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Item 9A. Controls and Procedures

2024-02-28 compared with 2023-02-27 · 201 added, 217 removed, 974 unchanged (30% of the section changed)

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We maintain disclosure controls and procedures designed to ensure that information required to be disclosed in reports filed or submitted under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms and that such information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Any controls and procedures, no matter how well designed

and operated, can provide only reasonable assurance of achieving the desired control objectives.

Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.

Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) as of the end of the period covered by this Annual Report on Form 10-K.

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Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policy or procedures may deteriorate.

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we have conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2022 based upon the Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we have conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2023 based upon the Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring

Organizations of the Treadway Commission.

Based on this evaluation, management, including our Chief Executive Officer and Chief Financial Officer, has concluded that our internal control over financial reporting was effective as of December 31, 2023.

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Other Information.

During the three months ended December 31, 2023, none of the Company's directors or officers (as defined in Rule 16a-1(f) of the Securities Exchange Act of 1934, as amended), adopted , terminated or modified a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement (as such terms are defined in Item 408 of Regulation S-K of the Securities Act of 1933, as amended).

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.

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Directors, Executive Officers and Corporate Governance.

Information required by this Item 10 is incorporated herein by reference to our definitive proxy statement for our 2023 Annual Meeting of Shareholders to be filed pursuant to Regulation 14A under the Exchange Act.

Information required by this Item 10 is incorporated herein by reference to our definitive proxy statement for our 2024 Annual Meeting of Shareholders to be filed pursuant to Regulation 14A under the Exchange Act (the "2024 Proxy Statement").

Executive Compensation.

Information required by this Item 11 is incorporated herein by reference to our definitive proxy statement for our 2023 Annual Meeting of Shareholders to be filed pursuant to Regulation 14A under the Exchange Act.

Information required by this Item 11 is incorporated herein by reference to the 2024 Proxy Statement.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

Information required by Item 403 of Regulation S-K is incorporated herein by reference to our definitive proxy statement for our 2023 Annual Meeting of Shareholders to be filed pursuant to Regulation 14A under the Exchange Act.

Information required by Item 403 of Regulation S-K is incorporated herein by reference to the 2024 Proxy Statement.

The following table sets forth information as of December 31, 2023 with respect to compensation plans under which shares of our common stock may be issued:

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Certain Relationships and Related Transactions, and Director Independence.

Information required by this Item 13 is incorporated herein by reference to our definitive proxy statement for our 2023 Annual Meeting of Shareholders to be filed pursuant to Regulation 14A under the Exchange Act.

Information required by this Item 13 is incorporated herein by reference to the 2024 Proxy Statement.

Principal Accountant Fees and Services.

Information required by this Item 14 is incorporated herein by reference to our definitive proxy statement for our 2023 Annual Meeting of Shareholders to be filed pursuant to Regulation 14A under the Exchange Act.

Information required by this Item 14 is incorporated herein by reference to the 2024 Proxy Statement.

Exhibits and Financial Statement Schedules.

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(3) Articles of Incorporation and Bylaws

3.1 Amended and Restated Certificate of Incorporation of the Registrant, dated December 18, 2008 (incorporated by reference to Exhibit 3.1 of the Registrant's Amendment No.

4 to Form 10, filed December 19, 2008).

3.2 Amended and Restated Bylaws of the Registrant, as amended on February 14, 2018 (incorporated by reference to Exhibit 3.1 of the Registrant's Current Report on Form 8-K, filed February 16, 2018).

3.1 Third Amended and Restated Certificate of Incorporation of the Registrant, dated May 17, 2023 (incorporated by reference to Exhibit 3.1 of the Registrant's Current Report on Form 8-K, filed May 18, 2023).

3.2 Amended and Restated Bylaws of the Registrant, as amended on May 17, 2023 (incorporated by reference to Exhibit 3.2 of the Registrant's Current Report on Form 8-K, filed May 18, 2023).

3.3 Certificate of Designations of Series A Non-Voting Convertible Preferred Stock and Series B Voting Convertible Preferred Stock of the Registrant, dated October 31, 2008 (incorporated by reference to Exhibit 4.2 of the Registrant's Amendment No.

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(4) Instruments Defining the Rights of Security Holders including Indentures

4.1 Description of the Registrant's Common Stock (incorporated by reference to Exhibit 4.3 of the Registrant's Annual Report on Form 10-K, filed February 27, 2020) .

4.1 Description of the Registrant's Common Stock (incorporated by reference to Exhibit 4.1 of the Registrant's Registration Statement on Form 8-A, filed January 12, 2024).

(10) Material Contracts

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Non-Qualified Excess Investment Plan, effective as of February 1, 2010 (incorporated by reference to Exhibit 10.1 of the Registrant's Quarterly Report on Form 10-Q, filed May 4, 2010).

10.5* Amendment Two to the Virtus Investment Partners, Inc.

Non-Qualified Excess Investment Plan, effective as of January 1, 2024.

10.6* Virtus Investment Partners, Inc.

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Omnibus Incentive and Equity Plan (incorporated by reference to Exhibit 10.4 of the Registrant's Quarterly Report on Form 10-Q, filed May 13, 2009).

10.7* Form of Restricted Stock Units Agreement under the Virtus Investment Partners, Inc.

Amended and Restated Omnibus Incentive and Equity Plan.

10.8* Form of Performance Share Units Agreement under the Virtus Investment Partners, Inc.

Amended and Restated Omnibus Incentive and Equity Plan.

10.9* Form of Indemnity Agreement (incorporated by reference to Exhibit 10.4 to the Registrant's Quarterly Report on Form 10-Q, filed November 4, 2009).

10.10* Form of Indemnity Agreement.

10.8* Form of Restricted Stock Unit Grant Agreement under the Virtus Investment Partners, Inc.

Amended and Restated Omnibus Incentive and Equity Plan (incorporated by reference to Exhibit 10.1 of the Registrant's Quarterly Report on Form 10-Q filed May 9, 2023).

10.9* Form of Performance Share Unit Grant Agreement under the Virtus Investment Partners, Inc.

Amended and Restated Omnibus Incentive and Equity Plan (incorporated by reference to Exhibit 10.2 of the Registrant's Quarterly Report on Form 10-Q filed May 9, 2023).

10.10* Form of Indemnity Agreement (incorporated by reference to Exhibit 10.9 to the Registrant's Annual Report on Form 10-K, filed February 27, 2023).

10.11* Offer Letter from the Registrant to Barry M.

Mandinach dated April 4, 2014 (incorporated by reference to Exhibit 10.1 of the Registrant's Quarterly Report on Form 10-Q, filed May 7, 2014).

10.12* Offer Letter from the Registrant to Wendy J.

Hills dated July 26, 2019 (incorporated by reference to Exhibit 10.15 of the Registrant’s Annual Report on Form 10-K, filed February 26, 2021).

Number Exhibit Description

10.12* Offer Letter from the Registrant to Richard W.

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as administrative agent, and the Lenders party thereto (incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K, filed October 4, 2021).

10.14 Amendment No.

1, dated June 20, 2023, to the Amended and Restated Credit Agreement, dated as of September 28, 2021, by and among Virtus Investment Partners, Inc.

as borrower, Morgan Stanley Senior Funding, Inc.

as administrative agent, and the Lenders party thereto (incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q filed August 9, 2023).

(21) Subsidiaries of the Registrant

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Certifications of Registrant's Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Incentive Compensation Clawback Policy

101 The following information is formatted in iXBRL (Inline Extensible Business Reporting Language):

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We have audited the accompanying consolidated balance sheets of Virtus Investment Partners, Inc.

and subsidiaries (the "Company") as of December 31, 2022 and 2021, the related consolidated statements of operations, comprehensive income, changes in stockholders’ equity, and cash flows, for each of the three years in the period ended December 31, 2022, and the related notes (collectively referred to as the "financial statements").

and subsidiaries (the "Company") as of December 31, 2023 and 2022, the related consolidated statements of operations, comprehensive income, changes in stockholders’ equity, and cash flow, for each of the three years in the period ended December 31, 2023, and the related notes (collectively referred to as the "financial statements").

