corporate 2,285,155 2,248,934 Total $ 4,586,970 $ 4,635,781 38 LAZARD, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued) (UNAUDITED) (dollars in thousands, except for per share data, unless otherwise noted) 21. CONSOLIDATED VIEs The Company’s consolidated VIEs as of March 31, 2024 and December 31, 2023 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 $ 78,135 and $ 113,174 of LFI held by Lazard Group as of March 31, 2024 and December 31, 2023, respectively, can only be used to settle the obligations of LFI Consolidated Funds. The Company’s consolidated VIE assets and liabilities for LFI Consolidated Funds as reflected in the condensed consolidated statements of financial condition consist of the following at March 31, 2024 and December 31, 2023. March 31, 2024 December 31, 2023 ASSETS Cash and cash equivalents $ 4,404 $ 4,627 Customers and other receivables 35 23,277 Investments 161,700 196,112 Other assets 803 683 Total assets $ 166,942 $ 224,699 LIABILITIES Deposits and other customer payables $ 73 $ 23,498 Other liabilities 259 353 Total liabilities $ 332 $ 23,851 39