What changed in this filing

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Item 9A. Controls and Procedures

2025-02-28 compared with 2024-02-28 · 175 added, 199 removed, 976 unchanged (28% of the section changed)

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Evaluation of Disclosure Controls and Procedures

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.

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.

Based on their evaluation, our Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures were effective at the reasonable assurance level as of December 31, 2023, the end of the period covered by this Annual Report on Form 10-K.

We maintain disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) that are designed to ensure that information required to be disclosed in our reports filed or submitted under 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.

Because of the inherent limitations, 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 of the end of the period covered by this Annual Report on Form 10-K.

Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of December 31, 2024, the end of the period covered by this Annual Report on Form 10-K.

Changes in Internal Controls over Financial Reporting

There have been no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) or 15d-15(f) under the Exchange Act) that occurred during the fourth quarter of fiscal 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

There have been no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) or 15d-15(f) under the Exchange Act) that occurred during the three months ended December 31, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Management's Report on Internal Control over Financial Reporting

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Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

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

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

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, our management has conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2024 based on the criteria established in the Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Based on this evaluation, our 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, 2024.

The effectiveness of our internal control over financial reporting as of December 31, 2024 has been audited by Deloitte & Touche LLP, our independent registered public accounting firm, as stated in their report, which is included in Item 15 "Exhibits and Financial Statement Schedules" of this Annual Report on Form 10-K.

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Information required by this Item 10 is incorporated herein by reference to our definitive proxy statement for our 2025 Annual Meeting of Shareholders to be filed pursuant to Regulation 14A under the Exchange Act (the "2025 Proxy Statement").

We have adopted a written Code of Conduct that applies to all of our directors, officers and employees, including our principal executive officer, principal financial officer and principal accounting officer.

We are committed to the highest standards of ethical and professional conduct, and the Code of Conduct provides guidance on how to uphold these standards.

The Code of Conduct is available on our website at www.virtus.com, in the Investor Relations section, under the heading “Corporate Governance.” We intend to post any substantive amendments to, or waivers of, the Code of Conduct applicable to our principal executive officer, principal financial officer, principal accounting officer, or directors on our website.

We have adopted an insider trading policy regarding securities transactions (the "Insider Trading Policy") that applies to all directors, officers, employees, consultants, and contractors of the Company and its subsidiaries, as well as the Company itself.

We believe that the Insider Trading Policy is reasonably designed to promote compliance with insider trading laws, rules and regulations with respect to the purchase, sale and/or other dispositions of our securities, as well as the applicable rules and regulations of the New York Stock Exchange.

A copy of the Insider Trading Policy is filed as Exhibit 19 to this Annual Report on Form 10-K.

Executive Compensation.

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Total 317,489 $ — 828,882

(1) The weighted-average exercise price set forth in this column is calculated excluding outstanding restricted stock unit awards ("RSUs") since recipients of such awards are not required to pay an exercise price to receive the shares subject to these awards.

(1) The weighted-average exercise price set forth in this column is calculated excluding outstanding restricted stock unit awards ("RSUs")

since recipients of such awards are not required to pay an exercise price to receive the shares subject to these awards.

(2) Represents shares of our common stock issuable upon the vesting of RSUs outstanding under the Company's Omnibus Incentive and Equity Plan (the "Omnibus Plan").

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(a)(1) Financial Statements:

The following Report of Independent Registered Public Accounting Firm and Consolidated Financial Statements of Virtus are included in this Annual Report:

The following Report of Independent Registered Public Accounting Firm and Consolidated Financial Statements of Virtus are included in this Annual Report on Form 10-K:

Report of Independent Registered Public Accounting Firm (PCAOB ID No.

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

10.2* Virtus Investment Partners, Inc.

Amended and Restated Omnibus Incentive and Equity Plan (incorporated by reference to Exhibit 10.1 of the Registrant's Form 8-K, filed May 17, 2021).

10.2+ Amended and Restated Virtus Investment Partners, Inc.

Omnibus Incentive and Equity Plan (incorporated by reference to Exhibit 10.1 of the Registrant's Current Report on Form 8-K, filed May 16, 2024).

10.3+ Virtus Investment Partners, Inc.

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

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

Non-Qualified Excess Investment Plan, effective as of January 1, 2024 (incorporated by reference to Exhibit 10.5 of the Registrant's Annual Report on Form 10-K filed February 28, 2024) .

10.6+ Virtus Investment Partners, Inc.