We also have audited the Company’s internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

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The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Valuation of Assets Acquired – Refer to Notes 2 and 4 to the financial statements

Valuation of Assets Acquired – Refer to Note 4 to the financial statements

Critical Audit Matter Description

During the year, the Company acquired Stone Harbor Investment Partners, LLC ("Stone Harbor") which was accounted for as a business combination.

Management estimated the fair value of the assets acquired using (1) an excess earnings method for the investment management agreements, (2) a royalty savings method for the trade name, and (3) both a royalty savings method and a replacement cost method for the software.

During the year, the Company acquired AlphaSimplex Group, LLC (“ASG”), which was accounted for as a business combination.

Management estimated the fair value of the assets acquired using (1) a discounted cash flow method for the investment management agreements and (2) a royalty savings method for the trade names.

The determination required management to make significant estimates and assumptions related to future cash flows and the selection of the discount rates and long-term growth rates for these assets.

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How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the valuation of assets acquired for Stone Harbor included the following, among others:

Our audit procedures related to the valuation of assets acquired for ASG included the following, among others:

• We tested the design and operating effectiveness of controls over valuation of the assets acquired including controls over management’s projections of future cash flows, discount rates, and long-term growth rates.

• We evaluated the reasonableness of significant business assumptions related to future cash flows by comparing the projections to historical results and certain peer companies.

We also held various discussions with accounting personnel and management regarding the business assumptions utilized in the valuation models and, on a sample basis, obtained audit evidence to substantiate the assumptions therein.

We also held various discussions with accounting personnel and management regarding the business assumptions utilized in the valuation models and obtained audit evidence to substantiate the assumptions therein.

• With the assistance of our internal fair value specialists we evaluated certain valuation assumptions, including discount rates and long-term growth rates.

– We evaluated the reasonableness of the valuation methodologies used by management to determine whether they were consistent with generally accepted valuation practices.

– We evaluated the reasonableness of the valuation methodologies used by management to determine whether they were consistent with generally accepted accounting policies.

– We evaluated the discount rates used by management to determine whether management's discount rate estimates were within our independent range.

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Contingent payment obligations related to business combinations are recorded at fair value upon acquisition and are remeasured at fair value each reporting date.

During the year, the contingent payment obligations associated with the 2022 acquisition of Stone Harbor and the 2021 acquisitions of NFJ Investment Group (“NFJ”) and Westchester Capital Management (“Westchester”) were valued to reflect remeasurement and payments made, if applicable, and changes were recorded in the

current period as a gain or loss.

During the year, the contingent payment obligations associated with the 2021 acquisitions of NFJ Investment Group (“NFJ”) and Westchester Capital Management (“Westchester”) were valued to reflect remeasurement and payments made, if applicable, and changes were recorded in the current period as a change in fair value of contingent consideration on the consolidated statement of operations.

Management uses simulation models to determine the fair value of the Company's estimated contingent liability given the variable nature of the arrangements and the significant management judgments in estimating revenue projections,market rate assumptions, discount rates, and risk volatility assumptions.

Contingent payment obligations related to asset acquisitions, if estimable and probable of payment, are initially recorded at their estimated value and reviewed every reporting period for changes.

During the year, the contingent payment obligations associated with the 2021 asset acquisition as part of the strategic partnership with Allianz Global Investors (“AllianzGI”) was valued to reflect remeasurement and payments made, if applicable, and changes were recorded in the current period as updates to the initial acquisition cost.

The valuations of the AllianzGI, NFJ, Westchester, and Stone Harbor contingent payment obligations use unobservable inputs and reflect management’s own judgments about the assumptions market participants would use in pricing the liabilities.

The valuations of the AllianzGI, NFJ and Westchester contingent payment obligations use unobservable inputs and reflect management’s own judgments about the assumptions market participants would use in pricing the liabilities.

Auditing the estimates involved a high degree of auditor judgment and an increased extent of effort.

For the fair value of the business combination contingent consideration, our internal fair value specialists were engaged to evaluate management’s judgments utilized within the simulation model related to revenue projections, market rate assumptions, discount rates, and risk volatility assumptions.

With the assistance of our internal fair value specialists, for the fair value of the business combination contingent consideration, we evaluated management’s judgments utilized within the simulation model related to revenue growth rates, discount rates, and market price of risk adjustment.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the valuation of the contingent consideration liability for the AllianzGI, NFJ, Westchester, and Stone Harbor acquisitions included the following, among others:

Our audit procedures related to the valuation of the contingent consideration liability for the AllianzGI, NFJ and Westchester acquisitions included the following, among others:

• We tested the design and operating effectiveness of controls over management’s valuation of the contingent consideration liability.

• We held discussions with accounting personnel and management regarding the revenue projections utilized in the valuation models.

We confirmed that the products included in the revenue projections utilized in the valuation models agreed to those within the respective acquisition agreements.

We evaluated whether the business assumptions used were appropriate and reasonable and confirmed that the products included in the revenue projections utilized in the valuation models agreed to those within the respective acquisition agreements.

• For the AllianzGI acquisition, we evaluated the methodology used to calculate the estimated value of the contingent payment obligations to confirm it was appropriate for an asset acquisition and confirmed that the amounts recorded were based on the revenue projections and the contractual payment rate.

• With the assistance of our internal fair value specialists, we performed the below procedures related to the NFJ, Westchester, and Stone Harbor contingent consideration liability:

– We evaluated the valuation methodology used by management to determine whether they were consistent with generally accepted valuation practices.

We further evaluated whether the business assumptions used were appropriate and reasonable.

• With the assistance of our internal fair value specialists, we performed the below procedures related to the NFJ and Westchester contingent consideration liability:

– We evaluated the valuation methodology used by management to determine whether they were consistent with generally accepted accounting policies.

– We estimated the fair value of the contingent liability through the preparation of independent simulation models developed from the underlying acquisition agreements and using independently sourced input data.

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A controlling financial interest is defined as (a) the power to direct the activities of a VIE that most significantly impact the VIE's economic performance and (b) the obligation to absorb losses of the VIE that could potentially be significant to the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE.

Management’s evaluation of these two criteria involves judgments to analyze the

governing documents of the investment product.

Management’s evaluation of these two criteria involves judgments to analyze the governing documents of the investment product.

The level of judgment required may vary in significance based on the complexity of the voting rights and structure economic interests of the investment product and the facts and circumstances of the Company’s investment.

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Dividends payable 17,291 15,812

Contingent consideration (Note 4) 128,400 162,564

Contingent consideration 90,938 128,400

Debt 253,412 255,025

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Permanent Equity Temporary Equity

Common Stock Preferred Stock Additional

Common Stock Additional

Capital Retained Earnings (Accumulated

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Equity Redeemable

(in thousands, except share data) Shares Par Value Shares Amount Shares Amount

(in thousands, except share data) Shares Par Value Shares Amount

Balances at December 31, 2020 7,583,466 $ 118 $ 1,298,002 $ ( 135,259 ) $ 29 4,207,403 $ ( 451,749 ) $ 711,141 $ 9,799 $ 720,940 $ 115,513

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Net subscriptions (redemptions) and other — — — — — — — ( 2,266 ) ( 2,266 ) ( 30,435 )

Conversion of preferred stock 912,806 9 ( 1,150,000 ) ( 110,843 ) 110,834 — — — — — — — —

Cash dividends declared ($ 4.64 per common share)

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Distributions from equity method investments 2,327 2,244 3,710

Sales (purchases) of investments, net ( 9,309 ) ( 7,952 ) 12,296

(Gain) loss on extinguishment of debt — — ( 705 )

Change in fair value of contingent consideration ( 5,510 ) 8,020 12,400

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Changes in operating assets and liabilities:

Sales (purchases) of investments, net ( 16 ) ( 9,309 ) ( 7,952 )

Accounts receivable, net and other assets 6,822 37,548 ( 30,057 )

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Capital expenditures and other asset purchases ( 8,821 ) ( 6,582 ) ( 5,838 )

Purchase of equity method investment ( 11,645 ) — —

Change in cash and cash equivalents of CIP due to consolidation (deconsolidation), net ( 267 ) ( 308 ) ( 13,559 )

Acquisition of business, net of cash acquired of $ 8,443 and $ 1,197 for the years ended December 31, 2022 and 2021, respectively

Acquisition of business, net of cash acquired of $ 4,395 and $ 8,443 and $ 1,197 for the years ended December 31, 2023, 2022 and 2021, respectively

( 108,999 ) ( 20,577 ) ( 155,636 )

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Cash Flows from Financing Activities:

Refinancing of credit agreement — 81,155 —

Payment of long-term debt ( 12,750 ) ( 12,513 ) ( 79,086 )

Payment of contingent consideration ( 33,036 ) — —

Borrowings and refinancing of credit agreement 50,000 — 81,155

Repayments on credit agreement ( 52,750 ) ( 12,750 ) ( 12,513 )

Payment of deferred financing costs — — ( 7,039 )

Payment of contingent consideration ( 27,179 ) ( 33,036 ) —

Repurchase of common shares ( 45,000 ) ( 90,000 ) ( 57,499 )

Preferred stock dividends paid — — ( 2,084 )

Common stock dividends paid ( 52,047 ) ( 47,254 ) ( 31,411 )

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Supplemental Disclosure of Non-Cash Investing and Financing Activities

Conversion of preferred stock to common stock — — 115,000

Common stock dividends payable 13,467 11,850 11,261

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(the "Company," "we," "us," "our" or "Virtus"), a Delaware corporation, operates in the investment management industry through its subsidiaries.

The Company provides investment management and related services to individuals and institutions.

The Company provides investment management and related services to institutions and individuals.

The Company's investment strategies are offered to institutional clients through institutional separate and commingled accounts, including structured products.

The Company’s retail investment management services are provided to individuals through products consisting of:

mutual funds registered pursuant to the Investment Company Act of 1940, as amended ("U.S.

retail funds" or "variable insurance funds");

retail funds");

Undertaking for Collective Investment in Transferable Securities and Qualifying Investor Funds (collectively, "global funds") and collectively with U.S.

retail funds, variable insurance funds, exchange traded funds ("ETFs"), the "open-end funds");

retail funds, variable insurance funds, and exchange-traded funds ("ETFs"), (the "open-end funds");

closed-end funds (collectively, with open-end funds, the "funds");

and retail separate accounts.

Institutional investment management services are offered through separate accounts and pooled or commingled structures to a variety of institutional clients.

The Company also provides subadvisory services to other investment advisers and serves as the collateral manager for structured products.

and retail separate accounts that include intermediary-sold and private client accounts.

The Company also provides subadvisory services to other investment advisers.

Summary of Significant Accounting Policies

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The consolidated financial statements include the accounts of the Company, its subsidiaries and investment products that are consolidated.

Voting interest entities ("VOEs") are consolidated when the Company is considered to have a controlling financial interest, which is typically present when the Company owns a majority of the voting interest in an entity or otherwise has the power to govern the financial and operating policies of the entity.

The Company evaluates any variable interest entity ("VIEs") in which the Company has a variable interest for consolidation.

A VIE is an entity in which either (i) the equity investment at risk is not sufficient to permit the entity to finance its own activities without additional financial support or (ii) where as a group, the holders of the equity investment at risk do not possess:

(x) the power through voting or similar rights to direct the activities that most significantly impact the entity's economic performance;

(y) the obligation to absorb expected losses or the right to receive expected residual returns of the entity;

or (z) proportionate voting and economic interests and where substantially all of the entity's activities either involve or are conducted on behalf of an investor with disproportionately fewer voting rights.

A voting interest entity ("VOE") is consolidated when the Company is considered to have a controlling financial interest, which is typically present when the Company owns a majority of the voting interest in an entity or otherwise has the power to govern the financial and operating policies of the entity.

The Company evaluates any variable interest entity ("VIE") in which the Company has a variable interest for consolidation.

A VIE is an entity in which either (i) the equity investment at risk is not sufficient to permit the entity to finance its own activities without additional financial support, or (ii) where as a group, the holders of the equity investment at risk do not possess any one of the following:

(a) the power through voting or similar rights to direct the activities that most significantly impact the entity's economic performance, (b) the obligation to absorb expected losses or the right to receive expected residual returns of the entity, or (c) proportionate voting and economic interests and where substantially all of the entity's activities either involve or are conducted on behalf of an investor with disproportionately fewer voting rights.

If an entity has any of these characteristics, it is considered a VIE and is required to be consolidated by its primary beneficiary.

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Noncontrolling interests - affiliate represent minority interests held in a consolidated affiliate.

These interests are subject to holder put rights and Company call rights at established multiples of earnings before interest, taxes, depreciation and amortization and, as such, are considered redeemable at other than fair value.

The rights are exercisable at pre-established intervals (between four and seven years from their issuance) or upon certain conditions such as retirement.

Minority interests held in the affiliate are subject to holder put rights and Company call rights at established multiples of earnings before interest, taxes, depreciation and amortization and, as such, are considered redeemable at other than fair value.

The rights are exercisable at pre-established intervals or upon certain conditions, such as retirement.

The put and call rights are not legally detachable or separately exercisable and are deemed to be embedded in the related noncontrolling interests.

The Company, in purchasing affiliate equity, has the option to settle in cash or shares of the Company's common stock and is entitled to the cash flow associated with any purchased equity.

Minority interests in an affiliate are recorded at estimated redemption value within redeemable noncontrolling interests on the Consolidated Balance Sheets and any changes in the estimated redemption value are recorded on the Consolidated Statements of Operations within noncontrolling interests.

These minority interests in the affiliate are recorded at estimated redemption value within redeemable noncontrolling interests on the Company's Consolidated Balance Sheets, and any changes in the estimated redemption value are recorded on the Consolidated Statements of Operations within noncontrolling interests.

Notes to Consolidated Financial Statements—(Continued)

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Furniture, equipment and leasehold improvements are recorded at cost.

Depreciation is computed using the straight-line method over the estimated useful lives of three to seven years for furniture and office equipment and three to five years for computer equipment and software.

Depreciation is computed using the straight-line method over the estimated useful lives of three to seven years for furniture and office equipment and three years for computer equipment and software.

Leasehold improvements are depreciated over the shorter of the remaining estimated lives of the related leases or useful lives of the improvements.

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The Company leases office space and equipment under various leasing arrangements.

In accordance with Accounting Standards Update ("ASU") 2016-02, Leases, the Company's leases are evaluated and classified as either financing leases or operating leases, as appropriate.

In accordance with ASC 842, Leases , the Company's leases are evaluated and classified as either financing leases or operating leases, as appropriate.

The Company recognizes a lease liability and a corresponding right of use ("ROU") asset on the commencement date of any lease arrangement.

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Lease expense is recognized on a straight-line basis over the lease term and is recorded within other operating expenses on the Consolidated Statement of Operations.

Goodwill and Intangible Assets

Goodwill and Other Intangible Assets

Goodwill represents the excess of the purchase price of business combinations over the identified assets and liabilities acquired.

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An impairment analysis of goodwill is performed annually or more frequently, if warranted by events or changes in circumstances affecting the Company's business.

The Company follows ASU 2011-08, Testing Goodwill for Impairment, which provides the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount.

The Company follows Accounting Standards Update ("ASU") 2011-08, Testing Goodwill for Impairment, which provides the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount.

If, after assessing the totality of events or circumstances, it is determined that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then performing the two-step impairment test is unnecessary.

The Company's 2023 and 2022 annual goodwill impairment analysis did not result in any impairment charges.

Definite-lived intangible assets are comprised of certain fund investment advisory contracts, trade names, non-competition agreements and software.

Definite-lived intangible assets are comprised of certain investment management agreements, trade names, non-competition agreements and software.