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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).

Number Exhibit Description

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).

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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).

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 Quarterly Report on Form 10-Q filed August 9, 2023).

(19) Insider Trading Policies and Procedures

19.1* Insider Trading Policy .

(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):

(i) Consolidated Balance Sheets as of December 31, 2023 and December 31, 2022, (ii) Consolidated Statements of Operations for the years ended December 31, 2023, 2022 and 2021, (iii) Consolidated Statements of Comprehensive Income for the years ended December 31, 2023, 2022 and 2021, (iv) Consolidated Statements of Cash Flows for the years ended December 31, 2023, 2022 and 2021, (v) Consolidated Statements of Changes in Stockholders' Equity for the years ended December 31, 2023, 2022 and 2021 and (vi) Notes to Consolidated Financial Statements.

97.1 Incentive Compensation Clawback Policy (incorporated by reference to Exhibit 97.1 to the Registrant's Annual Report on Form 10-K, filed February 28, 2024).

101.INS Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH Inline XBRL Taxonomy Extension Schema Document

101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document

104 Cover page Interactive Data File (embedded within the Inline XBRL document and included in Exhibit 101)

+ Management contract, compensatory plan or arrangement.

* Filed herewith.

# This certification is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (Exchange Act), or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act.

The agreements and other documents filed as exhibits to this report are not intended to provide factual information or other disclosure other than the terms of the agreements or other documents themselves, and you should not rely on them for that purpose.

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Director Melody L.

HOWARD MORRIS /S/ STEPHEN T.

HOWARD MORRIS /S/ JOHN C.

Howard Morris

Director Stephen T.

Director John C.

/S/ MICHAEL A.

Chief Financial Officer

Executive Vice President, Chief Financial Officer

(Principal Financial Officer and Principal Accounting Officer)

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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 Note 4 to the financial statements

Critical Audit Matter Description

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.

The inputs used in estimating the fair value are in most cases unobservable and reflect management’s own judgments about the assumptions market participants would use in pricing the assets.

Auditing the valuations of the assets acquired involved a high degree of judgment and an increased extent of effort, including involving our internal fair value specialists in evaluating management’s judgments especially as it relates to management’s assumptions of future cash flows, discount rates, and long-term growth rates.

How the Critical Audit Matter Was Addressed in the Audit

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 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 accounting policies.

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

– We performed an analysis of inflation, economic, and industry growth statistics to determine whether management's long-term growth rate used in the income approach fell within a reasonable range of the market data.

– We evaluated the appropriateness of management’s selection of guideline public companies used in developing the discount rates.

• We evaluated whether the assumptions used were consistent with evidence obtained in other areas of the audit.

Valuation of Contingent Consideration – Refer to Notes 2 and 7 to the financial statements

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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 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.

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 growth rates, discount rates, and the market price of risk adjustment.

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.

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

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

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Deferred taxes, net 23,206 25,024

Operating lease right-of-use assets 57,131 63,229

Other assets 34,292 26,209

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Accounts payable and accrued liabilities 49,492 56,047

Dividends payable 17,291 15,812

Contingent consideration 63,505 90,938

Debt 232,130 253,412

Operating lease liabilities 70,037 78,142

Other liabilities 15,932 13,329

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Common stock, $ 0.01 par value, 1,000,000,000 shares authorized;

12,163,228 shares issued and 7,087,728 shares outstanding at December 31, 2023 and 12,033,247 shares issued and 7,181,554 shares outstanding at December 31, 2022

12,243,880 shares issued and 6,967,147 shares outstanding at December 31, 2024 and 12,163,228 shares issued and 7,087,728 shares outstanding at December 31, 2023, respectively

Additional paid-in capital 1,319,108 1,300,999

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Net income (loss) — — — 117,541 — — — 117,541 ( 765 ) 116,776 ( 10,148 )

Foreign currency translation adjustments — — — — ( 9 ) — — ( 9 ) — ( 9 ) —

Foreign currency translation adjustments, net of tax of $ 135

— — — — ( 378 ) — — ( 378 ) — ( 378 ) —

Net subscriptions (redemptions) and other — — 2,035 — — — 2,035 ( 1,668 ) 367 ( 15,099 )

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Net income (loss) — — — 130,621 — — — 130,621 70 130,691 10,785

Foreign currency translation adjustments — — — — ( 378 ) — — ( 378 ) — ( 378 ) —

Foreign currency translation adjustments, net of tax of $( 96 )