These assets are amortized on a straight-line basis over the estimated useful lives of such assets, which range from 4 to 16 years.

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Assets are considered impaired, and an impairment is recorded, if the carrying value exceeds the expected future undiscounted cash flows.

Indefinite-lived intangible assets are comprised of certain trade names and fund investment advisory contracts.

Indefinite-lived intangible assets are comprised of certain trade names and fund investment management agreements.

These assets are tested for impairment annually or when events or changes in circumstances indicate the assets might be impaired.

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The change in fair value is recorded in the current period as a gain or loss.

Gains and losses resulting from

Gains and losses resulting

Notes to Consolidated Financial Statements—(Continued)

changes in the fair value of contingent payment obligations are reflected within change in fair value of contingent consideration on the Consolidated Statements of Operations.

from changes in the fair value of contingent payment obligations are reflected within change in fair value of contingent consideration on the Consolidated Statements of Operations.

Contingent payment obligations related to our asset purchases, if estimable and probable of payment, are initially recorded at their estimated value and reviewed every reporting period for changes.

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Fees earned on funds are based on each fund's average daily or weekly net assets and are generally calculated and received on a monthly basis.

The Company records investment management fees net of the fees paid to unaffiliated subadvisers, as the Company is deemed to be the agent of the fund as it relates to the day-to-day investment management services performed by unaffiliated subadvisers, with the Company's performance obligation being to arrange for the provision of that service and not control the specified service before it is performed.

For funds managed by unaffiliated subadvisors, the Company records fees net of the subadvisory fees, as the Company is deemed to be the agent as it relates to the services performed by unaffiliated subadvisers, with the Company's performance obligation being to arrange for the provision of that service and not control the specified service before it is performed.

Amounts paid to unaffiliated subadvisers for the years ended December 31, 2023, 2022 and 2021 were $ 54.7 million, $ 77.0 million and $ 115.5 million, respectively.

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Institutional account fees are generally earned based on an average of daily or month-end balances or the current quarter's asset values.

Fees for structured finance products, for which the Company acts as the collateral manager, consist of senior, subordinated and, in certain instances, incentive management fees.

Senior and subordinated management fees are earned at a contractual fee rate applied against the end of the preceding quarter par value of the total collateral being managed with subordinated fees being earned only after certain portfolio criteria are met.

Incentive fees on certain of the Company's collateralized loan obligations ("CLOs") are typically a percentage of the excess cash flows available to holders of the subordinated notes, above a threshold level internal rate of return.

Fees for structured finance products are generally earned at a contractual fee rate applied against the end of the preceding quarter par value of the total collateral being managed.

Distribution and Service Fees

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The Company distributes its open-end funds through unaffiliated financial intermediaries that comprise national, regional and independent broker-dealers.

These unaffiliated financial intermediaries provide distribution and shareholder service

Notes to Consolidated Financial Statements—(Continued)

activities on behalf of the Company.

These unaffiliated financial intermediaries provide distribution and shareholder service activities on behalf of the Company.

The Company passes related distribution and service fees to these unaffiliated financial intermediaries for these services and considers itself the principal in these arrangements since it has control of the services prior to the services being transferred to the customer.

These payments are classified within distribution and other asset-based expenses.

Notes to Consolidated Financial Statements—(Continued)

Administration and Shareholder Service Fees

The Company provides administrative fund services to its U.S.

retail funds, ETFs and the majority of its closed-end funds and shareholder services to its open-end funds.

retail funds, and certain of its closed-end funds and shareholder services to its open-end funds.

Administration and shareholder services are performed over time.

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Valuation allowances are provided when it is determined that it is more likely than not that the benefit of deferred tax assets will not be realized.

Notes to Consolidated Financial Statements—(Continued)

Comprehensive Income

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by the weighted-average number of common shares outstanding for the period, excluding dilution for potential common stock issuances.

Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock, including shares issuable upon the vesting of RSUs and stock option exercises using the treasury stock method, as determined under the if-converted method.

Diluted EPS reflects the potential

Notes to Consolidated Financial Statements—(Continued)

dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock, including shares issuable upon the vesting of RSUs and stock option exercises using the treasury stock method, as determined under the if-converted method.

Fair Value Measurements and Fair Value of Financial Instruments

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Level 3—Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable in active exchange markets.

Recent Accounting Pronouncements

New Accounting Standards Not Yet Implemented

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280) .

This standard updates reportable segment disclosure requirements, clarifies circumstances in which an entity can disclose multiple segment measures of profit or loss and provides new segment disclosure requirements for entities with a single reportable segment.

This standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024.

Early adoption is permitted, with the amendments to be applied retrospectively to all prior periods presented in the financial statements.

The Company is in the process of evaluating the impact of adopting this standard and, at this time, does not anticipate it will have a material impact on its consolidated financial statements.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740).

This standard updates income tax disclosure requirements by requiring disaggregated information about a reporting entity's effective tax rate reconciliation as well as information on income taxes paid.

This standard is effective for fiscal years beginning after December 15, 2024.

Early adoption is permitted.

The Company is in the process of evaluating the impact of adopting this standard and, at this time, does not anticipate it will have a material impact on its consolidated financial statements.

Notes to Consolidated Financial Statements—(Continued)

Investment Management Fees by Source

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Total investment management fees $ 711,475 $ 728,339 $ 781,585

Notes to Consolidated Financial Statements—(Continued)

Stone Harbor Investment Partners

On January 1, 2022, the Company acquired Stone Harbor Investment Partners, LLC ("Stone Harbor"), which was accounted for in accordance with ASC 805, Business Combinations ("ASC 805").

Transaction consideration consisted of $ 28.9 million paid in cash and $ 1.2 million in contingent consideration recorded at fair value, which represents future potential earn-out payments based on pre-established performance metrics related to revenue retention and revenue growth rates.

Future contingent consideration will be paid, if earned, in 2023, 2026 and 2027.

The transaction consideration of $ 30.1 million was allocated to the assets acquired and liabilities assumed, based upon their estimated fair values at the date of the acquisition, as well as goodwill of $ 10.3 million and definite-lived intangible assets of $ 10.8 million.

The Company expects $ 21.1 million of the purchase price to be tax deductible over 15 years.

The revenues and operating income of Stone Harbor were not material to the Company's results of operations for the year ended December 31, 2022.

The following table summarizes the identified acquired assets and liabilities assumed as of the Stone Harbor acquisition date:

January 1, 2022

AlphaSimplex Group, LLC

On April 1, 2023, the Company completed the acquisition of AlphaSimplex Group, LLC ("AlphaSimplex"), which was accounted for in accordance with ASC 805, Business Combinations ("ASC 805").

The total purchase price paid of $ 113.4 million was allocated to the assets acquired and liabilities assumed based upon their estimated fair values at the date of the acquisition.

Goodwill of $ 48.3 million and intangible assets of $ 55.4 million were recorded for the acquisition.

The Company expects $ 103.7 million of the purchase price, related to goodwill and intangibles, to be tax deductible over 15 years.

The revenues and operating income of AlphaSimplex were not material to the Company's results of operations for the year ended December 31, 2023.

The following table summarizes the identified acquired assets and liabilities assumed as of the AlphaSimplex acquisition date:

April 1, 2023

(in thousands)

Cash and cash equivalents $ 4,395

Investments 8,567

Accounts receivable 5,422

Furniture, equipment and leasehold improvements 4,161

Intangible assets 55,400

Accounts payable, accrued and other liabilities

Goodwill 48,262

Other assets 9,126

Total Assets 135,333

Accounts payable and accrued liabilities 21,939

Total Liabilities 21,939

Total Net Assets Acquired $ 113,394

Notes to Consolidated Financial Statements—(Continued)

Identifiable Intangible Assets Acquired

The Company identified and recorded the following intangible assets as a result of the Stone Harbor acquisition:

January 1, 2022

In connection with the allocation of the AlphaSimplex purchase price, the Company identified the following intangible assets:

April 1, 2023

Approximate Fair Value

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Trade names 3,400 9.0

Software 3,800 4.0

Total definite-lived intangible assets $ 55,400

The fair value of investment management agreements was estimated using a multi-period excess earnings method, the fair value of the trade names was estimated using a royalty savings method, and the fair value of the software was estimated using a royalty savings method and replacement cost approach.

The fair value estimates were prepared with the assistance of an independent valuation firm.

Westchester Capital Management

On October 1, 2021, the Company acquired Westchester Capital Management, LLC ("Westchester"), which was accounted for in accordance with ASC 805.

Transaction consideration consisted of $ 156.8 million in cash and contingent consideration representing future potential earn-out payments based on pre-established performance metrics related to revenue growth rates, that was recorded as a liability on the Company's Consolidated Balance sheet.

Future contingent consideration

Notes to Consolidated Financial Statements—(Continued)

payments will be made, if earned, in 2025 and 2026.

As of December 31, 2022, the contingent consideration balance was $ 19.9 million.

The total transaction consideration of $ 169.3 million was allocated to the assets acquired and liabilities assumed based upon their estimated fair values at the date of the acquisition.

Goodwill of $ 23.0 million and intangible assets of $ 144.4 million were recorded as a result of the acquisition.

The Company expects $ 155.6 million of the purchase price to be tax deductible over 15 years.

The revenues and operating income of Westchester were not material to the Company's results of operations for the year ended December 31, 2021.

Fund Adoption and NFJ Investment Group

On February 1, 2021, the Company executed an agreement with Allianz Global Investors U.S.

LLC ("AGI"), pursuant to which the Company became the investment adviser, distributor and/or administrator of certain of AGI's open-end, closed-end and retail separate account assets.

This transaction was classified as an asset acquisition, and the cost of the acquisition was allocated to the assets acquired on the basis of their relative fair values.

Additionally, as part of the transaction, AGI’s value equity team joined the Company as a newly established affiliated manager, NFJ Investment Group ("NFJ").

The addition of NFJ was classified as a business combination under ASC 805, and assets acquired were recorded at fair value.

Assets acquired primarily consisted of definite-lived intangible assets representing investment contracts as well as indefinite-lived assets consisting of goodwill related to NFJ.

The revenues and operating income of NFJ were not material to the Company's results of operations for the year ended December 31, 2021.

Transaction consideration consists of variable cash payments based on a percentage of the investment management fees earned on certain open-end, closed-end and retail separate account assets from the transaction.

Payments are to be made annually on the anniversary of the closing date of the transactions over the next seven years .

Contingent payment obligations related to NFJ, which were accounted for in accordance with ASC 805, are remeasured at fair value as of each reporting period-end, with the change in fair value recorded within the Consolidated Statements of Operations.

An estimate of these future payments has been recorded as a liability and included as contingent consideration on the Company's Consolidated Balance Sheets.

A payment of $ 33.0 million was made in the first quarter of 2022.

The estimated value of the total future revenue participation payments at December 31, 2022 was $ 108.5 million.

Notes to Consolidated Financial Statements—(Continued)

The fair value of investment management agreements was estimated using a multi-period excess earnings method and the fair value of the trade names was estimated using a relief-from-royalty method, each of which was prepared with the assistance of an independent valuation firm.

Stone Harbor Investment Partners

On January 1, 2022, the Company acquired Stone Harbor Investment Partners, LLC ("Stone Harbor"), which was accounted for in accordance with ASC 805.

The total purchase price of $ 30.1 million was allocated to the assets acquired and liabilities assumed, based upon their estimated fair values at the date of the acquisition, as well as goodwill of $ 10.3 million and definite-lived intangible assets of $ 10.8 million.

Goodwill and Other Intangible Assets

Activity in goodwill was as follows:

Years Ended December 31,

(in thousands) 2023 2022

Balance, beginning of period $ 348,836 $ 338,406

Acquisitions 48,262 10,430

Balance, end of period $ 397,098 $ 348,836

Below is a summary of intangible assets, net:

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Balances of December 31, 2021 $ 755,576 $ ( 297,303 ) $ 458,273 $ 42,298 $ 500,571

Additions/Transfers 266,006 — 266,006 ( 1,218 ) 264,788

Additions 10,800 — 10,800 — 10,800

Adjustments ( 10,348 ) — ( 10,348 ) — ( 10,348 )

Intangible amortization — ( 58,504 ) ( 58,504 ) — ( 58,504 )

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Balances of December 31, 2023 $ 806,655 $ ( 416,834 ) $ 389,821 $ 42,298 $ 432,119

Activity in goodwill was as follows:

Years Ended December 31,

(in thousands) 2022 2021 2020

Balance, beginning of period $ 338,406 $ 290,366 $ 290,366

Acquisitions 10,430 48,040 —

Balance, end of period $ 348,836 $ 338,406 $ 290,366

Definite-lived intangible asset amortization for the next five years and thereafter is estimated as follows:

Notes to Consolidated Financial Statements—(Continued)

Definite-lived intangible asset amortization for the next five and succeeding fiscal years is estimated as follows:

Fiscal Year Amount

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2029 and thereafter 142,201

Total $ 389,821

At December 31, 2023, the weighted average estimated remaining amortization period for definite-lived intangible assets was 8.2 years.

Notes to Consolidated Financial Statements—(Continued)

Investments consist primarily of investments in the Company's sponsored products.

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(1) The Company's equity method investments are valued on a three-month lag based upon the availability of financial information.

On January 1, 2023, the Company made an additional investment in an existing minority interest in an affiliated manager for $ 11.6 million including transaction costs.

Investment Securities - Fair Value

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Total investment securities - fair value $ 97,147 $ 97,304 $ 80,912 $ 76,999

For the years ended December 31, 2022, 2021 and 2020, the Company recognized a net realized loss of $ 1.4 million, and gains of $ 5.0 million and $ 4.7 million, respectively, on the sale of its investment securities - fair value.

For the years ended December 31, 2023, 2022 and 2021, the Company recognized a net realized gain of $ 2.1 million, a net realized loss of $ 1.4 million, and a net realized gain of $ 5.0 million, respectively, related to its investment securities - fair value.

Notes to Consolidated Financial Statements—(Continued)

Equity Method Investments

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Each participant is responsible for designating investment options for their contributions, and the ultimate distribution paid to each participant reflects any gains or losses on the assets realized while in the trust.

Assets held in trust are included in investments and are carried at fair value utilizing Level 1 valuation techniques in accordance with ASC 320;

Assets held in trust are included in investments and are carried at fair value utilizing Level 1 valuation techniques in accordance with ASC 320, Investments - Debt Securities ;

the associated obligations to participants are included in other liabilities on the Consolidated Balance Sheets .

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Other investments represent interests in entities not accounted for under the equity method such as those accounted for under the cost method.

Notes to Consolidated Financial Statements—(Continued)

Fair Value Measurements

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Total liabilities measured at fair value $ — $ — $ 56,200 $ 56,200

Notes to Consolidated Financial Statements—(Continued)

December 31, 2022

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Nonqualified retirement plan assets represent mutual funds within the Company's nonqualified retirement plan whose fair value is determined based on their published net asset value and are categorized as Level 1.

Notes to Consolidated Financial Statements—(Continued)

Contingent consideration represents liabilities associated with the Company's business combinations.

See Note 4 for a discussion of the transactions.

The estimated fair values are measured using a simulation model using unobservable market data inputs prepared with the assistance of an independent valuation firm.

Contingent consideration represents liabilities associated with the Company's business combinations with NFJ Investment Group ("NFJ") and Westchester Capital Management ("WCM").

The continent consideration related to the WCM transaction as of December 31, 2023 was $ 11.1 million and represents the fair value of future potential earn-out payments based on pre-established performance metrics related to revenue growth rates.

The estimated fair value of the WCM liability is measured using an options pricing model valuation technique utilizing unobservable market data inputs prepared with the assistance of an independent valuation firm.

The most significant unobservable inputs used relate to the aforementioned revenue growth rates, discount rate (range of 6 %- 7 %) and the market price of risk adjustment ( 9 %).