— — — — 271 — — 271 — 271 —

Net subscriptions (redemptions) and other — — 3,188 — — — 3,188 ( 1,624 ) 1,564 ( 19,634 )

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Net income (loss) — — — 121,746 — — — 121,746 769 122,515 29,938

Foreign currency translation adjustments — — — — 271 — — 271 — 271 —

Foreign currency translation adjustments, net of tax of $ 95

— — — — ( 277 ) — — ( 277 ) — ( 277 ) —

Net subscriptions (redemptions) and other — — 5,249 — — — 5,249 ( 989 ) 4,260 ( 27,525 )

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Stock-based compensation 32,841 26,825 24,042

Amortization of deferred commissions 1,609 4,342 3,956

Payments of deferred commissions ( 1,434 ) ( 2,065 ) ( 5,963 )

Equity in earnings of equity method investments ( 2,713 ) 198 ( 187 )

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Deferred taxes, net 7,120 1,394 ( 1,960 )

Right of use asset — 3,222 —

Lease termination ( 1,318 ) — 3,222

Changes in operating assets and liabilities:

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Change in cash and cash equivalents of CIP due to consolidation (deconsolidation), net ( 11,372 ) ( 267 ) ( 308 )

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

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

— ( 108,999 ) ( 20,577 )

Net cash provided by (used in) investing activities ( 16,951 ) ( 129,732 ) ( 27,467 )

Years Ended December 31,

(in thousands) 2023 2022 2021

Cash Flows from Financing Activities:

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

Borrowings on credit agreement — 50,000 —

Repayments on credit agreement ( 22,750 ) ( 52,750 ) ( 12,750 )

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

Payment of contingent consideration ( 24,234 ) ( 27,179 ) ( 33,036 )

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Cash, cash equivalents and restricted cash, end of year $ 400,309 $ 341,014 $ 589,179

Years Ended December 31,

(in thousands) 2024 2023 2022

Supplemental Disclosure of Cash Flow Information

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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 investment strategies are offered to institutional clients through institutional separate and commingled accounts, including subadvisory services to other investment advisers and Company sponsored 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");

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

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

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

retail funds, exchange-traded funds ("ETFs");

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

retail funds and ETFs the "open-end funds");

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

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

The Company also provides subadvisory services to other investment advisers.

retail separate accounts sold through intermediaries and wealth advisory services to high net worth clients through our wealth management business.

Summary of Significant Accounting Policies

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Intercompany accounts and transactions have been eliminated.

Certain prior period balances on the Consolidated Balance Sheets and Consolidated Statements of Cash Flow have been reclassified to conform to the current period presentation.

These changes had no effect on net income, total comprehensive income, total assets, or total liabilities and equity as previously reported:

• Dividends payable has been reclassified to accounts payable and accrued liabilities;

• Operating lease right-of-use assets and Operating lease liabilities have been reclassified from other assets and other liabilities, respectively, as separate financial statement line items;

• Certain immaterial operating cash flow line items were condensed with other operating cash flow line items

Noncontrolling Interests

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Noncontrolling interests - CIP represent third-party investments in the Company's CIP and are classified as redeemable noncontrolling interests on the Consolidated Balance Sheets because investors in those products are able to request withdrawal at any time.

Noncontrolling interests - affiliate

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

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.

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.

Noncontrolling interests - Investment Manager

Noncontrolling interests - Investment Manager represents the minority interests of a majority owned consolidated investment management subsidiary.

See Note 18 for further discussion.

Notes to Consolidated Financial Statements—(Continued)

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Accounting Standards Codification ("ASC") 280, Segment Reporting , establishes disclosure requirements relating to operating segments in annual and interim financial statements.

Operating segments are defined as components of an enterprise about which separate financial information is available that is regularly evaluated by the chief operating decision maker in deciding how to allocate resources to the segment and assess its performance.

The Company's Chief Executive Officer is the Company's chief operating decision maker.

Operating segments are defined as components of an enterprise about which separate financial information is available that is regularly evaluated by the chief operating decision maker ("CODM") in deciding how to allocate resources to the segment and assess its performance.

The Company's Chief Executive Officer is the Company's CODM.

The Company operates in one business segment, namely as an asset manager providing investment management and related services for individual and institutional clients.