The NFJ contingent consideration liability as of December 31, 2023 was $ 45.1 million and represents the fair value of the projected future revenue participation payments.

The NFJ revenue participation payments consist of variable payments based on a percentage of the investment management fees earned on certain NFJ managed open-end, closed-end and retail separate account assets.

The estimated fair value of the NFJ liability is measured using an options pricing model valuation technique utilizing unobservable market data inputs prepared with the assistance of an independent valuation firm.

The most significant unobservable inputs used relate to the revenue growth rates, discount rates (range of 6 % - 7 %) and the market price of risk adjustment ( 7 %).

These liabilities are categorized as Level 3 .

Cash, accounts receivable, accounts payable and accrued liabilities equal or approximate fair value based on the short-term nature of these instruments.

The following table presents a reconciliation of beginning and ending balances of recurring fair value measurements classified as Level 3:

The following table presents a reconciliation of beginning and ending balances of the Company's contingent

Notes to Consolidated Financial Statements—(Continued)

consideration liabilities:

(in thousands) 2023 2022

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Additions for acquisitions — 1,200

Reduction of liability for payments made ( 19,520 ) ( 20,000 )

Increase (reduction) of liability related to re-measurement of fair value, net 8,020 12,400

Reduction for payments made ( 16,390 ) ( 19,520 )

Increase (reduction) of liability related to re-measurement of fair value ( 5,510 ) 8,020

Contingent consideration, end of year $ 56,200 $ 78,100

Cash, accounts receivable, accounts payable and accrued liabilities equal or approximate fair value based on the short-term nature of these instruments.

Furniture, Equipment and Leasehold Improvements, Net

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All of the Company's leases qualify as operating leases and consist primarily of leases for office facilities, which have remaining initial lease terms ranging from 0.7 to 9.8 years and a weighted average remaining lease term of 5.7 years.

The Company has options to renew some of its leases for periods ranging from 3.0 to 10.0 years, depending on the lease.

The Company has options to renew certain of its leases for periods ranging from 3.0 to 10.0 years, depending on the lease.

None of the Company's renewal options were considered reasonably assured of being exercised and, therefore, were excluded from the initial lease term used to determine the Company's right-of-use asset and lease liability.

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Cash payments relating to operating leases during 2023 were $ 16.4 million.

Notes to Consolidated Financial Statements—(Continued)

Lease liability maturities as of December 31, 2023 were as follows:

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Present value of lease liabilities $ 78,142

Notes to Consolidated Financial Statements—(Continued)

The components of the provision for income taxes were as follows:

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The Company's tax position for the years ended December 31, 2023, 2022 and 2021 was impacted by changes in the valuation allowance related to the unrealized and realized gains and losses on the Company's investments.

Notes to Consolidated Financial Statements—(Continued)

Deferred taxes resulted from temporary differences between the amounts reported on the consolidated financial statements and the tax basis of assets and liabilities.

The tax effects of temporary differences were as follows:

Notes to Consolidated Financial Statements—(Continued)

(in thousands) 2023 2022

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Capital losses 6,139 2,197

Other 2,188 94

Gross deferred tax assets 88,553 77,067

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Credit Agreement

The Company's credit agreement, as amended (the "Credit Agreement"), comprises (i) a $ 275.0 million seven-year term loan (the "Term Loan") expiring in September 2028 and (ii) a $ 175.0 million revolving credit facility with a five-year term expiring in September 2026.

During the year ended December 31, 2022, the Company repaid $ 12.8 million outstanding under its Term Loan.

At December 31, 2022, $ 261.6 million was outstanding under the Term Loan, and there were no outstanding borrowings under the revolving credit facility.

The Company's credit agreement (the "Credit Agreement"), most recently amended on June 20, 2023 to change the base interest rate from LIBOR to SOFR, comprises (i) a $ 275.0 million term loan with a seven-year term (the "Term Loan") expiring in September 2028, and (ii) a $ 175.0 million revolving credit facility with a five-year term expiring in September 2026.

On April 3, 2023, the Company borrowed $ 50.0 million under the revolving credit facility to partially finance its acquisition of AlphaSimplex (see Note 4 for further information) and repaid the entire $ 50.0 million prior to December 31, 2023.

In addition, the Company repaid $ 2.8 million outstanding under the Term Loan in 2023 and had $ 258.8 million outstanding at December 31, 2023 under the Term Loan.

In accordance with ASC 835, Interest , the amounts outstanding under the Company's Term Loan are presented on the Consolidated Balance Sheet net of related debt issuance costs, which were $ 5.4 million as of December 31, 2023.

Amounts outstanding under the Credit Agreement bear interest at an annual rate equal to, at the option of the Company, either LIBOR (adjusted for reserves) for interest periods of one, three or six months (or, solely in the case of the revolving credit facility, if agreed to by each relevant Lender, 12 months) or an alternate base rate, in either case plus an applicable margin.

The applicable margins are 2.25 %, in the case of LIBOR-based loans, and 1.25 %, in the case of alternate base rate loans.

Interest is payable quarterly in arrears with respect to alternate base rate loans and on the last day of each interest period with respect to LIBOR-based loans (but, in the case of any LIBOR-based loan with an interest period of more than three months, at three-month intervals).

The Credit Agreement contains LIBOR and other subsequent benchmark successor provisions.

Amounts outstanding under the Credit Agreement bear interest at an annual rate equal to, at the option of the Company, either SOFR (adjusted for reserves) for interest periods of one, three or six months (or, solely in the case of the revolving credit facility, if agreed to by each relevant Lender, 12 months) or an alternate base rate, in either case plus an applicable margin.

The applicable margins are 2.25 %, in the case of SOFR-based loans, and 1.25 %, in the case of alternate base rate loans.

Interest is payable quarterly in arrears with respect to alternate base rate loans and on the last day of each interest period with respect to SOFR-based loans (but, in the case of any SOFR-based loan with an interest period of more than three months, at three-month intervals).

The Credit Agreement contains SOFR and other subsequent benchmark successor provisions.

The terms of the Credit Agreement require the Company to pay a quarterly commitment fee on the average unused amount of the revolving credit facility.

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and (iii) 100 % of the proceeds of any indebtedness incurred to refinance the term loans or other refinancing indebtedness as well as indebtedness incurred other than indebtedness permitted to be incurred by the Credit Agreement.

At any time, upon timely notice, the Company may terminate the Credit Agreement in full, reduce the commitment under the facility in minimum specified increments or prepay loans in whole or in part, subject to the payment of breakage fees with respect to LIBOR-based loans and, in the case of any term loans that are prepaid in connection with a "repricing transaction" occurring within the six-month period following the closing date of the Credit Agreement, a 1.00 % premium.

At any time, upon timely notice, the Company may terminate the Credit Agreement in full, reduce the commitment under the facility in minimum specified increments or prepay loans in whole or in part, subject to the payment of breakage fees with respect to SOFR-based loans and, in the case of any term loans that are prepaid in connection with a "repricing transaction" occurring within the six-month period following the closing date of the Credit Agreement, a 1.00 % premium.

The Credit Agreement contains customary affirmative and negative covenants, including covenants that affect, among other things, the ability of the Company and its subsidiaries to incur additional indebtedness, create liens, merge or dissolve, make investments, dispose of assets, engage in sale and leaseback transactions, make distributions and dividends and prepayments of junior indebtedness, engage in transactions with affiliates, enter into restrictive agreements, amend documentation governing junior indebtedness, modify its fiscal year and modify its organizational documents, subject to customary exceptions, thresholds, qualifications and "baskets." In addition, the Credit Agreement contains a financial performance covenant that is only applicable when greater than 35 % of the revolving credit facility is outstanding, requiring a maximum leverage ratio, as of the last day of each of the four fiscal quarter periods, of no greater than the levels set forth in the Credit Agreement.

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During the year ended December 31, 2023, the Company repurchased 223,807 common shares at a weighted average price of $ 200.73 per share, for a total cost, including fees and expenses, of $ 45.2 million under its share repurchase program.

In May 2022, the Company's Board of Directors authorized an additional 750,000 shares under the share repurchase program.

As of December 31, 2023, 604,545 shares remain available for repurchase.

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Accumulated Other Comprehensive Income (Loss)

The changes in accumulated other comprehensive income (loss), by component, were as follows:

Foreign Currency

Translation Adjustments

(in thousands)

Balance at December 31, 2021 $ 20

Net current-period other comprehensive income (loss) (1) ( 378 )

Balance at December 31, 2022 $ ( 358 )

Foreign Currency

Translation Adjustments

The changes in accumulated other comprehensive income (loss) were as follows:

Years Ended December 31,

(in thousands) 2023 2022

Balance at December 31, 2020 $ 29

Balance at beginning of period $ ( 358 ) $ 20

Net current-period other comprehensive income (loss) (1) 271 ( 378 )

Balance at December 31, 2021 $ 20

Balance at end of period $ ( 87 ) $ ( 358 )

(1) Consists of foreign currency translation adjustments, net of tax of $( 96 ) and $ 135 for the years ended December 31, 2023 and 2022, respectively.

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Shares that are issued upon vesting are newly issued shares from the Omnibus Plan and are not issued from treasury stock.

Notes to Consolidated Financial Statements—(Continued)

RSU activity, inclusive of PSUs, for the year ended December 31, 2023 is summarized as follows:

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The grant-date intrinsic value of RSUs granted during the year ended December 31, 2023 was $ 33.8 million.

Notes to Consolidated Financial Statements—(Continued)

Years Ended December 31,

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Fair value of RSUs vested $ 24.8 $ 23.8 $ 22.8

For the years ended December 31, 2022, 2021 and 2020, a total of 79,471 , 73,069 and 68,625 RSUs, respectively, were withheld by the Company as a result of net share settlements to settle minimum employee tax withholding obligations.

The Company paid $ 16.8 million, $ 19.5 million and $ 6.5 million for the years ended December 31, 2022, 2021 and 2020, respectively, in minimum employee tax withholding obligations related to RSUs withheld for net share settlements.

For the years ended December 31, 2023, 2022 and 2021, a total of 79,516 , 79,471 and 73,069 RSUs, respectively, were withheld by the Company as a result of net share settlements to settle minimum employee tax withholding obligations and for which the Company paid $ 13.8 million, $ 16.8 million and $ 19.5 million, respectively, in minimum employee tax withholding obligations.

These net share settlements had the effect of share repurchases by the Company as they reduced the number of shares that would have otherwise been issued as a result of the vesting.

During the years ended December 31, 2023 and 2022, the Company granted 44,583 and 30,516 PSUs, respectively, that contain performance-based metrics in addition to a service condition.

Compensation expense for PSUs is generally recognized over a three-year service period based upon the value determined using a combination of (i) the intrinsic value method, for awards that contain a performance metric that represents a "performance condition" in accordance with ASC 718, Compensation - Stock Compensation ("ASC 718") and (ii) the Monte Carlo simulation valuation model for awards that contain a "market condition" performance metric under ASC 718.

Compensation expense for PSUs is generally recognized over a three-year service period based upon the value determined using a combination of (i) the intrinsic value method, for awards that contain a performance metric that represents a "performance condition" in accordance with ASC 718, Stock Compensation ("ASC 718") and (ii) the Monte Carlo simulation valuation model for awards that contain a "market condition" performance metric under ASC 718.

Compensation expense for PSU awards that contain a market condition is fixed at the date of grant and will not be adjusted in future periods based upon the achievement of the market condition.

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The Company does not reserve shares for this plan or discount the purchase price of the shares.

Restructuring Expense

During the year ended December 31, 2022, the Company incurred $ 4.0 million in in restructuring costs, primarily related to the write-down of right-of-use assets for a lease in conjunction with the consolidation of certain office space.

Notes to Consolidated Financial Statements—(Continued)

Earnings (Loss) Per Share

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The following table details the securities that have been excluded from the above computation of weighted-average number of shares for diluted EPS, because the effect would be anti-dilutive.

Notes to Consolidated Financial Statements—(Continued)

Years Ended Years Ended December 31,

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Concentration of Credit Risk

The following Company clients or sponsored funds provided 10 percent or more of the Company's investment management, administration and shareholder service fee revenues:

2022 2021 2020

Virtus KAR Small Cap Growth Fund * * 10 %

* Less than 10 percent of total revenues of the Company

No Company clients or sponsored funds provided 10 percent or more of the Company's investment management, administration and shareholder service fee revenues in the preceding three years.

Redeemable Noncontrolling Interests

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The consolidated financial statements include the accounts of the Company, its subsidiaries and investment products that are consolidated.

VOEs are consolidated when the Company is considered to have a controlling financial interest, which is

Notes to Consolidated Financial Statements—(Continued)

typically present when the Company owns a majority of the voting interest in an entity or otherwise has the power to govern the financial and operating policies of the entity.

The Company evaluates any VIEs in which the Company has a variable interest for consolidation.

A VIE is an entity in which either (i) the equity investment at risk is not sufficient to permit the entity to finance its own activities without additional financial support;

or (ii) where as a group, the holders of the equity investment at risk do not possess:

(i) the power through voting or similar rights to direct the activities that most significantly impact the entity's economic performance, (ii) the obligation to absorb expected losses or the right to receive expected residual returns of the entity, or (iii) proportionate voting and economic interests and where substantially all of the entity's activities either involve or are conducted on behalf of an investor with disproportionately fewer voting rights.

A VOE is consolidated when the Company is considered to have a controlling financial interest, which is typically present when the Company owns a majority of the voting interest in an entity or otherwise has the power to govern the financial and operating policies of the entity.

The Company evaluates any VIE in which the Company has a variable interest for consolidation.

If an entity has any of these characteristics, it is considered a VIE and is required to be consolidated by its primary beneficiary.

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In the normal course of its business, the Company sponsors various investment products, some of which are consolidated by the Company.

CIP includes both VOEs, made up primarily of open-end funds in which the Company holds a controlling financial interest, and VIEs, which consist of CLOs and certain global and private funds of which the Company is considered the primary beneficiary.

The consolidation and deconsolidation of these investment products have no impact on net income (loss) attributable to Virtus Investment Partners, Inc.

CIP includes both VOEs, made up primarily of U.S.

retail funds and ETFs in which the Company holds a controlling financial interest, and VIEs, which consist of collateralized loan obligations ("CLO") and certain global and private funds ("GF") of which the Company is considered the primary beneficiary.

The consolidation and deconsolidation of these investment products have no impact on the Company's net income (loss).

The Company's risk with respect to these investment products is limited to its beneficial interests in these products.

The Company has no right to the benefits from, and does not bear the risks associated with, these investment products beyond the Company's investments in, and fees generated from, these products.

Notes to Consolidated Financial Statements—(Continued)

The following table presents the balances of CIP that, after intercompany eliminations, were reflected on the Consolidated Balance Sheets as of December 31, 2023 and 2022:

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VOEs VIEs VOEs VIEs

(in thousands) CLOs Other CLOs Other

(in thousands) CLOs GFs CLOs GFs

Cash and cash equivalents $ 1,223 $ 98,101 $ 2,088 $ 1,153 $ 249,003 $ 789

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The majority of the Company's CIP that are VIEs are CLOs.

At December 31, 2022, the Company consolidated seven CLOs.

The financial information of certain CLOs is included on the Company's consolidated financial statements on a one-month lag based upon the availability of their financial information.

A majority-owned consolidated private fund, whose primary purpose is to invest in CLOs for which the Company serves as the collateral manager, is also included.

At December 31, 2023, the Company consolidated eight CLOs.

Investments of CLOs

The CLOs held investments of $ 2.1 billion at December 31, 2022 consisting of bank loan investments, which comprise the majority of the CLOs' portfolio asset collateral and are senior secured corporate loans across a variety of industries.