Although the Company provides disclosures regarding assets under management and other asset flows by product, the Company's determination that it operates in one business segment is based on the fact that the same investment professionals manage both retail and institutional products, operational resources support multiple products, such products have the same or similar regulatory framework and the Company's chief operating decision maker reviews the Company's financial performance on a consolidated level.

Investment managers within the Company are generally not aligned with a specific product type.

Although the Company provides disclosures regarding assets under management and other asset flows by product, the Company's determination that it operates in one business segment is based on the fact that the same investment professionals manage both retail and institutional products, operational resources support multiple products, such products have the same or similar regulatory framework and the Company's CODM the Company's financial performance on a consolidated level.

Cash and Cash Equivalents

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See Note 6 for additional information related to the Excess Incentive Plan.

Notes to Consolidated Financial Statements—(Continued)

Furniture, Equipment and Leasehold Improvements, Net

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 years for computer equipment and software.

Depreciation is computed using the

Notes to Consolidated Financial Statements—(Continued)

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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In contingent payment arrangements, the Company agrees to pay additional transaction consideration to the seller based on future performance.

The Company estimates the value of estimated future payments of these potential future obligations at the time a business combination or asset purchase is consummated.

The Company estimates the value of future payments of these potential future obligations at the time a business combination or asset purchase is consummated.

Liabilities under contingent payment arrangements are recorded within contingent consideration on the Consolidated Balance Sheets.

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

Gains and losses resulting

Gains and losses resulting 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 asset purchases, if estimable and probable of payment, are initially

Notes to Consolidated Financial Statements—(Continued)

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.

recorded at their estimated value and reviewed every reporting period for changes.

Any changes to the estimated value are recorded as an update of the initial acquisition cost of the asset with a corresponding change to the estimated contingent payment obligation on the Consolidated Balance Sheets.

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Revenue Recognition

The Company's revenues are recognized when a performance obligation is satisfied, which occurs when control of the services is transferred to customers.

The Company's revenues are recognized when a performance obligation is satisfied, which occurs when control of the services is transferred to clients.

Investment management fees, distribution and service fees, and administration and shareholder service fees are generally calculated as a percentage of average net assets of the investment portfolios managed.

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Investment Management Fees

The Company provides investment management services pursuant to investment management agreements through its investment advisers (each an "Adviser").

The Company provides investment management services pursuant to investment management agreements through its investment advisers.

Investment management services represent a series of distinct daily services that are performed over time.

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

Notes to Consolidated Financial Statements—(Continued)

Administration and Shareholder Service Fees

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The Company earns fees for these services, which are calculated and paid monthly, based on each fund's average daily or weekly net assets.

Notes to Consolidated Financial Statements—(Continued)

Administrative fund services include:

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Other Income and Fees

Other income and fees primarily represent fees related to other fee earning assets and contingent sales charges earned from investor redemptions of certain shares sold without a front-end sales charge.

Other income and fees primarily represent fees related to other fee earning assets and marketing fees earned on certain ETFs.

Stock-based Compensation

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The fair value of each RSU award is based on the fair market value price on the date of grant unless it contains a performance metric that is considered a "market condition." Compensation expense for RSU awards is recognized ratably over the vesting period on a straight-line basis.

The value of RSUs that contain a performance metric ("PSUs") is determined based on (i) the fair market value price on the date of grant, for awards that contain a performance metric that represents a "performance condition" in accordance with ASC 718 or (ii) the Monte Carlo simulation valuation model for awards that contain a "market condition" performance metric under ASC 718.

The value of RSUs that contain a performance metric ("PSUs") is determined based on (i) the intrinsic value method for awards that contain a performance metric that represent a "performance condition" in accordance with 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 grand and will not be adjusted in future periods based upon the achievement of the market condition.

Compensation expense for PSU awards with a performance condition is recorded each period based upon a probability assessment of the expected outcome of the performance metric with a final adjustment upon measurement at the end of the performance period.

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

The Company accounts for income taxes in accordance with ASC 740, Income Taxes ("ASC 740"), which requires recognition of the amount of taxes payable or refundable for the current year as well as deferred tax assets and liabilities for temporary differences between the tax basis of assets and liabilities and the reported amounts on the Consolidated Financial Statements.

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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

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.

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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Recent Accounting Pronouncements

New Accounting Standards Not Yet Implemented

New Accounting Standards 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.

This standard is effective for annual filings of 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.

The Company adopted this standard in this annual filing.

See Note 17 for a discussion of the Company's segment information.

In March 2024, the FASB issued ASU 2024-01, Compensation - Stock Compensation (Topic 718), Scope Application of Profits Interest and Similar Awards.

This standard provides clarity regarding whether profits interest and similar awards are within the scope of Topic 718 of the Accounting Standards Codification.

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

Early adoption is permitted.

The Company adopted this standard in this annual filing.

The adoption of this standard did not have a material impact on the Company's consolidated financial statements.

New Accounting Standards Not Yet Implemented

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

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Early adoption is permitted.

The Company has evaluated 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 November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40).

The standard requires enhanced disclosures of certain expense captions presented on the face of the Consolidated Income Statement.

This standard is effective for fiscal years beginning after December 15, 2026 and interim periods within fiscal years beginning after December 15, 2027.

Early adoption is permitted with amendments to be applied either prospectively or retrospectively to any or 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.

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Total investment management fees $ 773,830 $ 711,475 $ 728,339

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.

AlphaSimplex Group, LLC

2 unchanged sentences

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

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

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

April 1, 2023

Approximate Fair Value

( in thousands)

Weighted Average of Useful Life

Definite-lived intangible assets:

Investment management agreements $ 52,000 10.5

Trade names 3,400 9.0

Total definite-lived intangible assets $ 55,400

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

13 unchanged sentences

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

Additions 55,400 — 55,400 — 55,400

Adjustments 2,409 — 2,409 — 2,409

15 unchanged sentences

Nonqualified retirement plan assets 15,159 12,682

Other investments — 1,729

Total investments $ 119,216 $ 132,696

(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

7 unchanged sentences

Equity securities 17,406 19,019 16,353 19,871

Debt securities 1,457 1,456 — —

Total investment securities - fair value $ 82,083 $ 83,771 $ 97,147 $ 97,304

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)

For the years ended December 31, 2024, 2023 and 2022, the Company recognized net realized gains of $ 3.8 million and $ 2.1 million, and a net realized loss of $ 1.4 million, respectively, related to its investment securities - fair value.

Equity Method Investments

The Company's equity method investments primarily consist of a minority investment in an affiliated manager and an investment in a limited partnership.

The Company's equity method investments primarily consist of a minority investment in an investment manager and an investment in a limited partnership.

For the years ended December 31, 2024, 2023 and 2022, distributions from equity method investments were $ 5.4 million, $ 2.3 million and $ 2.2 million, respectively.

2 unchanged sentences

The Company's Excess Incentive Plan allows certain employees to voluntarily defer compensation.

The Company holds the Excess Incentive Plan assets in a rabbi trust, which is subject to the claims of the Company's creditors in the event of the Company's bankruptcy or insolvency.

Notes to Consolidated Financial Statements—(Continued)

holds the Excess Incentive Plan assets in a rabbi trust, which is subject to the claims of the Company's creditors in the event of the Company's bankruptcy or insolvency.

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.

1 unchanged sentence

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

Other Investments

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

Fair Value Measurements

6 unchanged sentences

Equity securities 19,019 — — 19,019

Debt securities — 1,456 — 1,456

Nonqualified retirement plan assets 15,159 — — 15,159

2 unchanged sentences

Total liabilities measured at fair value $ — $ — $ 36,100 $ 36,100

Notes to Consolidated Financial Statements—(Continued)

December 31, 2023

11 unchanged sentences

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

Sponsored funds represent investments in open-end funds, closed-end funds and ETFs for which the Company acts as the investment manager.

The fair value of open-end funds is determined based on their published net asset values and are categorized as Level 1.

The fair value of closed-end funds and ETFs is determined based on the official closing price on the exchange on which they are traded and are categorized as Level 1.

Sponsored funds represent investments in open-end funds and closed-end funds for which the Company acts as the investment manager.

The fair values of U.S.

retail funds and global funds are determined based on their published net asset values and are categorized as Level 1.

The fair value of closed-end funds and ETFs is determined based on the official closing

Notes to Consolidated Financial Statements—(Continued)

price on the exchange on which they are traded and are categorized as Level 1.

Equity securities represent securities traded on active markets, are valued at the official closing price (typically the last sale or bid) on the exchange on which the securities are primarily traded and are categorized as Level 1.

Debt securities Debt securities represent investments in corporate and government bonds.

The fair values of corporate and government bonds traded on active markets are valued at the official closing price on the exchange on which the securities are primarily traded and are categorized as Level 1.

Debt 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, are categorized as Level 2.

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.

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 .

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

Notes to Consolidated Financial Statements—(Continued)

consideration liabilities:

Contingent consideration represents liabilities associated with contingent payment arrangements made in connection with the Company's business combinations.

In these contingent payment arrangements, the Company agrees to pay additional transaction consideration to the seller based on future performance.

Contingent consideration is remeasured at fair value each reporting date using a simulation model with the assistance of an independent valuation firm and approved by management and are categorized as Level 3.

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

(in thousands) 2024 2023

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

Additions for acquisitions — 1,200

Reduction for payments made ( 14,492 ) ( 16,390 )

1 unchanged sentence

Contingent consideration, end of year $ 36,100 $ 56,200

The contingent consideration related to the Westchester Capital Management transaction as of December 31, 2024 was $ 1.9 million, measured using an options pricing model valuation technique.

The most significant unobservable inputs used relate to revenue growth rates, discount rates (range of 6.3 % - 6.4 %) and the market price of risk adjustment ( 7.3 %).

The NFJ Investment Group contingent consideration liability as of December 31, 2024 was $ 34.2 million, measured using an options pricing model valuation technique.

The most significant unobservable inputs used relate to the revenue growth rates, discount rates (range of 6.3 % - 6.4 %) and the market price of risk adjustment ( 6.5 %).

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

8 unchanged sentences

Furniture, equipment and leasehold improvements, net $ 22,718 $ 26,216

Notes to Consolidated Financial Statements—(Continued)

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 0.1 to 13.6 years and a weighted average remaining lease term of 11.3 years.

1 unchanged sentence

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.

The Company's right-of-use asset, recorded in other assets , and lease liability, recorded in other liabilities on the Consolidated Balance Sheets, at December 31, 2023 were $ 63.2 million and $ 78.1 million, respectively.

The Company's right-of-use asset and lease liability on the Consolidated Balance Sheets at December 31, 2024 were $ 57.1 million and $ 70.0 million, respectively.

The weighted average discount rate used to measure the Company's lease liability was 6.8 % at December 31, 2024.

9 unchanged sentences

Present value of lease liabilities $ 70,037

Notes to Consolidated Financial Statements—(Continued)

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

8 unchanged sentences

Total expense (benefit) for income taxes $ 55,423 $ 45,088 $ 57,260

Notes to Consolidated Financial Statements—(Continued)

The following presents a reconciliation of the provision (benefit) for income taxes computed at the federal statutory rate to the provision (benefit) for income taxes recognized on the Consolidated Statements of Operations for the years indicated:

12 unchanged sentences

The Company's tax position for the years ended December 31, 2024, 2023 and 2022 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.

6 unchanged sentences

Lease liability 17,698 19,009

Investments 11,643 18,283

Investment in sponsored products 8,801 11,643

Capital losses 7,748 6,139

Other 2,188 94

Investment in partnerships 8,058 2,188

Gross deferred tax assets 87,467 88,553

5 unchanged sentences

Fixed assets ( 3,042 ) ( 4,197 )

Other investments ( 370 ) ( 712 )

Other ( 559 ) ( 370 )

Gross deferred tax liabilities ( 47,649 ) ( 46,990 )

2 unchanged sentences

The Company maintained a valuation allowance in the amount of $ 16.6 million and $ 16.5 million at December 31, 2024 and 2023, respectively, relating to deferred tax assets on items of a capital nature as well as certain state deferred tax assets.

As of December 31, 2023, the Company had net operating loss carry-forwards for federal income tax purposes represented by a $ 6.1 million deferred tax asset.

As of December 31, 2024, the Company had net operating loss carry-forwards for federal income tax purposes

Notes to Consolidated Financial Statements—(Continued)

represented by a $ 5.2 million deferred tax asset.

The related federal net operating loss carry-forwards are scheduled to begin to expire in the year 2031.

13 unchanged sentences

The Company does not expect any significant changes to its liability for unrecognized tax benefits during the next 12 months.

Notes to Consolidated Financial Statements—(Continued)

The Company recognizes interest and penalties related to income tax matters within income tax expense.

3 unchanged sentences

Credit Agreement

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.

The Company's credit agreement, as amended (the "Credit Agreement"), 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.

The Company repaid $ 22.8 million outstanding under the Term Loan in 2024 and had $ 236.1 million outstanding at December 31, 2024 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 $ 3.9 million as of December 31, 2024.

6 unchanged sentences

The Term Loan amortizes at the rate of 1.00 % per annum payable in equal quarterly installments on the last day of each calendar quarter, commencing on December 31, 2021.

In addition, the Credit Agreement requires that the Term Loan be mandatorily prepaid with (i) 50 % of the Company’s excess cash flow on an annual basis, stepping down to 25 % if the Company’s secured net leverage ratio declines to 2 :1 or below and stepping down to 0 % if the Company’s secured net leverage ratio declines below 1.5 :1;

In addition, the Credit Agreement requires that the Term Loan be

Notes to Consolidated Financial Statements—(Continued)

mandatorily prepaid with (i) 50 % of the Company’s excess cash flow on an annual basis, stepping down to 25 % if the Company’s secured net leverage ratio declines to 2 :1 or below and stepping down to 0 % if the Company’s secured net leverage ratio declines below 1.5 :1;

(ii) 50 % of the net proceeds of certain asset sales, casualty or condemnation events, subject to customary reinvestment rights;

2 unchanged sentences

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.

Notes to Consolidated Financial Statements—(Continued)

Future minimum Term Loan payments (exclusive of any mandatory excess cash-flow repayments) as of December 31, 2024 were as follows:

4 unchanged sentences

The Company is involved from time to time in litigation and arbitration, as well as examinations, inquiries and investigations by various regulatory bodies, involving its compliance with, among other things, securities laws, client investment guidelines, laws governing the activities of broker-dealers and other laws and regulations affecting its products and other activities.

The Company records a liability when it is both probable that a liability has been incurred and the amount of the liability can be reasonably estimated.

The Company records a liability when it believes that it is both probable that a liability has been incurred and the amount of the liability can be reasonably estimated.

Significant judgment is required in both the determination of probability and the determination as to whether a loss is reasonably estimable.

Based on information currently available, available insurance coverage, indemnities and established reserves, the Company believes that the outcomes of its legal and regulatory proceedings are not likely, either individually or in the aggregate, to have a material adverse effect on the Company's results of operations, cash flows or its consolidated financial condition.

However, in the event of unexpected subsequent developments, and given the inherent unpredictability of these legal and regulatory matters, the Company can provide no assurance that its assessment of any legal matter will reflect the ultimate outcome, and an adverse outcome in certain matters could have a material adverse effect on the Company's results of operations or cash flows in particular quarterly or annual periods.

Notes to Consolidated Financial Statements—(Continued)

Equity Transactions

3 unchanged sentences

At December 31, 2024, $ 20.0 million was included as dividends payable in liabilities on the Consolidated Balance Sheet representing the fourth quarter dividends to be paid on February 12, 2025 for common stock shareholders of record as of January 31, 2024.

On February 26, 2025, the Company declared a quarterly cash dividend of $ 2.25 per common share to be paid on May 14, 2025 to shareholders of record at the close of business on April 30, 2025.

Common Stock Repurchases

3 unchanged sentences

The program, which has no specified term, may be suspended or terminated at any time.

Notes to Consolidated Financial Statements—(Continued)

Accumulated Other Comprehensive Income (Loss)

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

Years Ended December 31,

(in thousands) 2023 2022

Balance at beginning of period $ ( 358 ) $ 20

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

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.

Retirement Savings Plan

14 unchanged sentences

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, 2024 is summarized as follows:

6 unchanged sentences

The grant-date intrinsic value of RSUs granted during the year ended December 31, 2024 was $ 30.1 million.

Notes to Consolidated Financial Statements—(Continued)

Years Ended December 31,

14 unchanged sentences

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

Notes to Consolidated Financial Statements—(Continued)

Earnings (Loss) Per Share

13 unchanged sentences

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,

2 unchanged sentences

Total anti-dilutive securities 1 2 33

Concentration of Credit Risk

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.

ASC 280 establishes disclosure requirements relating to operating segments in annual and interim financial statements.

Operating segments are defined as components of an enterprise about which separate financial information is available that is regularly evaluated by the CODM in deciding how to allocate resources to the segment and assess its performance.

The Company's Chief Executive Officer is the Company's CODM.

The Company operates in one business segment, namely as an asset manager providing investment management and related services for individual and institutional clients.

Although the Company provides disclosures regarding assets under management and other asset flows by product, the Company's determination that it operates in one business segment is based on the fact that the same investment professionals manage both retail and institutional products, operational resources support multiple products, such products have the same or similar regulatory framework and the Company's CODM reviews the Company's financial performance on a consolidated level.

The key GAAP measure of segment profit or loss that the CODM uses to evaluate the Company’s financial performance and allocate resources of the Company is net income, as reported on the Company’s Consolidated Statements of Operations.

In addition, the CODM uses net income in deciding whether to reinvest profits or allocate profits to other uses of capital, such as for acquisitions or to pay dividends.

All expense categories on the Consolidated Statements of Operations are significant and there are no other significant segment expenses that would require disclosure.

Assets provided to the CODM are consistent with those reported on the Consolidated Balance Sheets.

Redeemable Noncontrolling Interests

Redeemable noncontrolling interests

Minority interests held in a majority-owned investment management subsidiary are subject to holder put rights and Company call rights at pre-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 equity of the investment management subsidiary, 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.

The minority interests in the investment management subsidiary are recorded at estimated redemption value within redeemable noncontrolling interests on the Company's Condensed Consolidated Balance

Notes to Consolidated Financial Statements—(Continued)

Sheets, and any changes in the estimated redemption value are recorded on the Condensed Consolidated Statements of Operations within noncontrolling interests.

Redeemable noncontrolling interests for the year ended December 31, 2024 included the following amounts:

(in thousands) CIP Affiliate Noncontrolling Interests Total

(in thousands) CIP Noncontrolling Interests - Investment Manager Total

Balance at December 31, 2023 $ 30,643 $ 74,226 $ 104,869

6 unchanged sentences

(1) Relates to noncontrolling interests redeemable at other than fair value.

Equity awards of majority-owned investment management subsidiary

The Company also issues equity-based profit-interest awards of the investment manager to certain of its employees, with certain awards having up to a three-year vesting period when issued.

These profit-interest awards are subject to holder put rights and Company call rights at established multiples of earnings before interest, taxes, depreciation and amortization, with certain awards also subject to pre-established thresholds.

The profit-interest awards are accounted for as cash settled liability awards under ASC 718, with changes in value at each reporting date recognized as compensation expense over the requisite service period if any, in the Company’s Consolidated Statements of Operations.

The awards are classified as a liability within accrued compensation and benefits on the Consolidated Balance Sheets until the award is settled.

Additionally, these profit-interest awards have a right to participate in distributions of the affiliate which are recorded as compensation expense in the Company’s Consolidated Statements of Operations.

Accrued compensation associated with these awards was $ 19.4 million and $ 8.2 million at December 31, 2024 and 2023, respectively.

Compensation expense related to these awards totaled $ 8.2 million and $ 1.1 million for the years ended December 31, 2024 and 2023, respectively.

Consolidation

1 unchanged sentence

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.

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.

The primary beneficiary is the entity that has both the power to direct the activities that most significantly impact the VIE's economic performance and has the obligation to absorb losses of, or the right to receive benefits from, the VIE that could potentially be significant to the VIE.

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

18 unchanged sentences

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

At December 31, 2024, the Company consolidated seven CLOs.

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

Investments of CLOs

1 unchanged sentence

These bank loan investments mature at various dates between 2025 and 2033 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 Payable of CLOs

The CLOs held notes payable with a total value, at par, of $ 2.4 billion at December 31, 2024, consisting of senior secured floating rate notes payable with a par value of $ 2.2 billion and subordinated notes with a par value of $ 244.9 million.

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.

These note obligations bear interest at variable rates based on SOFR plus a pre-defined spread.

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.

5 unchanged sentences

Total Beneficial Interests $ 112,317

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:

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

December 31, 2024

46 unchanged sentences

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.

Level 2 liabilities consist of notes payable 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.

9 unchanged sentences

Sales ( 43,179 ) ( 21,784 )

Amortization 327 107

Change in unrealized gains (losses), net 8,768 ( 958 )

Realized gains (loss), net ( 9,886 ) ( 585 )

Realized and unrealized gains (losses), net 459 ( 791 )

Transfers to Level 2 ( 120,916 ) ( 120,536 )

9 unchanged sentences

At December 31, 2024, the carrying value and maximum risk of loss related to the Company's interest in these VIEs was $ 27.0 million.

Subsequent Events

Dividends Declared

On February 21, 2024, the Company declared a quarterly cash dividend of $ 1.90 per common share to be paid on May 15, 2024 to shareholders of record at the close of business on April 30, 2024.

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