These bank loan investments mature at various dates between 2023 and 2030 and pay interest at LIBOR plus a spread of up to 10.0 %.

The CLOs may elect to reinvest any prepayments received on bank loan investments up until the periods between October 2019 and October 2026, depending on the CLO.

Generally, subsequent prepayments received after the reinvestment period must be used to pay down the note obligations.

At December 31, 2022, the fair value of the senior bank loans was less than the unpaid principal balance by $ 146.7 million.

The CLOs held investments of $ 2.0 billion at December 31, 2023, consisting of bank loan investments that comprise the majority of the CLOs' portfolio asset collateral and are senior secured corporate loans across a variety of industries.

These bank loan investments mature at various dates between 2024 and 2032 and generally pay interest at SOFR plus a spread.

The CLOs have a reinvestment period where any prepayments received on bank loan investments may be reinvested.

Generally, subsequent prepayments received after the reinvestment period must be used to pay down the note payable obligations.

The reinvestment periods end between October 2021 and September 2028, depending on the CLO.

At December 31, 2023, the fair value of the senior bank loans was less than the unpaid principal (par) balance by $ 104.4 million.

At December 31, 2023, there were no material collateral assets in default.

Notes to Consolidated Financial Statements—(Continued)

Notes Payable of CLOs

The CLOs held notes payable with a total value, at par, of $ 2.1 billion at December 31, 2023, consisting of senior secured floating rate notes payable with a par value of $ 1.9 billion and subordinated notes with a par value of $ 215.1 million.

These note obligations bear interest at variable rates based on LIBOR plus a pre-defined spread ranging from 0.8 % to 9.1 %.

The principal amounts outstanding of these note obligations mature on dates ranging from October 2027 to October 2034.

These note obligations bear interest at variable rates based on SOFR plus a pre-defined spread ranging from 0.8 % to 9.1 %.

The principal amounts outstanding of these note obligations mature on dates ranging from October 2029 to September 2036.

The Company's beneficial interests and maximum exposure to loss related to these consolidated CLOs is limited to (i) ownership in the subordinated notes and (ii) accrued management fees.

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Total Beneficial Interests $ 96,655

The following table represents income and expenses of the consolidated CLOs included on the Company's Consolidated Statements of Operations for the period indicated:

The following table represents income and expenses of the consolidated CLOs included on the Company's

Notes to Consolidated Financial Statements—(Continued)

Consolidated Statements of Operations for the period indicated:

December 31, 2023

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Noncontrolling interests ( 70 )

Net Income (loss) attributable to CIP $ ( 6,772 )

As summarized in the table below, the application of the measurement alternative as prescribed by ASU 2014-13 results in the consolidated net income summarized above to be equivalent to the Company's own economic interests in the consolidated CLOs, which are eliminated upon consolidation:

Net Income (loss) attributable to CLOs $ 23,563

The following table represents the Company's own economic interests in the consolidated CLOs, which are eliminated upon consolidation:

December 31, 2023

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Total Economic Interests $ 23,563

Notes to Consolidated Financial Statements—(Continued)

Fair Value Measurements of CIP

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Total liabilities measured at fair value $ 518 $ 1,922,243 $ — $ 1,922,761

Notes to Consolidated Financial Statements—(Continued)

As of December 31, 2022

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The following is a discussion of the valuation methodologies used for the assets and liabilities of the Company's CIP measured at fair value.

Cash equivalents represent investments in money market funds.

Cash investments in money market funds are valued using published net asset values and are classified as Level 1.

Debt and equity investments represent the underlying debt, equity and other securities held in CIP.

Equity investments are valued at the official closing price on the exchange on which the securities are traded and are generally categorized within Level 1.

Level 2 investments represent most debt securities, including bank loans and certain equity securities (including non-U.S.

Level 1 assets represent cash investments in money market funds and debt and equity investments that are valued using published net asset values or the official closing price on the exchange on which the securities are traded.

Level 2 assets represent most debt securities (including bank loans) and certain equity securities (including non-U.S.

securities), for which closing prices are not readily available or are deemed to not reflect readily available market prices, and are valued using an independent pricing service.

Debt investments are valued based on quotations received from independent pricing services or from dealers who make markets in such securities.

Debt investments, other than bank loans, are valued based on quotations received from independent pricing services or from dealers who make markets in such securities.

Bank loan investments, which are included as debt investments, are generally priced at the average mid-point of bid and ask quotations obtained from a third-party pricing service.

Fair value may also be based upon valuations obtained from independent third-party brokers or dealers utilizing matrix pricing models that consider information regarding securities with similar characteristics.

In certain instances, fair value has been determined utilizing discounted cash flow analyses or single broker non-binding quotes.

Depending on the nature of the inputs, these assets are classified as Level 1, 2 or 3 within the fair value measurement hierarchy.

Level 3 investments include debt and equity securities that are not widely traded, are illiquid or are priced by dealers based on pricing models used by market makers in the security.

Notes payable represent notes issued by CIP CLOs and are measured using the measurement alternative in ASU 2014-13.

Level 3 assets include debt and equity securities that are not widely traded, are illiquid or are priced by dealers based on pricing models used by market makers in the security.

These securities are valued using unadjusted prices from an independent pricing service.

Level 1 liabilities consist of short sales transactions in which a security is sold that is not owned or is owned but there is no intention to deliver, in anticipation that the price of the security will decline.

Short sales are recorded on the Condensed Consolidated Balance Sheets within other liabilities of CIP and are classified as Level 1 based on the underlying equity security.

Level 2 liabilities consists of notes payables issued by CLOs and are measured using the measurement alternative in ASU 2014-13.

Accordingly, the fair value of CLO liabilities was measured as the fair value of CLO assets less the sum of (i) the fair value of the beneficial interests held by the Company, and (ii) the carrying value of any beneficial interests that represent compensation for services.

The fair value of the beneficial interests held by the Company is based on third-party pricing information without

Notes to Consolidated Financial Statements—(Continued)

Short sales are transactions in which a security is sold that is not owned or is owned but there is no intention to deliver, in anticipation that the price of the security will decline.

Short sales are recorded on the Consolidated Balance Sheets within other liabilities of CIP and are classified as Level 1 based on the underlying equity security.

The fair value of the beneficial interests held by the Company is based on third-party pricing information without adjustment.

The securities purchased payable at December 31, 2023 and 2022 approximated fair value due to the short-term nature of the instruments.

Notes to Consolidated Financial Statements—(Continued)

The following table is a reconciliation of assets of CIP for Level 3 investments for which significant unobservable inputs were used to determine fair value.

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The assets and liabilities of these CLOs reside in bankruptcy remote, special purpose entities in which the Company has no ownership of, nor holds any notes issued by, the CLOs, and provides neither recourse nor guarantees.

The Company has determined that the investment management fees it receives for serving as collateral manager for these CLOs did not represent a variable interest since (i) the fees the Company earns are compensation for services provided and are commensurate with the level of effort required to provide the investment management services, (ii) the Company does not hold other interests in the CLOs that individually, or in the aggregate, would absorb more than an insignificant amount of the CLOs' expected losses or receive more than an insignificant amount of the CLOs' expected residual return, and (iii) the investment management arrangement only includes terms, conditions and amounts that are customarily present in arrangements for similar services negotiated at arm's length.

The Company has determined that the investment management fees it receives for serving as collateral manager for these CLOs did not represent a variable interest as (i) the fees the Company earns are compensation for services provided and are commensurate with the level of effort required to provide the investment management services, (ii) the Company does not hold other interests in the CLOs that individually, or in the aggregate, would absorb more than an insignificant amount of the CLOs' expected losses or receive more than an insignificant amount of the CLOs' expected residual return, and (iii) the investment management arrangement only includes terms, conditions and amounts that are customarily present in arrangements for similar services negotiated at arm's length.

The Company has interests in certain other VIEs that the Company does not consolidate as it is not the primary beneficiary since its interest in these entities does not provide the Company with the power to direct the activities that most significantly impact the entities' economic performance.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures