2 0 2 3
A N N U A L
R E P O R T
“2023markedaninflectionpointforourfirm,aswe
commemoratedour175thanniversaryandembarkedon
ourvisionforthefutureofLazard:Tobuildonourstoried
history,furtherincreaseourrelevanceforclientsacrossthe
world,anddoublefirmwiderevenueby2030.Webelieve
that2024willbeabetteryearforourbusiness,andweare
energizedandunitedaroundourunwaveringmission:
Toprovidethemostsophisticatedanddifferentiatedadvice
andinvestmentsolutionsforourclients,advancingour
legacyasla haute banque d’affaires vis-à-vis the world.”
Peter R. Orszag | Chief Executive Officer
2023ANNUALLETTERTOSHAREHOLDERS
Dear Fellow Shareholders,
2023 marked an inflection point for Lazard in a number of ways, as we celebrated our past while
embracing our future. During the year, we commemorated our 175th anniversary, honored
Ken Jacobs, who transitioned to Executive Chairman on October 1, and shared our vision for
Lazard 2030. As we embark on our next phase, let me share my appreciation for Ken, who is
one of the world’s premier bankers and continues to focus on advising clients in his new role,
and my thanks to our board of directors. It is my privilege to serve as Lazard’s CEO, and I am
honored to lead this distinguished firm during our next chapter.
In September, we shared our future vision of Lazard 2030: To build on our storied history,
aim higher together, and further increase our relevance for clients across the world. Our goals
are to double firmwide revenue by 2030 and deliver an average annual shareholder return of
between 10 and 15 percent, by achieving high-productivity growth in Financial Advisory while
diversifying and strengthening our Asset Management business. Our people are motivated to
aim high, focused on delivering unique, innovative solutions for our clients while performing
strongly as markets recover.
In addition to our continued evolution as a firm, we also view 2023 as a broader turning point.
Firmwide operating revenue for the full year 2023 declined 12 percent to total $2.4 billion,
primarily reflecting the overall slowdown in M&A activity. However, operating revenue for
the fourth quarter of 2023 was up 13 percent compared to the fourth quarter one year ago,
demonstrating an inflection in client activity and early successes as we execute on our longer-
term growth plans.
LAZARD 2023 Annual Report | 1
Looking ahead, we believe 2024 will be a better year for our business based on several positive
indicators. Meetings with corporate, government, and investment leaders across the world
reflect general optimism on the macroeconomic outlook, including in the U.S. in particular.
Fundamentally, in the U.S. it appears that the disinflationary process is occurring with minimal
increases in unemployment—as we anticipated—so the consumer remains relatively strong,
and monetary policy now has room to loosen. While interest rates may be higher for longer,
shifting the debate away from if rates will go up to when they will go down is a key change in
perspective for corporate leaders and investors alike.
At the same time, it is abundantly clear that geopolitical issues are increasingly important
considerations for decision-makers. In addition to armed conflicts in the Middle East and
Ukraine, interdependence in energy transitions, advancements in artificial intelligence, and
U.S./China relations remain top-of-mind. On this last topic there is relatively good news, since
relations now appear somewhat stable despite the heightened tension. Another geopolitical
factor is that elections are taking place in over 70 countries in 2024, with approximately 2 billion
voters heading to polls across the world. While the majority of elections will be determined by
domestic dynamics, many will have implications beyond their borders.
It is when risks and opportunities are most complex that business, government, and investment
leaders reach out to Lazard. Our global network, intellectual capital, and two centuries of
collective experience and knowledge continue to further our unwavering mission: To provide
the most sophisticated and differentiated advice and investment solutions for our clients,
advancing our legacy as la haute banque d’affaires vis-à-vis the world.
GROWING OUR BUSINESS
We continue to see increasingly favorable conditions for M&A activity. Tailwinds are solid as
leaders look for opportunities to capture technological innovation, shift global supply chains—
partly for resilience and partly in response to government incentives—and drive evolutions in
life sciences and the energy sector. At the same time, headwinds are increasingly subdued, with
financing markets re-opening and risk spreads tightening, private equity growing active again,
and more directors and executives pursuing transactions in the wake of some favorable anti-trust
decisions in the U.S. As a result, our client conversations are very active, and our outlook is
positive for the year ahead.
Beyond M&A, we see significant further revenue opportunities in our Capital Solutions,
Restructuring, and Liability Management businesses. It is possible we could see M&A
and restructuring activity both increase in 2024, which would be an unusual pattern and a
constructive environment for the solutions we provide. As leaders and markets expect higher
interest rates for longer, and waves of debt maturities approach, clients increasingly benefit
from the innovative and customized options our integrated, collaborative teams provide.
LAZARD 2023 Annual Report | 2
To deliver our longer-term goals, in Financial Advisory we are focused on high-productivity
growth. This includes targeting an increase in average revenue per Managing Director to
$8.5 million by 2025 and $10 million by 2028, and a net addition of ten Managing Directors
each year through lateral hires and internal promotions. At the start of 2024, we hired four and
promoted ten Managing Directors, demonstrating our ability to attract world class professionals
and our strength in developing internal talent.
In Asset Management, we began 2024 with $247 billion in assets under management,
approximately 14 percent higher than at the start of 2023. Our emphasis on stabilizing and
optimizing the business is starting to produce improved results, with significant outperformance
across our Emerging Markets, Global, Quantitative, and select local strategies, and enhancements
to our sales and distribution platform resulting in new, substantial client mandates during the
past year. In addition, positive market sentiment and a widening dispersion of returns across asset
classes is leading to increased interest and activity in our actively managed investment products.
With increased interest and activity, we continue to strengthen our traditional asset management
business while focusing on adding capabilities in less liquid products. To achieve our longer-term
objectives, we are targeting approximately 30 percent of asset management revenues from
alternatives or private markets and wealth management by 2030, through the programmatic
and disciplined pursuit of acquisitions, with an emphasis on creating enhanced value for our
shareholders.
As we deliver high productivity growth in Financial Advisory, and strengthen while diversifying
our Asset Management business, we also aim to return to our long-term margin targets over
time. While continuing to make investments in growth, and as revenues return to a more
normalized environment, we anticipate returning to compensation and non-compensation
ranges more aligned with historical results.
ELEVATING OUR CULTURE
The success of Lazard is the result of our exceptional people, who hold one another accountable
for achieving the highest level of excellence. We foster excellence through intellectual curiosity,
which includes learning from one another as well as leveraging technology. We are living in a
particularly dynamic age, and we are focused on implementing and adopting AI tools to better
serve our clients going forward.
At Lazard, we create an environment for colleagues to work at the top of their license,
which demands an increasingly commercial and collegial culture. Developing new business
opportunities and providing best-in-class solutions for our clients requires intense effort and
collaboration. Over the past few months, our emphasis on elevating our culture has informed
changes in everything from our performance management and compensation programs to our
organizational structure and communications efforts.
LAZARD 2023 Annual Report | 3
Lazard is an intellectual capital business focused on delivering the best advice and solutions
to clients. As a global firm that has grown organically from local roots in different countries,
we celebrate diverse perspectives and have a deep tradition of respect for individual differences,
which has been core to our success for 175 years. We continue to prioritize supporting an
environment where our colleagues can thrive.
Beyond our business, we continue to invest substantially in support of our communities outside
of the firm. These efforts include social impact, volunteerism, and philanthropic activities across
our global footprint. To learn more, you can explore our Community Engagement activities
and read our Corporate Sustainability Report on Lazard.com.
Along with growing our business and elevating our culture, we continually look to deliver
shareholder value and strengthen our firm.
To that end, we are pleased to have completed our conversion to a U.S. C-Corporation effective
January 1, 2024. We believe this conversion will expand our shareholder base by simplifying tax
reporting and enhancing trading liquidity, and that it underscores our commitment to deliver
long-term value for our shareholders. Positive analyst and shareholder feedback, as well as more
robust trading volumes following the conversion, indicate strong support early into the year.
Furthermore, the appointment of Dan Schulman, former PayPal CEO, and Stephen R.
Howe Jr., former Ernst & Young U.S. Chairman and Managing Partner of the Americas,
to our Board of Directors demonstrates our focus on building and strengthening Lazard for
our elevated ambitions and future growth. It also exhibits our ability to attract world-class
talent at all levels of the firm.
Since transitioning to the role of CEO, I’ve spent the past several months meeting with our
clients, shareholders, and colleagues, and my conviction on our path forward has only grown
stronger. Across the globe, the number of unsolicited comments about the exceptional quality
of Lazard’s work has been impressive, and the energy and enthusiasm of our colleagues palpable.
We embark on 2024 with gratitude for our 175-year legacy, and as an organization unified in
our desire to aim higher and own our future together.
Thank you for your continued support.
Peter R. Orszag
Chief Executive Officer, Lazard
LAZARD 2023 Annual Report | 4
OURMISSION
Lazard’s mission is to provide sophisticated and differentiated advice and
investment solutions, custom-tailored for our clients. We serve clients by
leveraging our multinational resources and global perspectives, through a
worldwide network of key decision makers across business, government,
and investing institutions, a heritage of operating as a deeply rooted local firm,
and a business that has evolved for over 175 years.
OUR FIRM
OUR CULTURE
OUR VALUE
has a simple and powerful
model, focused on two
intellectual capital
businesses, Financial
Advisory and Asset
Management
thrives because of our
reputation for excellence,
integrity and delivering
innovative results
is as a global platform
serving as a trusted
advisor to institutions
and individuals
2023FINANCIALHIGHLIGHTS
ANNUAL OPERATING REVENUE
ASSETS UNDER MANAGEMENT
EMPLOYEES
YEARS SERVING CLIENTS
$2.4bn
$247bn
3,291
175
($mm, except per share data)
2023
2022
2021
2020
2019
U.S. GAAP Net Revenue
$2,515
$2,774
$3,193
$2,566
$2,587
Operating Revenue
2,440
2,769
3,139
2,524
2,546
Net Income, As Adjusted
75
384
576
410
385
Net Income Per Diluted Share, As Adjusted
$0.77
$3.73
$5.04
$3.60
$3.28
Dividend Per Share
2.00
1.94
1.88
1.88
2.35
This document uses non-GAAP measures for operating revenue and net income, as adjusted. Management believes such non-GAAP measures provide a more
meaningful basis for assessing our operating results and comparisons between present, historical and future periods. See Schedule A and related notes (unaudited)
for a detailed explanation of applicable adjustments to corresponding U.S. GAAP measures.
LAZARD 2023 Annual Report | 5
OURBUSINESS
$247
BILLION
AUM
64%
AUM IN
NON-USD SECURITIES
34%
INVESTMENT
PROFESSIONALS
16
YEARS AVERAGE
MD TENURE
Premier Brand &
Established
Global Leadership
200+
MANAGING
DIRECTORS (MD)
299
FY23 CLIENTS WITH
FEES >$1M
12
YEARS AVERAGE
MD TENURE
175
YEARS INDEPENDENT
FINANCIAL SERVICES
CORPORATESTRUCTURE
Lazard completed its conversion to a U.S. C-Corporation and changed
its name from Lazard Ltd to Lazard, Inc. effective January 1, 2024.
Simplified
Tax
Reporting
Broadens
Ownership
Eligibility
Enhances
Trading
Liquidity
More Attractive
Share-Based
Currency
LAZARD 2023 Annual Report | 6
GLOBALOFFICES
THE AMERICAS
EUROPE
ASIA PACIFIC
Dubai
Hong Kong
Melbourne
Riyadh
Seoul
Singapore
Sydney
Tokyo
New York
Austin
Boston
Charlotte
Chicago
Houston
Los Angeles
Minneapolis
Montreal
San Francisco
São Paulo
London
Paris
Amsterdam
Bordeaux
Brussels
Dublin
Frankfurt
Geneva
Hamburg
Luxembourg
Lyon
Madrid
Milan
Munich
Nantes
Stockholm
Vienna
Zürich
FOUNDED
1848
NYSE LISTED
2005
A global firm built
over generations,
on a foundation of
client service
LAZARD 2023 Annual Report | 7
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________________________
FORM 10-K
__________________________________
(Mark One)
x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2023
OR
For the transition period from ______________ to______________
001-32492
(Commission File Number)
__________________________________
LAZARD, INC.
(Exact name of registrant as specified in its charter)
__________________________________
Delaware
(State or Other Jurisdiction of Incorporation
or Organization)
98-0437848
(I.R.S. Employer Identification No.)
30 Rockefeller Plaza
New York, NY 10112
(Address of principal executive offices)
Registrant’s telephone number: (212) 632-6000
__________________________________
Securities Registered Pursuant to Section 12(b) of the Act:
Title of each class
Common Stock
Trading Symbol(s)
Name of each exchange on which registered
LAZ
New York Stock Exchange
Securities Registered Pursuant to Section 12(g) of the Act: None
Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes x No o
Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes o No x
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes x No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation
S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging
growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the
Exchange Act.
Large accelerated filer
Non-accelerated filer
x
o
Accelerated filer
Smaller reporting company
Emerging growth company
o
o
o
If the Registrant is an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with
any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over
financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. x
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing
reflect the correction of an error to previously issued financial statements. o
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any
of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). o
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x
The aggregate market value of the common stock held by non-affiliates of the Registrant as of June 30, 2023 was approximately $2,677,737,472.
As of January 31, 2024, there were 112,766,091 shares of the Registrant’s common stock outstanding (including 25,340,287 shares held by subsidiaries).
Portions of the Registrant’s proxy statement for its 2024 annual general meeting of shareholders are incorporated by reference in this Form 10-K in response to Part
III Items 10, 11, 12, 13 and 14.
DOCUMENTS INCORPORATED BY REFERENCE
Auditor Firm Id: 34
Auditor Name: Deloitte & Touche LLP
Auditor Location: New York, New York USA
LAZARD, INC.
ANNUAL REPORT ON FORM 10-K
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2023
INDEX
Form 10-K Item Number
PART I
Item 1.
Business
Executive Officers of the Registrant
Item 1A.
Risk Factors
Item 1B.
Unresolved Staff Comments
Item 1C.
Cybersecurity
Item 2.
Item 3.
Item 4.
PART II
Item 5.
Item 6.
Item 7.
Properties
Legal Proceedings
Mine Safety Disclosures
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases
of Equity Securities
[Reserved]
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 7A.
Quantitative and Qualitative Disclosures About Market Risk
Item 8.
Item 9.
Financial Statements and Supplementary Data
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Item 9A.
Controls and Procedures
Item 9B.
Other Information
Item 9C.
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
PART III
Item 10.
Item 11.
Item 12.
Item 13.
Item 14.
PART IV
Directors, Executive Officers and Corporate Governance
Executive Compensation
Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
Certain Relationships and Related Transactions, and Director Independence
Principal Accounting Fees and Services
Item 15.
Exhibits and Financial Statement Schedules
Index to Financial Statements and Financial Statement Schedule Items 15(a)(1) and 15(a)(2)
SIGNATURES
Page No.
1
13
16
35
35
37
37
37
38
39
40
65
66
128
128
128
128
129
129
129
130
130
131
F-1
II-1
i
Part I
On January 1, 2024, we completed our conversion (the “Conversion”) from an exempted company incorporated
under the laws of Bermuda named Lazard Ltd to a U.S. C-Corporation named Lazard, Inc., a company incorporated under
the laws of the state of Delaware. Pursuant to the Conversion, each share of Lazard Ltd common stock was converted into
one share of Lazard, Inc. common stock. This report includes the results of Lazard Ltd prior to the Conversion and Lazard,
Inc. following the Conversion.
When we use the terms “Lazard”, “we”, “us”, “our” and “the Company”, we mean (i) Lazard, Inc. and its
subsidiaries following the Conversion and (ii) Lazard Ltd and its subsidiaries prior to the Conversion. Lazard’s
subsidiaries include Lazard Group LLC, a Delaware limited liability company (“Lazard Group”), that is the current
holding company for our businesses. Lazard’s primary operating asset is its indirect ownership as of December 31, 2023
of all of the common membership interests in Lazard Group and its controlling interest in Lazard Group.
All references to common stock, or shares or per share amounts, prior to the Conversion refer to Class A common
stock of Lazard Ltd. Unless otherwise noted, all references to common stock, or shares or per share amounts, following the
Conversion refer to common stock of Lazard, Inc.
Item 1.
Business
Lazard, one of the world’s preeminent financial advisory and asset management firms, operates in North and
South America, Europe, the Middle East, Asia and Australia. With origins dating to 1848, we have long specialized in
crafting solutions to the complex financial and strategic challenges of a diverse set of clients around the world, including
corporations, governments, institutions, partnerships and individuals.
Principal Business Lines
We focus primarily on two business segments: Financial Advisory and Asset Management. We believe that the
mix of our activities across business segments, geographic regions, industries and investment strategies helps to diversify
and stabilize our revenue stream.
Financial Advisory
Our Financial Advisory business offers corporate, partnership, institutional, government, sovereign and individual
clients across the globe a wide array of financial advisory services regarding strategic and mergers and acquisitions
(“M&A”) advisory, capital markets advisory, shareholder advisory, restructuring and liability management, sovereign
advisory, geopolitical advisory and other strategic advisory matters and capital raising and placement. We focus on solving
our clients’ most complex issues, providing advice to key decision-makers, senior management, boards of directors and
business owners, as well as governments and governmental agencies, in transactions that typically are of significant
strategic and financial importance to them.
We continue to build our Financial Advisory business by fostering long-term, senior-level relationships with
existing and new clients as their independent advisor on strategic transactions and other matters. We seek to build and
sustain long-term relationships with our clients rather than focusing simply on individual transactions, a practice that we
believe enhances our access to senior management of major corporations and institutions around the world. We emphasize
providing clients with senior-level focus during all phases of transaction analysis and execution.
While we strive to earn repeat business from our clients, we operate in a highly competitive environment in which
there are no long-term contracted sources of revenue. Each revenue-generating engagement is separately negotiated and
awarded. To develop new client relationships, and to develop new engagements from historical client relationships, we
maintain an active dialogue with a large number of clients and potential clients, as well as with their financial and legal
advisors, on an ongoing basis. We have gained a significant number of new clients each year through our business
development initiatives, through recruiting additional senior investment banking professionals who bring with them client
relationships and through referrals from directors, attorneys and other third parties with whom we have relationships. At
the same time, we lose clients each year as a result of the sale, merger or restructuring of a client, a change in a client’s
senior management, competition from other investment banks and other causes.
1
We earned $1 million or more from 299 clients for the year ended December 31, 2023. For the year ended
December 31, 2023, the ten largest fee paying clients constituted approximately 19% of our Financial Advisory segment
net revenue, with no client individually contributing more than 10% of segment net revenue.
We believe that we have been pioneers in offering international Financial Advisory services, with the
establishment of our New York, Paris and London offices dating back to the nineteenth century. We maintain a major local
presence in the United States (the “U.S.”), the United Kingdom (the “U.K.”) and France, with offices across the world as a
part of our global network. For a full list of our current locations, visit www.lazard.com.
In addition to seeking business centered in the regions described above, we historically have focused in particular
on advising clients with respect to cross-border transactions. We believe that we are particularly well known for our legacy
of offering broad teams of professionals who are indigenous to their respective regions, who have long-term client
relationships, capabilities and know-how in their respective regions and who will coordinate with our professionals who
have global sector expertise. We also believe that this positioning affords us insight around the globe into key industry,
economic, governmental and regulatory issues and developments, which we can bring to bear on behalf of our clients.
Services Offered
We advise clients on a wide range of strategic and financial issues. When we advise clients on the potential
acquisition of another company, business or certain assets, our services include evaluating potential acquisition targets,
providing valuation analyses, evaluating and proposing financial and structural alternatives and rendering, if appropriate,
fairness opinions. We also may advise as to the timing, financing and pricing of a proposed acquisition and assist in
negotiating and closing the acquisition.
When we advise clients that are contemplating the sale of businesses, assets or an entire company, our services
include advising on the sale process, providing valuation analyses, assisting in preparing an information memorandum or
other appropriate sale materials and rendering, if appropriate, fairness opinions. We also identify and contact selected
qualified potential acquirors and assist in negotiating and closing the proposed sale. As appropriate, we also advise our
clients regarding potential financial and strategic alternatives to a sale, including recapitalizations, spin-offs, carve-outs and
split-offs. We frequently provide advice with respect to the structure, timing and pricing of these alternatives.
With respect to companies in financial distress, we provide services to the company, creditors or other interested
parties, which may include reviewing and analyzing the business, operations, properties, financial condition and prospects
of the company, evaluating debt capacity, assisting in the determination of an appropriate capital structure, assisting in
structuring and effecting the financial aspects of amendments to debt documents or exchange offers or refinancings,
evaluating financial and strategic alternatives and assisting and participating in negotiations with affected entities or
groups. If appropriate, we may provide financial advice and assistance in developing and seeking approval of a
restructuring or reorganization plan, which may include a plan of reorganization under Chapter 11 of the U.S. Bankruptcy
Code or other similar court administered processes in non-U.S. jurisdictions. In such cases, we may assist in certain aspects
of the implementation of such a plan, including advising and assisting in structuring and effecting the financial aspects of a
sale or recapitalization, structuring new securities, other consideration or other inducements to be offered or issued, as well
as assisting and participating in negotiations with affected entities or groups.
When we assist clients in connection with shareholder advisory and corporate preparedness matters, our services
may include reviewing and analyzing the business, operations, properties, financial condition and prospects of the
company, providing insights on the company’s shareholders and advising on defense measures and strategic alternatives
potentially available to the company. Our advice may relate to a broad range of matters including M&A and capital
markets transactions and activist situations.
When we assist clients in connection with their capital structure, we typically review and analyze structural
alternatives, assist in long-term capital planning and advise and assist with respect to rating agency discussions and
relationships, among other things.
When we assist clients in raising private or public market financing or capital, our services may include assisting
clients in connection with securing, refinancing or restructuring bank loans or other debt, securing venture capital and other
financial investor funding, originating and executing, or participating in, public underwritings and private placements of
securities, and originating and executing private placements of partnership and similar interests in alternative investment
funds such as leveraged buyout, mezzanine or real estate focused funds and single or multi-asset continuation funds.
2
We are at the forefront of providing independent advice to governments and governmental agencies in connection
with economic developments. Lazard’s Sovereign Advisory Group has advised a number of countries and institutions with
respect to sovereign debt and other financial matters.
Staffing
We staff each of our assignments with a team of quality professionals who have appropriate product, industry and
geographic expertise. We pride ourselves on, and we believe we differentiate ourselves from our competitors by, being able
to offer a high level of attention from senior personnel to our clients and organizing ourselves in such a way that managing
directors who are responsible for securing and maintaining client relationships also actively participate in providing related
advice and services. Our managing directors have significant experience, and many of them are able to use this experience
to advise on M&A, financings, restructurings, capital structure, shareholder advisory and other transactions or financial
matters, depending on our clients’ needs. Many of our managing directors and senior employees come from diverse
backgrounds, such as senior leadership positions in corporations, government, law and strategic consulting, which we
believe enhances our ability to offer sophisticated advice and customized solutions to our clients. As of December 31,
2023, our Financial Advisory segment had 210 managing directors and 1,393 other professionals and support staff.
Industries Served and Practice Areas
We seek to offer our services across most major industry groups, including, in many cases, sub-industry
specialties. Managing directors and professionals in our M&A practice are organized to provide advice in the following
major industry practice areas:
•
•
•
•
•
•
•
•
consumer;
financial institutions;
health care and life sciences;
industrials;
power and energy/infrastructure;
real estate;
technology; and
telecommunications, media and entertainment.
These groups are managed locally in each relevant geographic region and are coordinated globally, which allows
us to bring local industry-specific knowledge to bear on behalf of our clients on a global basis. We believe that this
enhances the scope and the quality of the advice that we can offer, which improves our ability to market our capabilities to
clients.
In addition to our M&A and Restructuring and Liability Management practices, we also maintain specialties in the
following distinct practice areas within our Financial Advisory business:
•
•
•
•
•
•
government and sovereign advisory;
capital structure debt and equity advisory;
shareholder and corporate preparedness advisory;
fundraising and arranging liquidity for third-party alternative investment funds;
corporate finance and other services, including private placements, underwritten offerings related to our
Financial Advisory business and transactions involving the exchange or issuance of securities; and
geopolitical advisory.
We endeavor to coordinate the activities of the professionals in these areas with our M&A industry specialists in
order to offer clients customized teams of cross-functional expertise spanning both industry and practice area expertise.
3
Strategy
Our focus in our Financial Advisory business is on:
•
•
•
•
•
•
•
•
•
investing in our intellectual capital through senior professionals who we believe have strong client
relationships and industry expertise;
increasing our contacts with existing clients to further enhance our long-term relationships and our efforts
in developing new client relationships;
developing new client relationships;
expanding the breadth and depth of our industry expertise and selectively adding or reinforcing practice
areas, such as our Capital Markets Advisory, Shareholder Advisory, Sovereign Advisory and
Geopolitical Advisory groups;
coordinating our industry specialty activities on a global basis and increasing the integration of our
industry experts in M&A with our other professionals;
selectively bolstering our existing presence in certain local markets;
broadening our geographic presence by adding new offices where opportunities arise;
investing in our technology infrastructure and data science capabilities to enhance our business; and
deploying our intellectual capital, strong client relationships and other assets to generate new revenue
streams.
In addition to the investments made as part of this strategy, we believe that our Financial Advisory business may
benefit from external market factors, including:
•
•
•
•
•
•
•
demand for independent, sophisticated financial advice;
recapitalization and related activities in developed and emerging markets;
high corporate cash balances;
attractive equity valuations, stable credit conditions and generally positive market sentiment;
favorable levels of cross-border M&A and large capitalization M&A, two of our areas of historical
specialization;
strategic market and industry catalysts, including energy transition, technology disruption, life sciences
evolution and infrastructure investment; and
favorable tax, regulatory and similar reform.
Going forward, our strategic emphasis in our Financial Advisory business is to leverage the investments we have
made to grow our business and drive our productivity. We continue to seek to opportunistically attract outstanding
individuals to our business, and expect the number of Financial Advisory managing directors to increase in the future as
part of our initiative to grow revenues. Net hiring may also increase compensation expenses. We routinely reassess our
strategic position and may in the future seek opportunities to further enhance our competitive position.
Asset Management
Our Asset Management business offers a broad range of global investment solutions and investment and wealth
management services in equity and fixed income strategies, asset allocation strategies, alternative investments and private
equity funds to corporations, public funds, sovereign entities, endowments and foundations, labor funds, financial
intermediaries and private clients. Our goal in our Asset Management business is to produce superior risk-adjusted
investment returns and provide customized investment solutions for our clients through the active management of their
assets. Our investment teams construct and manage portfolios using various techniques and investment philosophies,
including traditional fundamental research and analysis and quantitative tools.
Our top ten clients accounted for 29% of our total assets under management (“AUM”) as of December 31, 2023,
with no client individually contributing more than 10% of our Asset Management segment net revenue. Approximately
85% of our AUM as of December 31, 2023 was managed on behalf of institutional and intermediary clients, including
corporations, labor unions, public pension funds, insurance companies and banks, and through sub-advisory relationships,
4
mutual fund sponsors, broker-dealers and registered advisors, and approximately 15% of our AUM was managed on behalf
of individual client relationships, which are principally with family offices and high-net worth individuals.
The charts below illustrate the mix of our AUM as of December 31, 2023, measured by broad product strategy
and by office location.
Our Asset Management business maintains offices in New York, Amsterdam, Bordeaux, Boston, Brussels,
Chicago, Dubai, Dublin, Frankfurt, Geneva, Hamburg, Hong Kong, London, Luxembourg, Lyon, Madrid, Melbourne,
Milan, Montreal, Nantes, Paris, Riyadh, San Francisco, Seoul, Singapore, Sydney, Tokyo, Toronto, Vienna and Zurich.
These operations, with 114 managing directors and 1,107 other professionals and support staff as of December 31, 2023,
provide our Asset Management business with both a global presence and a local identity.
Primary distinguishing features of these operations include:
•
•
•
a global footprint with global research, global mandates and global clients;
a broad-based team of investment professionals, including focused, in-house investment analysts across
all products and platforms, many of whom have substantial industry or sector specific expertise; and
world-wide brand recognition and multi-channel distribution capabilities.
Our Investment Philosophy, Process and Research
Our investment philosophy is generally based upon a fundamental security selection approach to investing. Across
many of our products, we apply three key principles to investment portfolios:
•
•
•
select securities, not markets;
evaluate a company’s financial position, outlook, opportunities and risks, together with its valuation; and
manage risk.
In searching for investment opportunities, many of our investment professionals follow an investment process that
incorporates several interconnected components that may include:
•
•
•
•
•
•
fundamental analysis;
quantitative analysis;
accounting analysis;
security selection and portfolio construction;
risk management; and
environmental, social and governance (“ESG”) factors.
5
AUM BY PRODUCTLocal/Multi-Regional Equity45%MultiregionalFixed Income9%Alternative Investments/ Other Alternative Investments2%Emerging Markets Fixed Income4%Private Equity1%Emerging Markets Equity10%Global/LocalFixed Income 7%Global Equity22%AUM BY OFFICE LOCATIONFrance15%U.K.12%Germany5%Rest of Europe3%Australia3%Asia3%Japan4%North America55% In our Asset Management business, we conduct investment research on a global basis to develop market, industry
and company-specific insights and evaluate investment opportunities. Many of our global equity analysts, located in our
worldwide offices, are organized around global industry sectors.
6
Investment Strategies
Our Asset Management business provides equity, fixed income, cash management and alternative investment
strategies to our clients, paying close attention to our clients’ varying and expanding investment needs. We offer the
following product platform of investment strategies:
Equity
Global
Global
Large Capitalization
Small Capitalization
Thematic
Listed Infrastructure
Quantitative
Multi-Asset
Managed Volatility
Real Assets
Sustainable
Sustainable Agriculture
Global Ex
Global Ex-Australia
Global Ex-U.S.
Global Ex-Emerging
Markets
Thematic
Robotics
Health
Gender Diversity
Demographics
Climate
Circular Economy
Fixed Income and
Cash Management
Global
Core/Core Plus
Total Return
Short Duration
Convertibles
Local
Emerging Markets
Global
Large Capitalization
Small Capitalization
Quantitative
Multi-Asset
Managed Volatility
Middle East North
Africa
Middle East North Africa
U.S.
Large Capitalization
Small Capitalization
Multi-Capitalization
Sustainable
Quantitative Small
Capitalization
U.K.
U.K. (Large
Capitalization)
France
Large Capitalization
Small Capitalization
Asia Pacific
Australia
Japan
U.S.
Core/Core Plus
High Yield
Short Duration
Municipals
Cash Management
Convertibles
Global
Emerging Debt-
Core/Local/Blend/
Corporate
Multi-Regional
Pan-European
Large Capitalization
Small Capitalization
Multi-Capitalization
Value
Quantitative
Eurozone
Large Capitalization
Small Capitalization
Thematic
Continental European
Small Capitalization
Multi Capitalization
Eurozone
Asian
Asia Ex-Japan
Quantitative
Europe, Australasia and
Far East
Large Capitalization
Small Capitalization
Multi-Capitalization
Quantitative
Sustainable
Pan-European
Core
High Yield
Cash Management
Duration Overlay
Convertibles
Total Return
Eurozone
Core/Core Plus
Cash Management
Corporate Bonds
Nordic
Scandinavian Short
Duration
High Yield
Alternative
Global
Arbitrage/Relative Value
Commodities
Sustainable Private
Infrastructure
European
Long/Short Equity
U.S.
Quantitative Long/Short
Equity
Non-U.S.
Japan Long/Short Equity
Global
Emerging Debt Total
Return
Emerging Income
7
In addition to the primary investment strategies listed above, we also provide other asset management services to
our clients, including asset allocation and other investment advisory services, as well as locally customized investment
solutions. In many cases, we also offer both diversified and more concentrated versions of our products. These products are
generally offered on a separate account basis, as well as through pooled vehicles.
Distribution. We distribute our products through a broad array of marketing channels on a global basis.
Marketing, sales and client service efforts are organized through a global market delivery and service network, with
distribution professionals located in cities including New York, Amsterdam, Bordeaux, Boston, Brussels, Chicago, Dubai,
Frankfurt, Geneva, Hamburg, Hong Kong, London, Luxembourg, Lyon, Madrid, Melbourne, Milan, Montreal, Nantes,
Paris, Riyadh, San Francisco, Seoul, Singapore, Sydney, Tokyo, Toronto, Vienna and Zurich. We have developed a well-
established presence in the institutional asset management arena, managing assets for corporations, labor unions, sovereign
wealth funds and public pension funds around the world. In addition, we manage assets for insurance companies, savings
and trust banks, endowments, foundations and charities.
We are a leading firm in managing mutual funds, sub-advisory funds and separately managed accounts for many
of the world’s largest broker-dealers, insurance companies, registered advisors and other financial intermediaries.
Strategy
Our strategic plan in our Asset Management business is to focus on delivering superior investment performance
and client service and broadening our product offerings and distribution in selected areas in order to continue to drive
improved business results. Over the past several years, in an effort to improve our Asset Management business’ operations
and expand our Asset Management business, we have:
•
•
•
•
•
•
focused on enhancing our investment performance;
improved our investment management platform by adding a number of senior investment professionals,
including portfolio managers and analysts;
continued to strengthen our marketing and consultant relations capabilities, including by optimizing our
distribution globally;
expanded our product platform, including through the addition of long/short equity strategies, sustainable
strategies, quantitative equity strategies and thematically oriented strategies;
invested in our technology infrastructure and data science capabilities to enhance our business; and
continued to expand our geographic reach where opportunities arise.
We believe that our Asset Management business has long maintained an outstanding team of portfolio managers
and global research analysts. We intend to maintain and supplement our intellectual capital to achieve our goals. We
routinely reassess our strategic position and aim to add capabilities potentially through acquisitions or other transactions,
including the opportunistic hiring of new employees, in order to further enhance our competitive position.
We engage in selected alternative investments and private equity activities. In 2009, we established a private
equity business with The Edgewater Funds (“Edgewater”), a Chicago-based private equity firm, through the acquisition of
Edgewater’s management vehicles. As of December 31, 2023, Edgewater had approximately $1.6 billion of AUM and
unfunded fee-earning commitments. We have historically, and may in the future, invest our own capital alongside that of
other investors, in connection with certain of our activities in managing alternative asset and private equity investment
vehicles.
Human Capital
We believe that our people are our most important asset. Their talent, integrity and engagement have shaped our
success in the past, and they are instrumental to our ability to achieve sustainable growth and deliver value for our
shareholders in the future. We strive to create a culture that fosters excellence, collaboration, innovation, empowerment,
inclusion and engagement.
Our human capital efforts are overseen by our Board of Directors, with a focus on enhancing our workplace
environment which in turn, attracts a diversity of perspectives and exceptional talent. In February 2018, our Board of
Directors formally established its Workplace and Culture Committee to assist and advise management on cultivating and
8
reinforcing a workplace culture that helps attract, motivate and retain talented people; fosters productivity, professional and
personal development; values diversity, equity and inclusion; and encourages its people to engage with each other and their
communities. The Company has several areas of focus to support these objectives:
Attracting and Retaining Talent. We offer competitive compensation packages to recruit and retain exceptional
talent. We offer a variety of employee benefits, including comprehensive health insurance coverage, flexible retirement and
healthcare savings account plans as well as family planning and support services. We also invest in wellness programs that
are broadly inclusive and support varied lifestyles. We further believe that the equity-based portion of our compensation
program fosters a greater sense of ownership among our senior employees and aligns their interests with those of our
shareholders.
Talent Development. We seek to hire talented and motivated individuals and prioritize their continued education
and training. The Company works to support the success and growth of its employees through a collaborative and dynamic
360-degree performance management and review cycle. Furthermore, through investments in technology, we have
enhanced knowledge management and collaboration tools across our businesses.
Inclusion, Diversity, Equity and Allyship (“IDEA”). We strive to cultivate a workforce comprised of people with
different backgrounds and experiences, which we believe creates an environment of cognitive diversity that promotes new
ideas and innovation. Our IDEA strategy fosters diversity through hiring, development, promotion and retention while
contributing to an equitable and inclusive culture by calling on everyone at the firm to take personal responsibility in
ensuring the strategy’s success. Additionally, we support the creation of a variety of employee resource groups, which
build community across the firm, contribute to our inclusive culture, and provide opportunities for individuals to give back
to their communities through volunteering and educational outreach.
Personal Well-Being. The Company invests in the well-being of our employees by offering benefits intended to
meet the varied and evolving needs of our diverse workforce across businesses and geographies. The Company addresses
this through its Work to Wellness program, a global initiative that educates, motivates and empowers employees to
maintain a healthy lifestyle in and out of the workplace. We offer a wide range of resources to support employees and their
families’ emotional and financial well-being. We have also made investments in technology that enable remote and hybrid
working options.
Community. The Company promotes community engagement through our Work for Good initiative, which
supports employee initiatives to volunteer with a variety of local charities. Volunteering through our Work for Good
program allows employees to make a positive impact in their communities and share experiences with their colleagues
outside of the workplace. In addition to Work for Good, the Company encourages participation in, among others, the
Lazard Foundation in the U.S. and Give as You Earn in the U.K., which host additional volunteer opportunities and
charitable fundraising events.
Employees. As of December 31, 2023, we employed 3,291 full-time people. We operate through two business
segments: our Financial Advisory business included 210 managing directors and 1,393 professionals and support staff, and
our Asset Management business included 114 managing directors and 1,107 professionals and support staff. Our Corporate
segment included 26 managing directors and 441 professionals and support staff. Generally, our employees are not subject
to collective bargaining agreements, except that our employees in some offices, including France and Italy, are covered by
national, industry-wide collective bargaining agreements. We believe that we have good relations with our employees.
Competition
The financial services industry, and all of the businesses in which we compete, are intensely competitive, and we
expect them to remain so. Our competitors are other investment banking and financial advisory firms, broker-dealers,
commercial and “universal” banks, insurance companies, traditional asset management firms, hedge fund management
firms, alternative investment firms, private banks and other financial institutions. We compete with some of them globally
and with others on a regional, product or niche basis. We compete on the basis of a number of factors, including industry
and product expertise, innovative insights of our people, transaction execution skills, investment track record, quality of
client service, individual and institutional client relationships, absence of conflicts, range and price of products and
services, innovation, brand recognition and business reputation.
While we believe our independent advisory perspective and global footprint offer a uniquely competitive position,
many of our competitors are large, consolidated financial institutions that have the ability to offer a wider range of
9
products, including loans, insurance, foreign exchange, hedging, research, brokerage and underwriting services, which may
enhance their competitive position. They also may have the ability to support clients with other financial services in an
effort to gain market share, which could result in pricing pressure in our business or loss of opportunities for us. At the
same time, demand for independent financial advice has created opportunities for a number of boutique financial advisory
firms. These boutique firms frequently compete, among other factors, on the basis of their independent financial advice,
and their activities also could result in pricing and other competitive pressure in our businesses. In some circumstances, our
competitors may offer financial products or services that we do not offer, such as low-cost passive or private investment
vehicles. We compete based on the quality and breadth of our products and innovative solutions we offer, which are
derived from our objectivity, differentiated insights and fundamental research orientation.
Competition is also intense in each of our businesses for the attraction and retention of qualified employees, and
we compete, among other factors, on the level and nature of compensation and long-term incentives, workplace culture and
opportunities for professional and personal development for our employees. Our ability to continue to compete effectively
in our businesses will depend upon our ability to attract new employees and retain and motivate our existing employees, in
each case, at appropriate compensation levels.
See Item 1A, “Risk Factors—The financial services industry, and all of the businesses in which we compete, are
intensely competitive” below.
Regulation
Our businesses are subject to extensive regulation throughout the world. As a matter of public policy, regulatory
bodies are generally charged with safeguarding the integrity of the securities and other financial markets and with
protecting the interests of customers participating in those markets, not with protecting the interests of our stockholders or
creditors. Many of our affiliates that participate in securities markets are subject to comprehensive regulations that include
some form of minimum capital retention requirements and customer protection rules. In the U.S., certain of our subsidiaries
are subject to such regulations promulgated by the United States Securities and Exchange Commission (the “SEC”) and/or
the Financial Industry Regulatory Authority (“FINRA”). Standards, requirements and rules implemented throughout the
European Union are broadly comparable in scope and purpose to the regulatory capital and customer protection
requirements imposed under the SEC and FINRA rules. European Union directives also permit local regulation in each
jurisdiction, including those in which we operate, to be more restrictive than the requirements of such European Union-
wide directives. These local requirements can result in certain competitive disadvantages to us.
The SEC, FINRA and other U.S. and non-U.S. regulatory organizations may examine the activities of, and may
expel, fine and otherwise discipline us and our employees. The laws, rules and regulations comprising this framework of
regulation and the interpretation and enforcement of existing laws, rules and regulations are continually changing. The
effect of any such changes cannot be predicted and may impact the manner of operation and profitability of our businesses.
Our principal U.S. broker-dealer subsidiary, Lazard Frères & Co. LLC (“LFNY”), through which we conduct
most of our U.S. Financial Advisory business, is currently registered as a broker-dealer with the SEC and FINRA, and as a
broker-dealer in all 50 U.S. states, the District of Columbia and Puerto Rico. As such, LFNY is subject to regulations
governing most aspects of the securities business, including regulations regarding minimum capital retention requirements,
record-keeping and reporting procedures, relationships with customers, experience and training requirements for certain
employees and business procedures with firms that are not members of certain regulatory bodies. Lazard Asset
Management Securities LLC (“LAM Securities”), a subsidiary of Lazard Asset Management LLC (“LAM LLC”), is
registered as a broker-dealer with the SEC and FINRA and in all 50 U.S. states, the District of Columbia and Puerto Rico.
Our U.S. broker-dealer subsidiaries, including LFNY, are subject to the SEC’s uniform net capital rule, Rule
15c3-1 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the net capital rules of FINRA,
which may limit our ability to make withdrawals of capital from our broker-dealer subsidiaries. The uniform net capital
rule sets the minimum level of net capital a broker-dealer must maintain and also requires that a portion of its assets be
relatively liquid. FINRA may prohibit a member firm from expanding its business or paying cash dividends if it would
result in net capital falling below FINRA’s requirements. In addition, our broker-dealer subsidiaries are subject to certain
notification requirements related to withdrawals of excess net capital. Our broker-dealer subsidiaries are also subject to
regulations, including the USA PATRIOT Act of 2001, which impose obligations regarding the prevention and detection of
money-laundering activities, including the establishment of customer due diligence and other compliance policies and
procedures. Failure to comply with these requirements may result in monetary, regulatory and, in certain cases, criminal
penalties.
10
Certain U.K. subsidiaries of Lazard Group, including Lazard & Co., Limited (“LCL”), Lazard Fund Managers
Limited and Lazard Asset Management Limited, which we refer to in this Annual Report on Form 10-K (this “Form 10-
K”) as the “U.K. subsidiaries,” are authorized and regulated by the Financial Conduct Authority (the “FCA”), and are
subject to various rules and regulations made by the FCA under the authorities conferred upon it by the Financial Services
and Markets Act 2000, as amended by the Financial Services Act 2012.
Certain of our Asset Management subsidiaries are registered as investment advisors with the SEC. As a registered
investment advisor, each is subject to the requirements of the Investment Advisers Act of 1940, as amended (the
“Investment Advisers Act”), and the SEC’s regulations thereunder. Such requirements relate to, among other things, the
relationship between an advisor and its advisory clients, as well as general anti-fraud prohibitions. LAM LLC serves as an
investment advisor to several U.S. mutual funds which are registered under the Investment Company Act of 1940, as
amended (the “Investment Company Act”). The Investment Company Act regulates, among other things, the relationship
between a mutual fund and its investment advisor (and other service providers) and prohibits or severely restricts principal
transactions between an advisor and its advisory clients, imposes record-keeping and reporting requirements, disclosure
requirements, limitations on trades where a single broker acts as the agent for both the buyer and seller, and limitations on
affiliated transactions and joint transactions. LAM Securities serves as an underwriter or distributor for mutual funds and
private funds managed by LAM LLC and its subsidiaries (collectively, “LAM”), and as an introducing broker to Pershing
LLC for unmanaged accounts of certain of LAM LLC’s private clients.
As a result of certain changes effected by the Dodd-Frank Wall Street Reform and Consumer Protection Act (the
“Dodd-Frank Act”) related to the regulation of over-the-counter swaps and other derivative instruments, LAM and certain
of its subsidiaries have registered with the U.S. Commodity Futures Trading Commission (the “CFTC”) and the National
Futures Association (the “NFA”), and are subject to certain aspects of the U.S. Commodity Exchange Act and the
regulations thereunder and to the rules of the NFA. The CFTC and the NFA have authority over the laws, rules and
regulations related to commodities (including the over-the-counter swaps and derivatives markets), and regulate our
relationship with clients who trade in these instruments. The U.S. Commodity Exchange Act and the regulations thereunder
also impose additional record-keeping and reporting requirements and disclosure requirements on LAM and its
subsidiaries.
Compagnie Financière Lazard Frères SAS (“CFLF”), our French subsidiary under which asset management and
commercial banking activities are carried out in France, is subject to regulation by the Autorité de Contrôle Prudentiel et de
Résolution (“ACPR”) for its banking activities conducted through our Paris-based banking subsidiary, Lazard Frères
Banque SA (“LFB”). The investment services activities of the Paris group, exercised through LFB and other subsidiaries of
CFLF, primarily Lazard Frères Gestion SAS (“LFG”), also are subject to regulation and supervision by the Autorité des
Marchés Financiers. In addition, pursuant to the consolidated supervision rules in the European Union, LFB, in particular,
as a French credit institution, is required to be supervised by a regulatory body, either in the U.S. or in the European Union.
In 2013, the Company and the ACPR agreed on terms for the consolidated supervision of LFB and certain other non-
Financial Advisory European subsidiaries of the Company (referred to herein, on a combined basis, as the “combined
European regulated group”) under such rules. Under this supervision, the combined European regulated group is required
to comply with minimum requirements for regulatory net capital. Additionally, the combined European regulated group,
together with certain of our European Financial Advisory entities, is required to perform an annual risk assessment and
provide certain other information on a periodic basis.
In addition, the Central Bank of Ireland, the Japanese Ministry of Finance and Financial Services Agency, the
Korean Financial Supervisory Commission, the Securities and Futures Commission of Hong Kong, the Monetary Authority
of Singapore, the Australian Securities & Investments Commission, the Dubai Financial Services Authority, the Italian
Companies and Stock Exchange Commission and the German Federal Financial Supervisory Authority, among others,
regulate relevant operating subsidiaries of the Company and also have capital standards and other requirements broadly
comparable to the rules of the SEC. Our business is also subject to regulation by other non-U.S. governmental and
regulatory bodies and self-regulatory authorities in other countries in which we operate.
Regulators are empowered to conduct periodic examinations and initiate administrative proceedings that can
result, among other things, in censure, fine, the issuance of cease-and-desist orders or the suspension or expulsion or other
disciplining of a regulated entity or its directors, officers or employees.
We are also subject to various anti-bribery, anti-money laundering and counter-terrorist financing laws, rules and
regulations in the jurisdictions in which we operate. The U.S. Foreign Corrupt Practices Act, for example, generally
prohibits offering, promising or giving, or authorizing others to give, anything of value, either directly or indirectly, to a
11
non-U.S. government official in order to influence official action or otherwise gain an unfair business advantage, such as to
obtain or retain business. Similar rules and regulations exist in other jurisdictions in which we operate. In addition, we are
required to comply with economic sanctions and embargo programs administered by the U.S. Treasury’s Office of Foreign
Assets Control and by similar governmental agencies and other authorities worldwide. Violations of any of these laws,
rules, regulations and programs can give rise to administrative, civil or criminal penalties.
The U.S. and other governments and institutions have taken actions, and may continue to take further actions, that
affect the global financial markets. Such further actions could include expanding current or enacting new standards,
requirements and rules that may be applicable to us and our subsidiaries. The effect of any such expanded or new
standards, requirements and rules is uncertain and could have adverse consequences to our business and results of
operations. See Item 1A, “Risk Factors—Other Business Risks—Extensive regulation of our businesses limits our
activities and results in ongoing exposure to the potential for significant penalties, including fines or limitations on our
ability to conduct our businesses”.
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Executive Officers of the Registrant
Set forth below are the name, age, present title, principal occupation and certain biographical information for each
of our executive officers as of February 13, 2024, all of whom have been appointed by, and serve at the discretion of, our
board of directors.
Kenneth M. Jacobs, 65
Mr. Jacobs became Executive Chairman at Lazard, Inc. and Lazard Group in October 2023 after previously
serving as Chairman of the Board of Directors and Chief Executive Officer of Lazard, Inc. and Lazard Group from
November 2009 through September 2023. Mr. Jacobs has served as a Managing Director of Lazard, Inc. since 1991 and
had been a Deputy Chairman of Lazard from January 2002 until November 2009. Mr. Jacobs also served as Chief
Executive Officer of Lazard North America from January 2002 until November 2009. Mr. Jacobs initially joined Lazard in
1988. Mr. Jacobs is a member of the Boards of Trustees of the University of Chicago and the Brookings Institution. He is
also a Director of the Partnership for New York City, and a member of the Council on Foreign Relations.
Peter Orszag, 55
Mr. Orszag became Chief Executive Officer of Lazard, Inc. and Lazard Group in October 2023. He previously
served as Chief Executive Officer of Financial Advisory from June 2019 until September 2023. Prior to that he was
Lazard’s Head of North American Mergers & Acquisitions since July 2018 and Global Co-Head of Healthcare since
November 2016. Mr. Orszag joined Lazard in May 2016 as a Vice Chairman of Investment Banking from Citigroup, where
he was Vice Chairman of Corporate and Investment Banking and Chairman of the Financial Strategy and Solutions Group
from January 2011 to February 2016. Mr. Orszag served as the Director of the Office of Management and Budget in the
Obama Administration from January 2009 to July 2010, and was the Director of the Congressional Budget Office from
January 2007 to December 2008. Mr. Orszag is a member of the Board of Directors of the Peterson Institute for
International Economics, the Mt. Sinai Medical Center and New Visions for Public Schools in New York, and is a member
of the National Academy of Medicine.
Mary Ann Betsch, 45
Ms. Betsch became Chief Financial Officer of Lazard, Inc. and Lazard Group in October 2022. Prior to joining
Lazard, Ms. Betsch worked at Citadel, where she helped lead the finance and accounting function since 2018. Ms. Betsch
was previously a partner at PwC, where she spent 17 years in a variety of audit and advisory roles serving global
investment banks and other financial institutions. She also completed a two-year fellowship program supported by the
Federal Reserve Board’s Chief Accountant. She holds a CPA license in the State of New York and is a CFA charterholder.
Evan L. Russo, 49
Mr. Russo became Chief Executive Officer of Lazard’s Asset Management business in June 2022. He previously
served as Chief Financial Officer of Lazard, Inc. and Lazard Group from October 2017 until October 2022. Mr. Russo has
served as Managing Director of Lazard since 2009, and prior to becoming Chief Financial Officer was Co-Head of
Lazard’s Capital Markets and Capital Structure Advisory practice. Mr. Russo joined Lazard as a Director in 2007. Prior to
joining Lazard, Mr. Russo worked for Goldman, Sachs & Co. in the Investment Banking Division, and prior to that, for
Barclays Capital. Mr. Russo began his career as an attorney at Milbank, Tweed, Hadley & McCloy.
Alexandra Soto, 54
Ms. Soto became Chief Operating Officer of Lazard, Inc. and Lazard Group in October 2023. She previously
served as Group Executive, Human Capital and Workplace Innovation, of Lazard, Inc. and Lazard Group in June 2019. She
became the Global Chief Operating Officer of Financial Advisory in July 2018 and has served as a Managing Director of
Lazard since January 2001. Ms. Soto was previously Chief Operating Officer of Lazard Europe Financial Advisory from
January 2006 to July 2018, and Chief Operating Officer of Lazard Paris Financial Advisory from October 2009 to August
2013. Prior to joining Lazard in June 1993, Ms. Soto worked for Morgan Stanley. She is a member of the Supervisory
Board of Metro AG.
Christian A. Weideman, 48
Mr. Weideman became General Counsel of Lazard, Inc. and Lazard Group in October 2023. Prior to joining
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Lazard, Mr. Weideman was global General Counsel and a partner at Apollo Global Management, where he led and
managed Apollo's legal, tax, and compliance team. Mr. Weideman also served in senior roles at the United States
Department of the Treasury including as Deputy General Counsel and then Chief of Staff. Prior to the Department of
Treasury, Mr. Weideman served as Associate Counsel to the President at the White House and as a litigator at Williams &
Connolly.
14
Where You Can Find Additional Information
Lazard files current, annual and quarterly reports, proxy statements and other information required by the
Exchange Act with the SEC. The Company’s SEC filings are available to the public from the SEC’s internet site at http://
www.sec.gov.
Our public website is http://www.lazard.com and the investor relations section thereof hosts our SEC filings. We
will make available free of charge, on or through the investor relations section of our website, our annual reports on Form
10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy statements and Forms 3, 4 and 5 filed on behalf
of directors and executive officers and any amendments to those reports filed or furnished pursuant to the Exchange Act as
soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. Also posted on our
website, and available in print upon request of any Lazard shareholder to the Investor Relations Department, are charters
for the Company’s Audit Committee, Compensation Committee, Nominating & Governance Committee and Workplace
and Culture Committee. Copies of our Corporate Governance Guidelines and Code of Business Conduct and Ethics
governing our directors, officers and employees are also posted on the investor relations section of our website in the
corporate governance subsection.
15
ITEM 1A.
RISK FACTORS
You should carefully consider the following risks and all of the other information set forth in this Form 10-K,
including our consolidated financial statements and related notes. The following risks comprise the material risks of which
we are aware. If any of the events or developments described below actually occurred, our business, financial condition or
results of operations would likely suffer.
Risk Factors Summary
The following is a summary of certain material risks of which we are aware. You should carefully consider this
summary, together with the more detailed description of each risk factor contained below.
•
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•
•
•
•
•
•
•
•
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•
Difficult market conditions can adversely affect our business in many ways, including by reducing the volume of
transactions involving our Financial Advisory business and reducing the value or performance of the assets we
manage in our Asset Management business.
Consequences of geopolitical conditions, military conflicts, wars and acts of terrorism could adversely affect our
business, financial condition and results of operations.
Fluctuations in foreign currency exchange rates could reduce our stockholders’ equity and net income or negatively
impact the portfolios of our Asset Management clients and may affect the levels of our AUM.
Our results of operations may be affected by fluctuations in the fair value of positions held in our investment
portfolios.
Our business, financial condition and results of operations could be materially adversely affected by pandemics.
Due to the nature of our business, financial results could differ significantly from period to period, which may make
it difficult for us to achieve steady earnings growth on a quarterly basis.
Our ability to retain and attract managing directors and other key professional employees, including maintaining
compensation levels at an appropriate level, is critical to the success of our business and failure to do so may
materially adversely affect our results of operations and financial position.
The financial services industry, and all of the businesses in which we compete, are intensely competitive.
A substantial portion of our revenue is derived from Financial Advisory fees, which are not long-term contracted
sources of revenue and are subject to intense competition.
If the number of debt defaults, bankruptcies or other factors affecting demand for our Restructuring services
declines, our Restructuring revenue could suffer.
Certain of our services are dependent on the availability of private capital for deployment in illiquid asset classes.
Potential underwriting or deal manager activities or advisory roles on capital raises or exchange transactions may
expose us to risk.
Our investment style in our Asset Management business, including the mix of asset classes and investment strategies
comprising our AUM, may underperform or generate less demand than other investment approaches, which may
result in significant client or asset departures or a reduction in AUM.
We could lose clients and suffer a decline in our Asset Management revenue and earnings if the investments we
choose in our Asset Management business perform poorly, regardless of overall trends in the prices of securities.
Because many of our Asset Management clients can remove the assets we manage on short notice, we may
experience unexpected declines in revenue and profitability.
Access to clients through intermediaries and consultants is important to our Asset Management business, and
reductions in referrals from such intermediaries or consultants or poor reviews of our products or our organization
by such intermediaries or consultants could materially reduce our revenue and impair our ability to attract new
clients.
Our Asset Management business relies on non-affiliated third-party service providers.
Certain of our investments are in relatively high-risk, illiquid assets, and we may lose some or all of the principal
amount of these investments or fail to realize any profits from these investments for a considerable period of time.
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We may pursue new business lines, acquisitions, joint ventures, cooperation agreements or other growth or
geographic expansion strategies that may result in additional risks and uncertainties in our business and could
present unforeseen integration obstacles or costs.
An inability to access the debt and equity capital markets as a result of our debt obligations, credit ratings or other
factors could impair our liquidity, increase our borrowing costs or otherwise adversely affect our financial position
or results of operations.
The soundness of third parties, including our clients, as well as financial, governmental and other institutions, could
adversely affect us.
Other operational risks may disrupt our businesses, result in regulatory action against us or limit our growth.
Extensive regulation of our businesses limits our activities and results in ongoing exposure to the potential for
significant penalties, including fines or limitations on our ability to conduct our businesses.
The financial services industry faces substantial litigation and regulatory risks, and we may face damage to our
professional reputation and legal liability if our services are not regarded as satisfactory or if conflicts of interest
should arise.
Expectations relating to ESG considerations expose us to potential liabilities, increased costs, reputational harm, and
other adverse effects on our business.
Employee misconduct, which is difficult to detect and deter, could harm us by impairing our ability to attract and
retain clients and subjecting us to significant legal liability and reputational harm.
A failure in or breach of our information systems or infrastructure, or those of third parties with which we do
business, including as a result of cybersecurity incidents or threats, could disrupt our businesses, lead to reputational
harm and legal liability or otherwise impact our ability to operate our business.
Failure to maintain effective internal controls in accordance with Section 404 of the Sarbanes-Oxley Act could
materially adversely affect our business.
Uncertainty regarding the outcome of future arrangements between the European Union and the United Kingdom
may adversely affect our business.
Changes in relevant tax laws, regulations or treaties or an adverse interpretation of these items by tax authorities
could negatively impact our effective tax rate.
Tax authorities may challenge our tax computations and transfer pricing methods and our application of related
policies and methods.
Anti-takeover provisions in our organizational documents and Delaware law could delay or prevent a change in
control.
Our subsidiaries may be required to make payments under the Amended and Restated Tax Receivable Agreement.
The IRS may challenge the tax basis increases upon which payments are based and, under certain circumstances, our
subsidiaries may have made or could make payments under the Amended and Restated Tax Receivable Agreement
in excess of our subsidiaries’ cash tax savings.
We may fail to realize the anticipated benefits of the Conversion or those benefits may take longer to realize than
expected or not offset the costs of the Conversion, which could have a material and adverse impact on the trading
price of our common stock.
Lazard, Inc. is a holding company and, accordingly, depends upon distributions from Lazard Group to pay dividends
and taxes and other expenses.
Lazard Group is a holding company and, accordingly, depends on its subsidiaries to make distributions to Lazard
Group to enable it to service its obligations under its indebtedness.
Risks Related to Economic and Current Conditions Impacting Us and our Business
Difficult market conditions can adversely affect our business in many ways, including by reducing the volume
of transactions involving our Financial Advisory business and reducing the value or performance of the assets we
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manage in our Asset Management business, which, in each case, could materially reduce our revenue or income and
adversely affect our financial position.
As a financial services firm, our businesses are materially affected by conditions in the global financial markets and
economic conditions throughout the world. Unfavorable economic and market conditions can adversely affect our financial
performance in both the Financial Advisory and Asset Management businesses. The future market and economic climate may
deteriorate because of many factors, such as a general slowing of economic growth globally or regionally, periods of
disruption or volatility in securities markets, volatility and tightening of liquidity in credit markets, volatility or significant
realignments in currency markets, increases in interest rates, inflation, corporate or sovereign defaults, natural disasters,
pandemics, terrorism or political uncertainty or instability.
For example, revenue generated by our Financial Advisory business is directly related to the volume and value of
the transactions in which we are involved. During periods of unfavorable or uncertain market or economic conditions, the
volume and value of M&A transactions may decrease, thereby reducing the demand for our Financial Advisory services and
increasing price competition among financial services companies seeking such engagements. Our results of operations would
be adversely affected by any such reduction in the volume or value of M&A transactions. In addition, our profitability would
be adversely affected due to our fixed costs and the possibility that we would be unable to reduce our variable costs without
reducing revenue or within a timeframe sufficient to offset any decreases in revenue relating to changes in market and
economic conditions.
Within our Financial Advisory business, we have typically seen that, during periods of economic strength and
growth, our Mergers and Acquisitions practice historically has been more active and our Restructuring practice has been less
active. Conversely, during periods of economic weakness and contraction, we typically have seen that our Restructuring
practice has been more active and our Mergers and Acquisitions practice has been less active. As a result, revenue from our
Restructuring practice has tended to correlate negatively to our revenue from our Mergers and Acquisitions practice over the
course of business cycles. These trends are cyclical in nature and subject to periodic reversal. However, these trends do not
cancel out the impact of economic conditions in our Financial Advisory business, which may be adversely affected by a
downturn in economic conditions, leading to decreased Mergers and Acquisitions practice activity, notwithstanding
improvements in our Restructuring practice. While we generally have experienced a counter-cyclical relationship between
our Mergers and Acquisitions practice and our Restructuring practice, this relationship may not continue in the future, and
there is no certainty that strength in one practice will offset, or partially offset, weakness in the other.
Our Asset Management business also would be expected to generate lower revenue in a market or general economic
downturn. Under our Asset Management business’s arrangements, asset management fees we receive typically are based on
the market value of AUM. Accordingly, a decline in the prices of securities, or in specific geographic markets or sectors that
constitute a significant portion of our AUM (e.g., our emerging markets strategies), would be expected to cause our revenue
and income to decline by causing:
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the value of our AUM to decrease, which would result in lower asset management fees;
some of our clients to withdraw funds from our Asset Management business due to the uncertainty or
volatility in the market, or in favor of investments they perceive as offering greater opportunity or lower
risk, which would also result in lower asset management advisory fees;
some of our clients or prospective clients to hesitate in allocating new assets to our Asset Management
business due to the uncertainty or volatility in the market, which would also result in lower asset
management fees; or
negative absolute performance returns for some accounts that have performance-based incentive fees,
which would result in a reduction of revenue from such fees.
Our AUM declines from time to time. If our Asset Management revenue declines without a commensurate reduction
in our expenses, our net income would be reduced. In addition, in the event of a market or general economic downturn, our
alternative investment and private equity practices also may be impacted by a difficult fund raising environment and reduced
exit opportunities in which to realize the value of their investments. Fluctuations in foreign currency exchange rates may also
affect the levels of our AUM and our asset management fees. See “Fluctuations in foreign currency exchange rates could
reduce our stockholders’ equity and net income or negatively impact the portfolios of our Asset Management clients and may
affect the levels of our AUM” below.
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Consequences of geopolitical conditions, military conflicts, wars and acts of terrorism could adversely affect
our business, financial condition and results of operations.
Global financial markets and economic conditions have experienced, and may continue to experience, volatility and
disruptions due to geopolitical conditions, military conflicts, wars and acts of terrorism globally, including as a result of the
events themselves and the responses, such as the imposition of sanctions, by the U.S., the European Union and other
countries. Geopolitical instability, conflicts and related sanctions that have been or may be imposed may have further global
economic and other consequences, including reduced consumer confidence, decreased economic growth, increased inflation
and higher interest rates, each of which could adversely affect our performance in both our Financial Advisory and Asset
Management businesses resulting from, among other things, decreased M&A activity and downward pressure on assets under
management. In addition, businesses have seen, and expect to continue to see, increased risks of cyberattacks related to
geopolitical and military conflicts, including in retaliation for sanctions imposed by the United States and other countries.
Such impacts could intensify other risks to our businesses and industry described herein and could otherwise have an adverse
effect on our business, financial condition and results of operations.
Fluctuations in foreign currency exchange rates could reduce our stockholders’ equity and net income or
negatively impact the portfolios of our Asset Management clients and may affect the levels of our AUM.
We are exposed to fluctuations in foreign currencies, including through advisory fees paid to our Financial Advisory
business and management fees paid to our Asset Management business. Our financial statements are denominated in U.S.
Dollars and, for the year ended December 31, 2023, we received a portion of our consolidated net revenue in other currencies,
predominantly in Euros and British Pounds. In addition, we pay a portion of our expenses in such other currencies. The
exchange rates of these currencies versus the U.S. Dollar affect the carrying value of our assets and liabilities as well as our
revenues, expenses and net income. We do not generally hedge such foreign currency exchange rate exposure arising in our
subsidiaries outside of the U.S. Fluctuations in foreign currency exchange rates may also make period to period comparisons
of our results of operations difficult.
Fluctuations in foreign currency exchange rates also can impact the portfolios of our Asset Management clients.
Client portfolios are invested in securities across the globe, although most portfolios are funded in a single base currency.
Foreign currency exchange rate fluctuations can adversely impact investment performance for a client’s portfolio and also
may affect the levels of our AUM. As our AUM include significant assets that are denominated in currencies other than U.S.
Dollars, an increase in the value of the U.S. Dollar relative to non-U.S. currencies, with all other factors held constant,
generally would result in a decrease in the dollar value of our AUM, which, in turn, would result in lower U.S. Dollar-
denominated revenue in our Asset Management business. As of December 31, 2023, AUM with foreign currency exposure
represented approximately 64% of our total AUM.
Our results of operations may be affected by fluctuations in the fair value of positions held in our investment
portfolios.
We invest capital in various types of equity and debt securities in order to seed equity, debt and alternative
investment funds and for general corporate purposes. Such investments are subject to market fluctuations due to changes in
the market prices of securities, interest rates or other market factors, such as liquidity. While we may seek to hedge the
market risk for some of these investments, an effective hedge may not be available and, if available, may not be fully
effective. These investments are adjusted for accounting purposes to fair value at the end of each quarter, regardless of our
intended holding period, with any related gains or losses reflected in our results of operations and therefore may increase the
volatility of our earnings, even though such gains or losses may not be realized.
Our business, financial condition and results of operations could be materially adversely affected by
pandemics.
Pandemics have affected, and may continue to affect, the global community and our business, financial condition
and results of operations, by affecting the economies and markets in which we operate. For example, disruptions to, and
volatility in, the global financial markets as a result of a pandemic may result in a decrease in the volume and value of M&A
transactions, thereby reducing the demand for our Financial Advisory services and increasing price competition among
financial services companies seeking such engagements. Those same market disruptions may result in a decrease in our AUM
resulting in lower asset management fees for our Asset Management business, may affect our ability to effect transactions for
our Asset Management clients and may negatively impact the liquidity of the assets held in our client portfolios. Furthermore,
any such disruptions may affect our ability to incur debt or issue equity on acceptable terms, or at all, to fund our working
capital requirements, refinance existing indebtedness or make acquisitions and other investments. Our efforts to mitigate the
impact of pandemics may require significant investments of time and resources across our businesses. Furthermore, as many
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employees continue to perform all or a portion of their job functions remotely on a regular basis, there can be no assurance
that our measures implemented to protect the confidentiality of our and our clients’ confidential information will be adequate.
Any unauthorized disclosure of such information could result in legal action, regulatory sanctions and reputational or
financial harm.
Risks Related to Our Business and Operations
Due to the nature of our business, financial results could differ significantly from period to period, which may
make it difficult for us to achieve steady earnings growth on a quarterly basis.
We experience significant fluctuations in quarterly revenue and profits. These fluctuations generally can be
attributed to the fact that we earn a substantial portion of our Financial Advisory revenue upon the successful completion of a
transaction or a restructuring, the timing of which is uncertain and is not subject to our control. As a result, our Financial
Advisory business is highly dependent on market conditions and the decisions and actions of our clients, interested third
parties and governmental authorities. For example, a client or counterparty could delay or terminate an acquisition transaction
because of a failure to agree upon final terms, failure to obtain necessary regulatory consents or board of directors, acquirer’s
or stockholders’ approval, failure to secure necessary financing, adverse market conditions or because the seller’s business is
experiencing unexpected operating or financial problems. Anticipated bidders for assets of a client during a restructuring
transaction may not materialize or our client may not be able to restructure its operations or indebtedness, for example, due to
a failure to reach agreement with its principal creditors. In addition, a bankruptcy court may deny our right to collect a
success or completion fee. In these circumstances, other than in engagements where we receive retainers, we often do not
receive any advisory fees other than the reimbursement of certain expenses, despite the fact that we devote resources to these
transactions. Accordingly, the failure of one or more transactions to close either as anticipated or at all could cause significant
fluctuations in quarterly revenue and profits and could materially adversely affect our business, financial condition and
results of operations. For more information, see “Management’s Discussion and Analysis of Financial Condition and Results
of Operations”.
In addition, our Asset Management revenue is particularly sensitive to fluctuations in our AUM. Asset Management
fees are predominantly based on the daily, monthly or quarterly AUM. As a result, a reduction in AUM at the end of a day,
month or quarter (as a result of market depreciation, withdrawals, fluctuations in foreign currency exchange rates or
otherwise) will result in a decrease in management fees. Similarly, the timing of flows, contributions and withdrawals are
often out of our control and may be inconsistent from quarter to quarter. Incentive fees are driven by investment performance
(either absolute performance or relative to an established benchmark), which is directly impacted by market movements, and
may therefore fluctuate from period to period.
As a result of such fluctuations, it may be difficult for us to achieve steady revenue and earnings growth on a
quarterly basis.
Our ability to retain and attract managing directors and other key professional employees, including
maintaining compensation levels at an appropriate level, is critical to the success of our business and failure to do so
may materially adversely affect our results of operations and financial position.
Our people are our most important asset. We must retain the services of our managing directors and other key
professional employees, and strategically recruit and hire new talented employees, to obtain and successfully execute the
Financial Advisory and Asset Management engagements that generate substantially all of our revenue.
In general, our industry continues to experience change and be subject to significant competitive pressures with
respect to the retention of top talent, which makes it more difficult for us to retain professionals. Loss of key employees may
occur due to perceived opportunity for promotion, compensation levels or composition of compensation, work environment,
retirement or the pursuit of philanthropic, civic or similar service opportunities or other individual reasons, some of which
may be beyond our control. If managing directors and other key professional employees were to retire, join an existing
competitor, form a competing company or otherwise leave us, we could need to replace them, and some of our clients could
eventually choose to use the services of that competitor or some other competitor instead of our services. In any such event,
our financial advisory fees, asset management fees or AUM could decline. The employment arrangements, non-competition
agreements and retention agreements we have or will enter into with our managing directors and other key professional
employees may not sufficiently prevent our managing directors and other key professional employees from resigning from
practice or competing against us. In addition, these arrangements and agreements may face enforceability challenges and
have a limited duration and expire after a certain period of time. We continue to be subject to intense competition in the
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financial services industry regarding the recruitment and retention of key professionals, and have experienced departures
from and added to our professional ranks as a result.
Furthermore, we seek to align the interests of our managing directors and other key professional employees with that
of our shareholders by awarding deferred compensation in the form of equity, and any change in our ability to grant such
awards, including as a result of a shareholder vote against any of our equity incentive plans, could have a negative impact on
our ability to promote such alignment. Certain changes to our employee compensation arrangements may result in increased
compensation and benefits expense. In addition, any changes to the mix of cash and deferred incentive compensation granted
to our employees may affect certain financial measures applicable to our business, including ratios of compensation and
benefits expense to revenue, and may result in the issuance of increased levels of common stock to our employees upon
vesting of restricted stock units (“RSUs”), performance-based restricted stock units (“PRSUs”), restricted stock awards
(“RSAs”), profits interest participation rights (“PIPRs”) or other equity-based awards in a particular year. Our compensation
levels, results of operations and financial position may be significantly affected by many factors, including general economic
and market conditions, our operating and financial performance, staffing levels and competitive pay conditions.
The financial services industry, and all of the businesses in which we compete, are intensely competitive.
The financial services industry is intensely competitive, and we expect it to remain so. We compete on the basis of a
number of factors, including the quality of our advice, our employees and transaction execution, the range and price of our
products and services, our innovation and our reputation. We have experienced intense fee competition in some of our
businesses in recent years, and we believe that we may experience pricing pressures in these and other areas in the future as
some of our competitors seek to obtain increased market share by reducing fees. A number of factors increase the competitive
risks of our Financial Advisory and Asset Management businesses:
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there are relatively few barriers to entry impeding the launch of new asset management and financial
advisory firms, including a relatively low cost of entering these businesses, and the successful efforts of
new entrants, including major banks and other financial institutions, into our lines of business have resulted
in increased competition;
other industry participants will from time to time seek to recruit our employees away from us in order to
compete in our lines of business; and
certain of our practices and products are newly established and relatively small.
In addition, many of our competitors have the ability to offer a wide range of products, from loans, deposit-taking
and insurance to brokerage, asset management and investment banking services, including products and services which we do
not currently offer, which may enhance their competitive position. They may also have the ability to support investment
banking, including financial advisory services, with commercial banking, insurance and other financial services in an effort to
gain market share, which could result in pricing pressure in our businesses.
Competitive pressure could adversely affect our ability to attract new or retain existing clients, make successful
investments, retain our people or maintain AUM, any of which would adversely affect our results of operations and financial
condition.
A substantial portion of our revenue is derived from Financial Advisory fees, which are not long-term
contracted sources of revenue and are subject to intense competition, and declines in our Financial Advisory
engagements could have a material adverse effect on our business, financial condition and results of operations.
We historically have earned a substantial portion of our revenue from advisory fees paid to us by our Financial
Advisory clients, which usually are payable upon the successful completion of a particular transaction or restructuring. For
example, for the year ended December 31, 2023, Financial Advisory services accounted for approximately 55% of our
consolidated net revenue. We expect that we will continue to rely on Financial Advisory fees for a substantial portion of our
revenue for the foreseeable future, and a decline in our Financial Advisory engagements or the market for financial advisory
services would adversely affect our business, financial condition and results of operations.
In addition, we operate in a highly competitive environment where there are typically no long-term contracted
sources of revenue. Each revenue-generating engagement typically is separately awarded and negotiated. Furthermore, many
businesses do not routinely engage in transactions requiring our services, and as a consequence, our fee paying engagements
with many clients are not likely to be predictable. We may also lose clients from time-to-time as a result of, among other
reasons, the sale, merger or restructuring of a client, a change in a client’s senior management or competition from other
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financial advisors and financial institutions. As a result, our engagements with clients are constantly changing, and our
Financial Advisory fees could decline quickly due to the factors discussed above.
If the number of debt defaults, bankruptcies or other factors affecting demand for our Restructuring services
declines, our Restructuring revenue could suffer.
We provide various restructuring and restructuring-related advice to companies in financial distress or to their
creditors or other stakeholders. Historically, the fees from restructuring-related services have been a significant part of our
Financial Advisory revenue. A number of factors could affect demand for these advisory services, including general
economic conditions, the availability and cost of debt and equity financing and changes to laws, rules and regulations,
including those that protect creditors, and the deregulation or privatization of particular industries. In such periods, our
revenues from restructuring services may decline.
Certain of our services are dependent on the availability of private capital for deployment in illiquid asset
classes.
We provide private fund advisory and fundraising services for alternative investment strategies, including private
equity and real estate. Additionally, we may provide financial advice in connection with private placements for private
companies. Our ability to find suitable engagements and earn fees in these businesses depends on the availability of private
and public capital for investments in illiquid assets. The availability of such capital depends on a number of factors, including
many that are outside our control, such as the general macroeconomic environment, changes in the weight investors give to
alternative asset investments as part of their overall investment portfolio among asset classes, and market liquidity and
volatility. Further, certain investors, such as public pension plans, may have policies prohibiting the use of placement agents
by fund sponsors or managers in connection with a limited partner’s investment. To the extent private and public capital
focused on illiquid investment opportunities is limited by the foregoing or other circumstances, our fees generated by these
services and, therefore, our results may be adversely affected.
Potential underwriting or deal manager activities or advisory roles on capital raises or exchange transactions
may expose us to risk.
As part of our Financial Advisory business, we sometimes act as an underwriter in public offerings and other
distributions of securities or as a financial advisor in connection with a capital raise. While not an ordinary part of our
business, if we act as an underwriter, we may incur losses and be subject to reputational harm to the extent that, for any
reason, the underwriting syndicate in any given transaction is unable to sell the relevant securities at the anticipated price
levels. Similarly, we may incur losses and be subject to reputational harm to the extent that, for any reason, we are unable to
assist a client in raising capital at anticipated price levels when we act as financial advisor. In addition, if we act as an
underwriter, deal manager or financial advisor, we may also be subject to liability for material misstatements or omissions in
prospectuses and other offering documents relating to the applicable transactions. In such cases, any indemnification
provisions in the applicable underwriting, deal manager or financial advisory agreement may not be available to us or may
not be sufficient to protect us against losses arising from such liability. Operational risk in connection with any offering or
capital raise we participate in could arise in the form of errors, deficiencies or noncompliance and also could expose us to
risk. We seek to manage the risks associated with underwriting, deal manager and financial advisory activities through
screening, internal review and diligence, but such efforts may not be effective in all cases.
Our investment style in our Asset Management business, including the mix of asset classes and investment
strategies comprising our AUM, may underperform or generate less demand than other investment approaches,
which may result in significant client or asset departures or a reduction in AUM.
Even when securities prices are rising generally, performance can be affected by investment style and mix of asset
classes. For example, many of the equity investment strategies in our Asset Management business share a common
investment orientation towards relative value investing. We believe this style tends to outperform the market in some market
environments and underperform it in others. In particular, a prolonged growth environment, as we have seen over the last
several years, may cause some of our investment strategies to go out of favor with some clients, advisors, consultants or
third-party intermediaries. In addition, all of our investment strategies are actively managed strategies which seek to
outperform relative to a benchmark or generate an absolute return. Management fees for actively managed strategies tend to
be higher than those charged for passively managed strategies. The perception that actively managed strategies have, on
average, underperformed relative to passively managed strategies over time, combined with greater pressure on clients to
acquire asset management services at lower costs, has contributed to increased trends toward passively managed investment
strategies. This, in turn, may adversely affect demand for our strategies or result in fee pressure on our business overall. In
combination with poor performance relative to peers, changes in personnel, challenging market environments or other
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difficulties, the underperformance of our investment style may result in significant client or asset departures or a reduction in
AUM.
We could lose clients and suffer a decline in our Asset Management revenue and earnings if the investments
we choose in our Asset Management business perform poorly, regardless of overall trends in the prices of securities.
Investment performance affects our AUM relating to existing clients and is one of the most important factors in
retaining clients and competing for new Asset Management business. Poor investment performance could impair our revenue
and growth because:
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existing clients might withdraw funds from our Asset Management business in favor of better performing
products, which would result in lower asset management fees;
our incentive fees, which provide us with a set percentage of returns on some alternative investment and
private equity funds and other accounts, would decline;
third-party financial intermediaries, rating services, advisors or consultants may rate our products poorly,
which may result in client withdrawals and reduced asset flows; or
firms with which we have strategic alliances may terminate such relationships with us, and future strategic
alliances may be unavailable.
Over certain time periods, we may have a higher concentration of assets in certain strategies. To the extent that this
is the case, changes in investment personnel or other changes in these strategies may result in significant withdrawals of
assets and related declines in our revenues and operating results.
Because many of our Asset Management clients can remove the assets we manage on short notice, we may
experience unexpected declines in revenue and profitability.
Our investment advisory contracts are generally terminable upon very short notice. Institutional and individual
clients, and firms with which we have strategic alliances, can terminate their relationship with us, reduce the aggregate
amount of AUM or shift their funds to other types of accounts with different rate structures or to other asset management
firms for a number of reasons, including investment performance relative to the market, prior years or other asset
management firms, departures from or changes to the teams that manage our investment products, changes in prevailing
interest rates and financial market performance or for no stated reason. In addition, the ability to terminate relationships may
allow clients to renegotiate reduced fees paid for asset management services.
In addition, in the U.S., as required by the Investment Company Act, each of our investment advisory contracts with
the mutual funds we advise or sub-advise automatically terminates upon its “assignment.” Each of our other investment
advisory contracts subject to the provisions of the Investment Advisers Act provide, as required by the Investment Advisers
Act, that the contract may not be “assigned” without the consent of the customer. A sale of a sufficiently large block of shares
of our voting securities or other transactions could be deemed an “assignment” in certain circumstances. An assignment,
actual or constructive, would trigger these termination provisions and could adversely affect our ability to continue managing
client accounts.
Access to clients through intermediaries and consultants is important to our Asset Management business, and
reductions in referrals from such intermediaries or consultants or poor reviews of our products or our organization
by such intermediaries or consultants could materially reduce our revenue and impair our ability to attract new
clients.
Our ability to market our Asset Management services relies in part on receiving mandates from the client base of
national and regional securities firms, banks, insurance companies, defined contribution plan administrators, investment
consultants and other intermediaries. To an increasing extent, our Asset Management business uses referrals from
accountants, lawyers, financial planners and other professional advisors. The inability to have this access could materially
adversely affect our Asset Management business. In addition, many of these intermediaries and consultants review and
evaluate our products and our organization. Poor reviews or evaluations of either the particular product or of us may result in
client withdrawals or an inability to attract new clients through such intermediaries or consultants.
Our Asset Management business relies on non-affiliated third-party service providers.
Our Asset Management business has entered into service agreements with third-party service providers for client
order management and the execution and settlement of client securities transactions. This business faces the risk of
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operational failure of any of our clearing agents, the exchanges, clearing houses or other intermediaries we use to facilitate
our securities transactions. We oversee and manage these relationships. Poor oversight and control or inferior performance or
service on the part of the service provider could result in our loss of customers and violations of applicable rules and
regulations. Any such failure could also adversely affect our ability to effect transactions and to manage our exposure to risk,
and thereby adversely affect our results of operations.
Certain of our investments are in relatively high-risk, illiquid assets, and we may lose some or all of the
principal amount of these investments or fail to realize any profits from these investments for a considerable period of
time.
We have made, and in the future may make, principal investments in public or private companies or in alternative
investments (including private equity funds) established by us, and we continue to hold principal investments directly or
through funds managed by certain affiliates of Lazard, including Edgewater, as well as third parties. Making principal
investments is risky, and we may lose some or all of the principal amount of our investments. Certain of these types of
investments may be in relatively high-risk, illiquid assets. Because it may take several years before attractive alternative
investment opportunities are identified, some or all of the capital committed by us to these funds is likely to be invested in
government securities, other short-term, highly-rated debt securities and money market funds that traditionally have offered
investors relatively lower returns. In addition, these investments may be adjusted for accounting purposes to fair value at the
end of each quarter, and any related gains or losses would affect our results of operations and could increase the volatility of
our earnings, even though such fair value fluctuations may have no cash impact. It takes a substantial period of time to
identify attractive alternative investment opportunities, to raise all the funds needed to make an investment and then to realize
the cash value of an investment through resale. Even if an alternative investment proves to be profitable, it may be several
years or longer before any profits can be realized in cash or other proceeds.
Our revenue from our private equity business is derived in part from management fees, which are calculated as a
percentage of committed capital or invested capital depending on the stage of each respective fund. Transaction and advisory
fees are also earned. Incentive fees are earned if investments are profitable over a specified threshold. Our ability to form new
alternative investment funds is subject to a number of uncertainties, including past performance of our funds, market or
economic conditions, competition from other fund managers and the ability to negotiate terms with major investors.
We may pursue new business lines, acquisitions, joint ventures, cooperation agreements or other growth or
geographic expansion strategies that may result in additional risks and uncertainties in our business and could
present unforeseen integration obstacles or costs.
We routinely assess our strategic position and may in the future pursue new business lines or seek acquisitions or
other transactions or growth strategies to further enhance our competitive position. We have in the past pursued joint ventures
and other transactions aimed at expanding the geography and scope of our operations. We expect to continue to explore new
business lines, acquisitions, growth strategies and partnership or strategic alliance opportunities that we believe to be
attractive.
Acquisitions, growth strategies, joint ventures and new business lines involve a number of risks and present
financial, managerial and operational challenges. These risks and challenges include potential disruption of our ongoing
business and distraction of management, difficulty integrating personnel and financial and other systems, difficulty hiring
additional management and other critical personnel and other challenges arising from the increased scope, geographic
diversity and complexity of our operations.
To the extent that we pursue business opportunities outside of the U.S. and our other principal business locations,
including through acquisitions, joint ventures or other geographic expansion of our existing businesses, we may become
subject to political, economic, legal, operational, regulatory and other risks that are inherent in operating in a foreign country,
including risks of potential price, capital and currency exchange controls, licensing requirements and other regulatory
restrictions, as well as the risk of hostile actions against or affecting our business or people. Our ability to remain in
compliance with local laws in a particular foreign jurisdiction could adversely affect our businesses and our reputation.
In addition, our clients and other stakeholders may react unfavorably to our acquisition, growth and joint venture
strategies or new business lines; we may not realize any anticipated benefits from such actions, we may be exposed to
additional liabilities of any new business line, acquired business or joint venture; we may be exposed to litigation in
connection with a new business line, acquisition, growth or joint venture transaction; and we may not be able to renew on
similar terms (or at all) previously successful joint ventures or similar arrangements, any of which could materially adversely
affect our business, financial position and results of operations.
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An inability to access the debt and equity capital markets as a result of our debt obligations, credit ratings or
other factors could impair our liquidity, increase our borrowing costs or otherwise adversely affect our financial
position or results of operations.
As of December 31, 2023, Lazard Group and its subsidiaries had approximately $1.7 billion in debt outstanding, of
which $400 million, $300 million, $500 million and $500 million relate to Lazard Group senior notes that mature in 2025,
2027, 2028 and 2029, respectively. This debt has certain mandated payment obligations, which may constrain our ability to
operate our business. If we decide to redeem or retire this debt before maturity, we may be required to pay a significant
premium to do so, which may adversely impact our earnings and affect our financial position. In addition, in the future we
may need to incur debt or issue equity in order to fund our working capital requirements or refinance existing indebtedness,
as well as to make acquisitions and other investments. The amount of our debt obligations may impair our ability to raise debt
or issue equity for financing purposes. Our access to funds also may be impaired if regulatory or governmental authorities
take significant action against us or for a variety of other possible reasons. In addition, our borrowing costs and our access to
the debt capital markets depend significantly on market factors, including benchmark interest rates, and our credit ratings.
These ratings are assigned by rating agencies, which may reduce or withdraw their ratings or place us on “credit watch” with
negative implications at any time.
The soundness of third parties, including our clients, as well as financial, governmental and other institutions,
could adversely affect us.
We have exposure to many different industries, institutions, products, counterparties and clients, and we routinely
execute transactions with counterparties in the financial services industry, including brokers and dealers, commercial banks,
investment banks, mutual and hedge funds and other institutions. Many of these transactions expose us to credit risk in the
event of default of our counterparty or client. In addition, our credit and settlement risk may be exacerbated when the
collateral held by us, if any, cannot be fully realized or is liquidated at prices not sufficient to recover the full amount of the
loan, credit balance or derivative exposure due to us.
LFG and LFB offer wealth management and banking services to high net worth individuals and families. In order to
support this business, LFB may extend lines of credit to such clients. These loans are fully collateralized, but collateral values
could fluctuate over time. In the event that the clients are unable to repay their loans and we are unable to realize the
collateral for sums that exceed the underlying amount of the loan, we may lose some or all of these amounts.
In addition, we have and may continue to enter into joint ventures, partnerships and invest in entities in which we
share ownership or management with unaffiliated third parties. In certain circumstances, we may not have complete control
over governance, financial reporting, operations, legal and regulatory compliance or other matters relating to such joint
ventures, partnerships or entities. As a result, we may face certain operating, financial, legal, regulatory compliance,
reputational and other risks relating to these joint ventures, partnerships and entities, including risks related to the financial
strength of such third parties; the willingness of such third parties to provide adequate funding for the joint venture,
partnership or entity; differing goals, strategies, priorities or objectives between us and such third parties; our inability to
unilaterally implement actions, policies or procedures with respect to the joint venture, partnership or entity that we believe
are favorable; legal and regulatory compliance risks relating to actions of the joint venture, partnership, entity or such third
parties; the risk that the actions of such third parties could damage our brand image and reputation; and the risk that we will
be unable to resolve disputes with such third parties.
Other operational risks may disrupt our businesses, result in regulatory action against us or limit our growth.
Our business is highly dependent on communications and information systems, including those of our vendors. Any
failure or interruption of these systems, whether caused by fire, other natural disaster, power or telecommunications failure,
geopolitical instability, act of terrorism or war, system modification or upgrade or a delay of any modification or upgrade or
otherwise, could materially adversely affect our business. Although back-up systems are in place, our back-up procedures and
capabilities in the event of a failure or interruption may not be adequate.
Aspects of our business, including our Asset Management business, rely heavily on our financial, accounting,
trading, compliance and other data processing systems and those of our third-party vendors or service providers who support
these functions. We expect that we will need to review whether to continue to upgrade and expand the capabilities of these
systems, including legacy systems, in the future to avoid disruption of, or constraints on, our operations, and any such system
upgrades or expansions could result in significant costs to us. We may need to hire additional staff in order to continue to
upgrade or expand the capabilities of our systems, including with respect to quickly advancing technologies like generative
artificial intelligence, and failure to attract and retain staff with the proper skillset could disrupt or constrain our operations.
Certain investment teams within our Asset Management business, for example, employ proprietary systems, including
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quantitative models, in connection with their investment processes. These systems and models are often designed and, with
assistance from technology personnel, maintained by employees who are members of those investment teams. If any of the
foregoing systems fails to operate properly or is disabled, including for reasons beyond our control, we could suffer material
financial loss, a disruption of our businesses, liability to clients, regulatory intervention and reputational damage. The
inability of our systems (or those of our vendors or service providers) to accommodate an increasing volume of transactions
also could constrain our ability to expand our businesses. In addition, errors resulting from these issues or from human error
when conducting a trade or other transaction could expose us to significant risk.
In addition, if we were to experience a local or regional disaster or other business continuity problem, such as a
pandemic or man-made or natural disaster, our continued success would depend, in part, on the availability of our personnel
and office facilities and the proper functioning of and remote accessibility to our computers, telecommunications, transaction
processing and other information systems and operations, as well as those of third parties on whom we rely. Such events
could lead us to experience operational challenges, and our inability to successfully recover could materially disrupt our
businesses and cause material financial loss, regulatory actions, reputational harm and legal liability.
For additional information regarding operational risks with respect to our businesses, see “Management’s Discussion
and Analysis of Financial Condition and Results of Operations—Operational Risk” below.
Risks Related to Legal or Regulatory Factors and Taxation
Extensive regulation of our businesses limits our activities and results in ongoing exposure to the potential for
significant penalties, including fines or limitations on our ability to conduct our businesses.
The financial services industry is subject to extensive regulation. We are subject to regulation by governmental and
self-regulatory organizations in the jurisdictions in which we operate around the world. Many of these regulators, including
U.S. and non-U.S. government agencies and self-regulatory organizations, as well as state securities commissions in the U.S.,
are empowered to conduct administrative proceedings that can result in censure, fine, the issuance of cease-and-desist orders
or the suspension or expulsion of a regulated entity from registration or membership. The requirements imposed by our
regulators are generally designed to ensure the integrity of the financial markets and to protect customers and other third
parties who deal with us and not to protect our stockholders. Consequently, these regulations often serve to limit our
activities, including through net capital, customer protection and market conduct requirements.
We face the risk of significant intervention by regulatory and governmental authorities, including extended
investigation and surveillance activity, adoption of costly or restrictive new regulations and judicial or administrative
proceedings that may result in substantial penalties. Among other things, we could be fined or be prohibited from engaging in
some of our business activities. In addition, the regulatory environment in which we operate is subject to modification and
further regulation. Such changes may increase the expenses that we incur without necessarily leading to commensurate
increases in revenue and income. Certain laws and regulations within the U.S. and externally include extraterritorial
application that may lead to overlapping or conflicting legal and regulatory burdens with additional risks and implementation
expenses. New laws or regulations or changes in the enforcement of existing laws or regulations applicable to us and our
clients also may adversely affect our business, and our ability to function in this environment will depend on our ability to
continually monitor and react to these changes.
The U.S. and other governments and institutions have taken actions, and may in the future take further actions, in
response to geopolitical events and disruption and volatility in the global financial markets. Such further actions could
include expanding current or enacting new standards, requirements and rules that may be applicable to us and our
subsidiaries. The effect, complexity and scope of any such expanded or new standards, requirements and rules is uncertain
and could increase costs of compliance, monitoring and reporting and result in increased potential for litigation, sanctions and
other liabilities, all of which could have adverse consequences to our business, financial condition and results of operations.
While we continue to examine the requirements of new regulations that may become applicable to us in the U.S. and in the
European Union (see “Business—Regulation” above), and previously announced actual or potential regulations that may be
modified, we are not able to predict the ultimate effect on us.
The regulatory environment in which our clients operate may also impact our business. For example, changes in
antitrust laws or the enforcement of antitrust laws could affect the level of M&A activity, and changes in state laws may limit
investment activities of state pension plans. In addition, many tax laws and regulations have been modified, or are otherwise
under review, in the U.S. and in many other jurisdictions in which we and our clients operate. Actual and proposed changes
to these laws and regulations may affect the level of M&A activity, including cross-border M&A activity.
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For the asset management businesses in general, there have been a number of highly publicized cases involving
fraud or other misconduct by employees of asset management firms, as well as industry-wide regulatory inquiries. These
cases and inquiries have resulted in increased scrutiny from regulators, governments and investors and may result in new
rules and regulations for mutual funds, hedge funds, private equity funds and their investment managers. This regulatory
scrutiny and these rulemaking initiatives may result in an increase in operational and compliance costs or the risk of
assessment of significant fines or penalties against our Asset Management business and may otherwise limit our ability to
engage in certain activities.
Specific regulatory changes also may have a direct impact on the revenue of our Asset Management business. In
addition to regulatory scrutiny and potential fines and sanctions, regulators continue to examine different aspects of the asset
management industry. For example, the use of “soft dollars,” where a portion of commissions paid to broker-dealers in
connection with the execution of client trades also pays for research and other eligible services that are used by investment
advisors, has in the last several years been reexamined by different regulatory bodies and industry participants. Although a
substantial portion of the research relied on by our Asset Management business in its investment decision-making processes
is generated internally by our investment personnel, external research, including external research and other eligible services
traditionally paid for with soft dollars, is also important to the process. This external research includes materials provided by
broker-dealers and research firms, as well as eligible data and analytics services from various sources. In connection with the
implementation of the EU Markets in Financial Instruments Directive II (“MiFID II”) in 2018, our Asset Management
affiliates in France, Germany and the U.K. decided to pay for broker research services from their own resources. This has
reduced our ability to utilize commissions to pay for research services and other soft dollar services in certain European
jurisdictions. Similar pressures may come from future changes within the asset management industry itself, which may
further increase our costs related to external research services. For the year ended December 31, 2023, our Asset
Management business obtained research and other eligible services through third-party soft dollar arrangements, the total
value of which we estimate to be approximately $24 million.
In addition, new regulations affecting the asset management business, including those regarding the management of
U.S. mutual funds, hedge funds, Undertakings for the Collective Investment in Transferable Securities (“UCITS”) funds and
the use of certain investment products may impact our Asset Management business and result in increased costs. For
example, the European Union has adopted updated directives on the coordination of laws, regulations and administrative
provisions relating to undertakings for collective investment in transferable securities (“UCITS V”) with respect to various
subjects. Among other things, UCITS V establishes remunerations policies that impact the structure of compensation for
certain portfolio managers and other personnel within the Company. UCITS V also establishes certain regulations governing
oversight and independence of depository functions. While these rules have already been implemented, they could further
impact our personnel or result in changes to our operations, resulting in increased costs to the business. In addition, many
regulators around the world, including those in the U.S., continue to adopt disclosure requirements impacting the asset
management business, as well as changes to the laws, rules and regulations relating to recordkeeping and reporting
obligations.
Legislators and regulators around the world continue to explore changes to, and additional oversight of, the financial
industry generally. The impact of the potential changes on us are uncertain and may result in an increase in costs or a
reduction of revenue associated with our businesses.
See “Business—Regulation” above for a further discussion of the regulatory environment in which we conduct our
businesses.
The financial services industry faces substantial litigation and regulatory risks, and we may face damage to
our professional reputation and legal liability if our services are not regarded as satisfactory or if conflicts of interest
should arise.
In recent years, the volume of claims and amount of damages claimed in litigation and regulatory proceedings
against financial advisors has increased. The activities of our Financial Advisory business may subject us to the risk of
significant legal actions by our clients and third parties, including our clients’ stockholders, under securities or other laws.
Such legal actions may include allegations relating to aiding and abetting breaches of fiduciary duties and to materially false
or misleading statements or misrepresentations made in connection with securities and other transactions, including private
placements. We may also be exposed to potential liability for the fairness opinions and other advice provided to participants
in transactions. In our Asset Management business, we make investment decisions on behalf of our clients, which could result
in substantial losses. Many of our business activities may subject us to the risk of legal actions alleging negligence,
misconduct, breach of fiduciary duty or breach of contract.
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We increasingly confront actual and potential conflicts of interest relating to our Financial Advisory business, as
well as to the fact that we have both a Financial Advisory business and an Asset Management business. Additionally, our
pursuit of new business lines or other growth opportunities could result in additional actual or potential conflicts of interest. It
is possible that actual, potential or perceived conflicts of interest, including with respect to the use or disclosure of
confidential information, could give rise to client dissatisfaction, litigation or regulatory or governmental enforcement
actions, which could have the effect of limiting our business opportunities. Appropriately identifying and managing actual or
perceived conflicts of interest is complex and difficult, and our reputation could be damaged if we fail, or appear to fail, to
deal appropriately with one or more potential or actual conflicts of interest. We have adopted various policies, controls and
procedures to address or limit actual or perceived conflicts of interest. However, these policies, controls and procedures may
not be adhered to by our employees or be effective in reducing the applicable risks. Any failure of, or failure to adhere to,
these policies, controls and procedures may result in regulatory or governmental sanctions or client litigation. We may also
face competition from time to time from other financial services firms that do not operate under similar policies, controls and
procedures.
Our Financial Advisory engagements typically include broad indemnities from our clients and provisions designed
to limit our exposure to legal claims relating to our services, but these provisions may not protect us or may not be available
or adhered to in all cases. We also are subject to claims arising from disputes with employees for alleged wrongful
termination, discrimination or harassment, among other things. These risks often may be difficult to assess or quantify, and
their existence and magnitude often remain unknown for substantial periods of time.
We may incur significant legal expenses in defending ourselves against litigation or regulatory or governmental
action. Substantial legal liability or significant regulatory or governmental action against us could materially adversely affect
our business, financial condition or results of operations and cause significant reputational harm to us, which could seriously
harm our business.
Expectations relating to ESG considerations expose us to potential liabilities, increased costs, reputational
harm, and other adverse effects on our business.
As a financial services firm, we depend to a large extent on our relationships with our clients and our reputation for
integrity and high-caliber professional services to attract and retain clients. Companies across all industries are facing
increasing scrutiny from customers, clients, regulators, investors, and other stakeholders related to their ESG practices and
disclosures. In addition to governments and regulators, the investment community and society at large is increasingly focused
on these practices, especially as they relate to the environment and climate change, health and safety, diversity, equity,
inclusion, labor conditions and human and civil rights. As a result, there is heightened demand for information related to ESG
factors, such as climate change, natural resources, waste reduction, energy, human capital, and risk oversight, including with
respect to our supply chain, which expands the nature, scope, and complexity of matters that we are expected to manage,
assess, and report.
We also make statements about our ESG goals and initiatives through our ESG Corporate Sustainability reporting
and our Asset Management Sustainable Investing perspectives, which is available on our public websites. We may not
achieve our ESG goals and initiatives. In addition, some stakeholders may disagree with our goals and initiatives. Any
failure, or perceived failure, to achieve our goals, further our initiatives, adhere to our public statements, comply with federal,
state or international ESG laws and regulations, or meet evolving and varied stakeholder expectations and standards could
result in legal and regulatory proceedings against us or client dissatisfaction and materially adversely affect our business,
reputation, results of operations, financial condition and stock price.
Employee misconduct, which is difficult to detect and deter, could harm us by impairing our ability to attract
and retain clients and subjecting us to significant legal liability and reputational harm.
There have been a number of highly publicized cases involving fraud or other misconduct by employees in the
financial services industry generally, and we run the risk that employee misconduct could occur in our business as well. For
example, misconduct by employees could involve the improper use or disclosure of confidential information, which could
result in legal action, regulatory sanctions and reputational or financial harm. Our Financial Advisory business often requires
that we deal with confidences of great significance to our clients or their counterparties, improper use of which may harm our
clients or our relationships with our clients. Any breach of confidences as a result of employee misconduct may adversely
affect our reputation, impair our ability to attract and retain Financial Advisory clients and subject us to liability. Similarly, in
our Asset Management business, we have authority over client assets, and we may, from time to time, have custody of such
assets. In addition, we often have discretion to trade client assets on the client’s behalf and must do so acting in the best
interests of the client. As a result, we are subject to a number of obligations and standards, and the violation of those
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obligations or standards may adversely affect our clients and us. It is difficult to detect and deter employee misconduct, and
the precautions we take to detect and prevent this activity may not be effective in all cases.
In recent years, the U.S. Department of Justice and the SEC have also devoted greater resources to the enforcement
of the Foreign Corrupt Practices Act. In addition, the U.K., France and other jurisdictions have expanded the reach of their
anti-bribery laws. While we have developed and implemented policies and procedures designed to ensure compliance with
anti-bribery and other laws, such policies and procedures may not be effective in all instances to prevent violations. Any
determination that we have violated these laws could subject us to, among other things, civil and criminal penalties, material
fines, profit disgorgement, injunction against future conduct, securities litigation and reputational damage, any one of which
could adversely affect our business, financial condition and results of operations.
A failure in or breach of our information systems or infrastructure, or those of third parties with which we do
business, including as a result of cybersecurity incidents or threats, could disrupt our businesses, lead to reputational
harm and legal liability or otherwise impact our ability to operate our business.
Our operations rely on electronic information systems that we use for the collection, processing, maintenance, use,
sharing, dissemination or disposition of our and our clients’ information, which we refer to as “information systems”,
including our computer systems, hardware, software and networks and those of our third-party vendors and service providers.
Such information systems, which frequently include “cloud”-based networks and services, have in the past and may in the
future be subject to unauthorized or fraudulent access, computer viruses or other malicious code or other threats, including
“phishing” and social engineering attempts, that are constantly evolving and that could have a material security impact on us.
There can be no assurance that we will not suffer material losses relating to cybersecurity incidents or threats, including cyber
attacks that exploit vulnerabilities, or other security breaches involving our information and payment systems, or the
information systems of third parties with which we do business, despite taking protective measures to prevent such breaches.
The increased use of mobile technologies and remote working technologies can heighten these and other operational risks, as
can the advancing sophistication and increased frequency and severity of cybersecurity incidents and threats globally. In
addition, attacks against us, our customers and our third-party vendors have in the past and may in the future increase during
periods of heightened diplomatic or armed conflict.
A successful cyber attack or other cybersecurity incident or threat against us, our customers or other third parties
with which we do business, our confidential or proprietary information, or the confidential or proprietary information of our
clients or their counterparties, that is stored in, or transmitted through, such information systems could result in compromise
or misappropriation of such information. Any such cyber attack or other cybersecurity incident or threat, or any disruption of
or failure in the physical or logical infrastructure or operating systems that support such information systems or our
businesses, could significantly impact our ability to operate our businesses and could result in reputational damage, legal
liability, the loss of clients or business opportunities and financial losses that are either not insured against or not fully
covered through any insurance maintained by us. Additionally, as geopolitical tensions rise, cyber retaliation between nation
states can impact the business of those countries, which could adversely affect our business. As threats continue to multiply,
become more sophisticated, frequent and severe and threaten additional aspects of our businesses, we may also be required to
expend additional resources on information security and compliance costs in order to continue to modify or enhance our
protective measures or to investigate and remediate any cybersecurity vulnerabilities or other exposures.
Additionally, certain of our third-party vendors or service providers, which may process or otherwise have access to
confidential or sensitive data, may have instituted policies allowing their respective employees who are capable of
performing their functions remotely to do so and implementing or expanding back-up procedures and capabilities, and may
be experiencing a growing demand for their services. As such, such vendors and service providers may be more susceptible
to interruptions or confidentiality or security breaches than in prior periods. Any failure of or interruption to their systems or
any back-up procedures and capabilities as a result of such actions or such growth in demand could materially adversely
affect our business, financial condition and results of operations. See “Other operational risks may disrupt our businesses,
result in regulatory action against us or limit our growth.”
Similarly, due to the significant number of employees frequently deploying the remote working capabilities of our
information systems, including on home networks or through increased use of mobile technologies, we face a heightened risk
of operational interruptions and security breaches involving such systems. Additionally, such home and mobile technology
resources could be more susceptible to interruptions and security breaches than our dedicated business resources. There can
be no assurance that protective measures and policies we have instituted in an effort to reduce the likelihood and severity of
such interruptions and breaches, including as a result of cybersecurity incidents or threats, will be adequate.
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Failure to maintain effective internal controls in accordance with Section 404 of the Sarbanes-Oxley Act
could materially adversely affect our business.
We have documented and tested our internal control procedures in order to satisfy the requirements of Section 404
of the Sarbanes-Oxley Act, which requires annual management assessments of the effectiveness of our internal controls over
financial reporting and a report by our independent auditors regarding our internal control over financial reporting. We are in
compliance with Section 404 of the Sarbanes-Oxley Act as of December 31, 2023. However, if we fail to maintain the
adequacy of our internal controls, as such standards are modified, supplemented or amended from time to time, we may not
be able to ensure that we can conclude on an ongoing basis that we have effective internal controls over financial reporting in
accordance with Section 404 of the Sarbanes-Oxley Act. Failure to maintain an effective internal control environment could
materially adversely affect our business.
Uncertainty regarding the outcome of future arrangements between the European Union and the U. K. may
adversely affect our business.
The Company has a significant presence in the U.K. and many European Union countries. The U.K. left the
European Union on January 31, 2020. Prior to that date, the U.K. adopted numerous European Union laws and regulations
into U.K. domestic legislation in order to ensure continuity. The “Retained EU Law (Revocation and Reform) Act 2023”,
which came into force on January 1, 2024, revoked certain European Union legacy laws (“retained EU laws”) and gave the
U.K. Government the power to amend, repeal or restate the remaining retained EU laws. There is currently no certainty on
which retained EU laws and regulations will be changed going forward and the U.K. may diverge from these laws and
regulations and may decide not to adopt rules that correspond to future European Union legislation. To the extent that
different regulatory systems impose overlapping or inconsistent requirements on the conduct of the Company’s business, the
Company may face additional complexity and costs in its compliance efforts, as well as potential increased costs to the extent
the Company is required to make further adjustments to how the Company operates its business in the U.K. and/or the
European Union.
Changes in relevant tax laws, regulations or treaties or an adverse interpretation of these items could
negatively impact our effective tax rate.
We are a multinational company subject to tax in multiple U.S. and foreign jurisdictions. Our effective tax rate is
based upon the application of currently enacted income tax laws, regulations and treaties, and current judicial and
administrative interpretations of those income tax laws, regulations and treaties, and upon our non-U.S. subsidiaries’ ability
to qualify for benefits under those treaties. Those income tax laws, regulations and treaties, and the administrative and
judicial interpretations of them, are subject to change at any time, and any such change may be retroactive.
In addition, recent or future changes to tax laws, regulations and tax treaties may have an adverse impact on us. For
example, the Tax Cuts and Jobs Act of 2017 includes several international provisions applicable to us and the recently
enacted Inflation Reduction Act imposes, among other items, an alternative minimum “book” tax on certain large
corporations and a new 1% excise tax on net stock repurchases made by certain publicly traded corporations after December
31, 2022. Some guidance has been issued on the application of the alternative minimum book tax and the excise tax but
several aspects of the Tax Cuts and Jobs Act and the Inflation Reduction Act remain uncertain and the Treasury regulations
implementing the provisions are forthcoming. All of these provisions are complex and could adversely impact our effective
tax rate in future years.
Multiple levels of government, foreign legislatures and international organizations, such as the Organization for
Economic Cooperation and Development (“OECD”) and the European Union, are increasingly focused on tax reform and
have proposed and implemented tax legislation and regulations that could affect the taxation of multinational companies. For
example, the enactment of all or part of the recommendations set forth or that may be introduced in the OECD project on
Base Erosion and Profit Shifting by tax authorities in the countries in which we operate could unfavorably impact our overall
tax rate. Additionally, the OECD continues to advance proposals for modernizing international tax rules, including the
introduction of a 15% global minimum tax and its Base Erosion and Profit Shifting project, which is focused on several
issues, including the shifting of profits among affiliated entities in different tax jurisdictions. Each, if implemented, could
unfavorably impact our overall tax rate.
Tax authorities may challenge our tax computations and classifications, our transfer pricing methods and our
application of related policies and methods.
Our tax returns are subject to audit by U.S. federal, state, local and foreign tax authorities. These authorities may
successfully challenge certain tax positions or deductions taken by our subsidiaries. For example, tax authorities may contest
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intercompany allocations of fee income, management charges or interest charges among affiliates in different tax
jurisdictions. While we believe that we have provided the appropriate required reserves, it is possible that a tax authority may
disagree with all, or a portion, of the tax benefits claimed. If a tax authority were to successfully challenge our positions, it
could result in significant additional tax costs or payments under the tax receivable agreement described below.
In addition, there are additional transfer pricing and standardized country-by-country reporting requirements being
implemented. Additional information from country-by-country reporting, certain local information-sharing arrangements and
other documentation held by tax authorities is expected to be subject to greater information-sharing arrangements, and any
challenges from tax authorities reviewing such information could adversely impact our overall tax obligations or our
business, financial condition or results of operations.
Anti-takeover provisions in our organizational documents and Delaware law could delay or prevent a change
in control.
Our certificate of incorporation and by-laws contain provisions that may make the merger or acquisition of the
Company more difficult, for example:
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permitting our Board of Directors to issue one or more series of preferred stock;
providing that any vacancy on the board of directors may be filled only by a majority of the directors then in office
or by the sole remaining director;
requiring advance notice for stockholder proposals and nominations;
providing that, subject to certain limitations, (i) the Board of Directors is expressly authorized to adopt, amend and
repeal our by-laws and (ii) that our stockholders may only adopt, amend and repeal our by-laws with the approval of
at least a majority of the outstanding shares of our capital stock entitled to vote thereon (or, in some cases, a super-
majority);
providing that the Board of Directors will be divided into three classes of directors serving staggered three-year
terms;
establishing limitations on convening stockholder meetings;
requiring stockholder action by written consent to be unanimous; and
providing for the removal of directors only for cause.
In addition, certain provisions of Delaware law give us the ability to delay or prevent a transaction that could cause a
change in our control. These provisions may also discourage acquisition proposals or delay or prevent a change in control.
The market price of our common stock could be adversely affected to the extent that such provisions discourage potential
takeover attempts that our stockholders may favor.
Our subsidiaries may be required to make payments under the Amended and Restated Tax Receivable
Agreement. The IRS may challenge the tax basis increases upon which payments are based and, under certain
circumstances, our subsidiaries may have made or could make payments under the Amended and Restated Tax
Receivable Agreement in excess of our subsidiaries’ cash tax savings.
As further discussed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations—
Critical Accounting Policies and Estimates—Income Taxes” and Note 19 of Notes to Consolidated Financial Statements, the
Second Amended and Restated Tax Receivable Agreement, dated as of October 26, 2015 (the “Amended and Restated Tax
Receivable Agreement”), between Lazard and LTBP Trust, a Delaware statutory trust (the “Trust”), provides for the payment
by our subsidiaries to the Trust of a significant portion of the cash savings, if any, in U.S. federal, state and local income tax
or franchise tax that we actually realize as a result of certain tax benefits that are subject to the Amended and Restated Tax
Receivable Agreement. Any amount paid by our subsidiaries to the Trust will generally be distributed to the owners of the
Trust, including certain of our executive officers, in proportion to their beneficial interests in the Trust. If the IRS
successfully challenges the tax basis increases we receive, under certain circumstances, our subsidiaries may have made or
could make payments under the Amended and Restated Tax Receivable Agreement in excess of our subsidiaries’ cash tax
savings.
31
Risks Relating to Our Conversion to a U.S. C-Corporation
We may fail to realize the anticipated benefits of the Conversion or those benefits may take longer to realize
than expected or not offset the costs of the Conversion, which could have a material and adverse impact on the trading
price of our common stock.
We believe that the Conversion may over time, among other things, act as a catalyst for enhanced stockholder
ownership, as some institutional investors are subject to constraints on owning stock of companies not incorporated in the
U.S. or taxed as a partnership, and potentially provide increased liquidity benefits for our common stock. However, the level
of investor interest in our common stock may not meet our expectations. Moreover, even though we have made efforts to
simplify our tax structure and reporting as a result of the Conversion, this may not result in the sustained increased demand
for our common stock that we anticipate. Consequently, we may fail to realize the anticipated benefits of the Conversion or
those benefits may take longer to realize than we expect. Moreover, there can be no assurance that the anticipated benefits of
the Conversion will offset its costs, which could be greater than we expect. Our failure to achieve the anticipated benefits of
the Conversion at all or in a timely manner, or a failure of any benefits realized to offset its costs, could have a material and
adverse impact on the trading price of our common stock.
Risks Relating to Our Capital Structure
Lazard, Inc. is a holding company and, accordingly, depends upon distributions from Lazard Group to pay
dividends and taxes and other expenses.
Lazard, Inc. is a holding company and has no independent means of generating significant revenue or cash. We
control Lazard Group through our indirect control of both of the managing members of Lazard Group. Following the
Conversion, all of our operating income will be subject to U.S. federal corporate income taxes, which we anticipate will
increase our effective tax rate and the amount of cash used to pay taxes. In addition, our subsidiaries incur income taxes on
the net taxable income of Lazard Group in their respective tax jurisdictions. We intend to continue to cause Lazard Group to
make distributions to our subsidiaries in an amount sufficient to cover all applicable taxes payable by us and dividends, if
any, declared by us. To the extent that our subsidiaries need funds to pay taxes on their share of Lazard Group’s net taxable
income, or if Lazard, Inc. needs funds for any other purpose, and Lazard Group is restricted from making such distributions
under applicable law or regulation, or is otherwise unable to provide such funds, it could materially adversely affect our
business, financial condition, results of operations and/or ability to return capital to our shareholders.
Lazard Group is a holding company and therefore depends on its subsidiaries to make distributions to
Lazard Group to enable it to service its obligations under its indebtedness.
Lazard Group depends on its subsidiaries, which conduct the operations of its businesses, for distributions, dividends
and other payments to generate the funds necessary to meet its financial obligations, including payments of principal and
interest on its indebtedness. However, none of Lazard Group’s subsidiaries is obligated to make funds available to it for
servicing such financial obligations, and the group of entities that constitute Lazard Group’s subsidiaries may change over
time. The earnings from, or other available assets of, Lazard Group’s subsidiaries may not be sufficient to pay dividends or
make distributions or loans to enable Lazard Group to make payments with respect to its financial obligations when such
payments are due. In addition, even if such earnings were sufficient, the agreements governing the current and future
obligations of Lazard Group’s subsidiaries, regulatory requirements, including regulatory capital requirements, with respect
to our broker-dealer and other regulated subsidiaries, foreign exchange controls and a variety of other factors may impede our
subsidiaries’ ability to provide Lazard Group with sufficient dividends, distributions or loans to fund its financial obligations,
when due.
32
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
We have made statements under the captions “Business,” “Risk Factors,” “Management’s Discussion and Analysis
of Financial Condition and Results of Operations” and in other sections of this Form 10-K that are forward-looking
statements. In some cases, you can identify these statements by forward-looking words such as “may,” “might,” “will,”
“should,” “could,” “would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “target,” “goal” or
“continue,” and the negative of these terms and other comparable terminology. These forward-looking statements, which are
subject to known and unknown risks, uncertainties and assumptions about us, may include projections of our future financial
performance based on our growth strategies, business plans and initiatives and anticipated trends in our business. These
statements are only predictions based on our current expectations and projections about future events. There are important
factors that could cause our actual results, level of activity, performance or achievements to differ materially from the results,
level of activity, performance or achievements expressed or implied by the forward-looking statements. These factors
include, but are not limited to, the numerous risks and uncertainties outlined in “Risk Factors,” including the following:
•
•
•
•
•
•
•
a decline in general economic conditions or the global or regional financial markets;
a decline in our revenues, for example due to a decline in overall M&A activity, our share of the M&A
market or our AUM;
losses caused by financial or other problems experienced by third parties;
losses due to unidentified or unanticipated risks;
a lack of liquidity, i.e., ready access to funds, for use in our businesses;
competitive pressure on our businesses and on our ability to retain and attract employees at current
compensation levels; and
changes in relevant tax laws, regulations or treaties or an adverse interpretation of these items.
These risks and uncertainties are not exhaustive. Other sections of this Form 10-K describe additional factors that
could adversely affect our business and financial performance. Moreover, we operate in a very competitive and rapidly
changing environment. New risks and uncertainties emerge from time to time, and it is not possible for our management to
predict all risks and uncertainties, nor can management assess the impact of all factors on our business or the extent to which
any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-
looking statements.
Although we believe the statements reflected in the forward-looking statements are reasonable, we cannot guarantee
future results, level of activity, performance, achievements or events. Moreover, neither we nor any other person assumes
responsibility for the accuracy or completeness of any of these forward-looking statements. You should not rely upon
forward-looking statements as predictions of future events. We are under no duty to update any of these forward-looking
statements after the date of this Form 10-K to conform our prior statements to actual results or revised expectations and we
do not intend to do so.
Forward-looking statements include, but are not limited to, statements about:
•
•
•
•
•
•
•
•
•
•
•
financial goals, including ratios of compensation and benefits expense to operating revenue;
ability to deploy surplus cash through dividends, share repurchases and debt repurchases;
ability to offset stockholder dilution through share repurchases;
possible or assumed future results of operations and operating cash flows;
strategies and investment policies;
financing plans and the availability of short-term borrowing;
competitive position;
future acquisitions, including the consideration to be paid and the timing of consummation;
potential growth opportunities available to our businesses;
potential impact of investments in our technology infrastructure and data science capabilities;
recruitment and retention of our managing directors and employees;
33
•
•
•
•
•
•
•
•
•
•
•
•
•
potential levels of compensation expense, including adjusted compensation and benefits expense, and non-
compensation expense;
potential operating performance, achievements, productivity improvements, efficiency and cost reduction
efforts;
statements regarding ESG goals and initiatives;
likelihood of success and impact of litigation;
ability to realize the anticipated benefits of the Conversion and impact on the trading price of our stock;
expected tax rates, including effective tax rates;
changes in interest and tax rates;
availability of certain tax benefits, including certain potential deductions;
potential impact of certain events or circumstances on our financial statements and operations;
changes in foreign currency exchange rates;
expectations with respect to the economy, the securities markets, the market for mergers, acquisitions,
restructuring and other financial advisory activity, the market for asset management activity and other
macroeconomic, regional and industry trends;
effects of competition on our business; and
impact of new or future legislation and regulation, including tax laws and regulations, on our business.
The Company is committed to providing timely and accurate information to the investing public, consistent with our
legal and regulatory obligations. To that end, Lazard and its operating companies use their websites, and other social media
sites to convey information about their businesses, including the anticipated release of quarterly financial results, quarterly
financial, statistical and business-related information, and the posting of updates of AUM in various mutual funds, hedge
funds and other investment products managed by LAM LLC and LFG. Investors can link to Lazard, Inc., Lazard Group and
their operating company websites through http://www.lazard.com. Our websites and social media sites and the information
contained therein or connected thereto shall not be deemed to be incorporated into this Form 10-K.
34
Item 1B.
Unresolved Staff Comments
There are no unresolved written comments that were received from the SEC staff 180 days or more before
December 31, 2023 relating to our periodic or current reports under the Exchange Act.
Item 1C.
Cybersecurity
Our business is highly dependent on electronic information resources used for the collection, processing,
maintenance, use, sharing, dissemination, or disposition of our and our clients’ information, which we refer to as
“information systems”, including our computer systems, hardware, software and networks and those of our third-party
vendors and service providers. Our operations rely on the secure processing, storage and transmission of confidential and
other information by our information systems and those of third parties.
Lazard maintains a formal, robust cybersecurity and information security program that is aligned with the National
Institute of Standards and Technology Cybersecurity Framework (“CSF”) and integrated into our overall risk management
process. Our Information Security Program, Policies and Standards are also designed to comply with the financial
regulations and cybersecurity laws in the jurisdictions in which we operate. By focusing on the following four
interconnected pillars, we aim to reduce the impact of cybersecurity incidents, safeguard our digital assets and foster a
proactive and comprehensive approach to cybersecurity within our organization.
• Risk assessments and mitigation strategies
◦
Conduct regular risk assessments to identify and prioritize critical assets and vulnerabilities, both
internally and with respect to third-party risks.
◦ Develop and implement appropriate mitigation strategies based on risk assessments.
◦ Monitor and evaluate the effectiveness of risk mitigation measures.
•
•
•
Professional cybersecurity staff
◦
◦
◦
Retain and recruit skilled cybersecurity professionals.
Provide regular training and development opportunities.
Foster collaboration and knowledge sharing among cybersecurity team members.
Security-aware organizational culture
◦ Maintain policies and procedures for reporting and responding to cybersecurity incidents.
◦
◦
Empower employees to take ownership of their cybersecurity responsibilities.
Promote a security-aware culture throughout the organization through regular training and awareness
programs.
Security technology
◦
◦
◦
Implement and maintain robust cybersecurity technologies, including advanced threat detection,
prevention and response tools.
Regularly evaluate and update our suite of cybersecurity technology to address emerging threats and
vulnerabilities.
Integrate cybersecurity technologies with other systems and processes.
Third-Party Monitoring and External Reviews
As noted above, our business regularly uses and relies on third-party information systems and services to process,
store and transmit confidential and other information. To support our cybersecurity oversight of third-party information
technology providers, we have integrated automated processes to manage third-party cloud security. We also use an
enterprise-wide third-party technology provider to assist in our identification and assessment of cybersecurity risks to the
Company presented by third parties, and our contracts are vetted by our internal legal and compliance departments as part
of a process designed to ensure that we are provided the right to audit and test the security and quality of each of our
vendors. As part of our screening and evaluation processes, we conduct due diligence on our potential vendors, as well as
regular assessments of current vendors, regarding compliance with law (including financial regulations, sanctions regimes
and data privacy regulations) and cybersecurity standards, including background checks and system tests.
35
Our Chief Information Security Officer (“CISO”) regularly engages independent third parties to assess the
performance of our cybersecurity risk management systems and procedures and to help test and identify cybersecurity risks
to the Company. Annually, we engage an independent third-party to perform a comprehensive review of our cybersecurity
programs, with the aim of ensuring alignment with the current version of the CSF. In addition, we engage several other
third parties at regular intervals for targeted assessments of specific cybersecurity risk management systems, tools, vendors
and processes. Among other things, tests include simulations of communications shared with affected stakeholders on
security events and identification of vulnerabilities. These third-party audits and assessments are used by management to
review, update and improve our cybersecurity risk management systems and identify vulnerabilities. Results and
recommendations are reported to our CISO, who reports to our General Counsel. Material findings are presented to the
Global Risk Committee (“GRC”), Audit Committee and the full Board as discussed below.
Cybersecurity Management Team and Board Oversight
Lazard’s cybersecurity program, which includes information security, is the primary responsibility of our CISO,
who oversees our global information security strategy and program and is supported by our Information Technology and
Information Security departments. The Company’s current CISO has held the position since 2015 and has been working in
technology risk management since 1991. The CISO holds a bachelor’s degree from New York Institute of Technology and
is an accredited Certified Information Systems Security Professional. Our CISO leads our Cybersecurity Incident Handling
Team (“CSIHT”), to which cybersecurity threats and cybersecurity incidents are reported. The CSIHT manages the
Company’s response to cybersecurity threats and cybersecurity incidents, including the prevention, detection, analysis,
containment, eradication and recovery thereof.
The CISO reports monthly to the GRC, which includes our Chief Executive Officer (“CEO”), Chief Financial
Officer (“CFO”) and General Counsel, among other members of senior management, regarding cybersecurity incidents
from the preceding month.
Our Internal Audit department regularly assesses and reports to the Audit Committee on the effectiveness of our
cybersecurity and information technology controls. Our Audit Committee reviews the Company’s cybersecurity risk profile
and risk management strategies at regular intervals. Our CFO reviews with the Audit Committee categories of risk the
Company faces, including cybersecurity risks, as well as the likelihood of the occurrence of cybersecurity risks, the
potential impact of those risks and the steps management has taken to monitor, mitigate and control such risks. In addition,
our CISO reports at least annually to the Board, and at least quarterly to the Board’s Audit Committee, with respect to
cybersecurity risks, including those identified through review of our business, of rising threats in the industry, and of the
current state of Lazard’s cybersecurity program. Updates on cybersecurity risks are reviewed at regular meetings of the
Audit Committee and reported to the full Board.
Incident Response and Assessment Policies and Procedures
Lazard has implemented policies and procedures to protect the firm from any interruptions to the availability of
our data and our systems and to protect the firm’s and our clients’ data from intentional and unintentional disclosure,
including disclosure arising from a range of cybersecurity threats. These policies and procedures outline actions to be taken
after identifying suspected cybersecurity threats and cybersecurity incidents and designate the persons responsible for
managing those actions.
Our disclosure controls and procedures provide for the CSIHT to report high severity cybersecurity incidents to an
Assessment Committee, consisting of our CFO, CISO and General Counsel, among others, for an assessment of
materiality. The Assessment Committee in consultation with third-party experts, as warranted, makes the incident
materiality determination consistent with SEC guidance and by considering relevant quantitative and qualitative factors,
including without limitation:
•
•
•
•
the probability of an adverse outcome;
the potential impact on financial results;
the likelihood of litigation or regulatory investigations; and
the potential impact on the Company’s reputation and competitiveness.
A determination that a cybersecurity incident has, or is reasonably likely to have, a material impact on the
Company is reported by the Assessment Committee to the CEO and the Board’s Audit Committee without delay. The
Assessment Committee also provides a summary of all incidents that are determined to be immaterial to the Board’s Audit
Committee at the next scheduled meeting.
36
For additional information regarding how cybersecurity threats or incidents are reasonably likely to materially
affect our business strategy, results of operations or financial condition, see “Risk Factors—A failure in or breach of our
information systems or infrastructure, or those of third parties with which we do business, including as a result of
cybersecurity incidents or threats, could disrupt our businesses, lead to reputational harm and legal liability or otherwise
impact our ability to operate our business” and “Risk Factors—Other operational risks may disrupt our businesses, result
in regulatory action against us or limit our growth.”
Item 2.
Properties
Lazard has offices located around the world. The following table lists the principal properties used for the Lazard
organization as of December 31, 2023. As a general matter, one or both of our Financial Advisory and Asset Management
segments (as well as our Corporate segment) uses the following properties.
Location
New York City
Paris
London
Offices
Principal office located at 30 Rockefeller Plaza
Principal offices located at 175 Boulevard Haussmann and 25 Rue de Courcelles
Principal office located at 50 Stratton Street
Item 3.
Legal Proceedings
The Company is involved from time to time in judicial, governmental, regulatory and arbitration proceedings and
inquiries concerning matters arising in connection with the conduct of our businesses, including proceedings initiated by
former employees alleging wrongful termination. The Company reviews such matters on a case-by-case basis and
establishes any required accrual if a loss is probable and the amount of such loss can be reasonably estimated. The
Company may experience significant variation in its revenue and earnings on an annual basis. Accordingly, the results of
any pending matter or matters could be significant when compared to the Company’s earnings in any particular year. The
Company believes, however, based on currently available information, that the results of any pending matters, in the
aggregate, will not have a material effect on its business or financial condition.
Item 4.
Mine Safety Disclosures
Not applicable.
37
Part II
Item 5.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities
Our common stock is traded on The New York Stock Exchange under the symbol “LAZ.”
As of January 26, 2024, there were approximately 18 holders of record of our common stock. This does not
include the number of shareholders that hold shares in “street-name” through banks or broker-dealers.
On January 26, 2024, the last reported sales price for our common stock on the New York Stock Exchange was
$39.49 per share.
Share Repurchases in the Fourth Quarter of 2023
The following table sets forth information regarding Lazard’s purchases of its common stock on a monthly basis
during the fourth quarter of 2023. Share repurchases are recorded on a trade date basis.
Total
Number
of Shares
Purchased
Average
Price Paid
per Share
Total Number
of Shares
Purchased
as Part of
Publicly
Announced
Plans or
Programs
Approximate
Dollar Value of
Shares that May
Yet Be
Purchased
Under the Plans
or
Programs
– $
9,600 $
– $
2,666 $
– $
7,578 $
– $
19,844 $
–
30.43
–
27.65
–
31.53
–
30.48
– $ 200.1 million
– $ 200.1 million
– $ 200.1 million
– $ 200.1 million
Period
October 1 – October 31, 2023
Share Repurchase Program (1)
Employee Transactions (2)
November 1 – November 30, 2023
Share Repurchase Program (1)
Employee Transactions (2)
December 1 – December 31, 2023
Share Repurchase Program (1)
Employee Transactions (2)
Total
Share Repurchase Program (1)
Employee Transactions (2)
______________________
(1)
The Board of Directors of Lazard authorized the repurchase of common stock as set forth in the table below.
Date
February 2022
July 2022
Repurchase
Authorization
($ in thousands)
Expiration
$
$
300,000 December 31, 2024
500,000 December 31, 2024
A significant portion of the Company’s purchases under the share repurchase program are used to offset a portion
of the shares that have been or will be issued under the Company’s 2018 Incentive Compensation Plan, as
amended (the “2018 Plan”). Purchases under the share repurchase program may be made in the open market or
through privately negotiated transactions. The rate at which the Company purchases shares in connection with the
share repurchase program may vary from quarter to quarter due to a variety of factors. Amounts shown in this line
item include repurchases of common stock and exclude the shares of common stock withheld by the Company to
meet the minimum statutory tax withholding requirements as described below.
Under the terms of the 2018 Plan, upon the settlement of RSUs, PRSUs, deferred stock units (“DSUs”) and
delivery of restricted stock, shares of common stock may be withheld by the Company to meet the minimum
(2)
38
statutory tax withholding requirements. During the three month period ended December 31, 2023, the Company
satisfied such obligations in lieu of issuing (i) 8,861 shares of common stock upon the settlement of 12,134 RSUs
and (ii) 10,983 shares of common stock upon the delivery of 24,363 shares of restricted stock.
During the year ended December 31, 2023, Lazard had in place trading plans under Rule 10b5-1 of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”), pursuant to which it effected stock repurchases in the open
market.
Equity Compensation Plan Information
See Item 12, “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters—Equity Compensation Plan Information.”
Stock Performance
The stock performance graph below compares the performance of an investment in our common stock, from
December 31, 2018 through December 31, 2023, with that of the S&P 500 Index and the S&P Financial Index. The graph
assumes $100 was invested at the close of business on December 31, 2018 in each of our common stock, the S&P 500
Index and the S&P Financial Index. It also assumes that dividends were reinvested on the date of payment without payment
of any commissions. The performance shown in the graph represents past performance and should not be considered an
indication of future performance.
Other Matters
None.
Item 6.
[Reserved]
39
LazardS&P Financial IndexS&P 500 Index12/31/201812/31/201912/31/202012/31/202112/30/202212/29/2023$0$50$100$150$200$250 Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion should be read in conjunction with Lazard’s consolidated financial statements and the
related notes included elsewhere in this Annual Report on Form 10-K (this “Form 10-K”). This discussion contains
forward-looking statements that are subject to known and unknown risks and uncertainties. Actual results and the timing of
events may differ significantly from those expressed or implied in such forward-looking statements due to a number of
factors, including those set forth in the sections entitled “Risk Factors” and “Special Note Regarding Forward-Looking
Statements” and elsewhere in this Form 10-K.
Business Summary
Lazard, one of the world’s preeminent financial advisory and asset management firms, operates in North and
South America, Europe, the Middle East, Asia and Australia. With origins dating to 1848, we have long specialized in
crafting solutions to the complex financial and strategic challenges of a diverse set of clients around the world, including
corporations, governments, institutions, partnerships and individuals.
Our primary business purpose is to serve our clients. Our deep roots in business centers around the world form a
global network of relationships with key decision-makers in corporations, governments and investing institutions. This
network is both a competitive strength and a powerful resource for Lazard and our clients. As a firm that competes on the
quality of our advice, we have two fundamental assets: our people and our reputation.
We operate in cyclical businesses across multiple geographies, industries and asset classes. In recent years, we
have expanded our geographic reach, bolstered our industry expertise and continued to build in growth areas. Companies,
government bodies and investors seek independent advice with a geographic perspective, deep understanding of capital
structure, informed research and knowledge of global, regional and local economic conditions. We believe that our
business model as an independent advisor will continue to create opportunities for us to attract new clients and key
personnel.
Our principal sources of revenue are derived from activities in the following business segments:
•
•
Financial Advisory, which offers corporate, partnership, institutional, government, sovereign and
individual clients across the globe a wide array of financial advisory services regarding strategic and
mergers and acquisitions (“M&A”) advisory, capital markets advisory, shareholder advisory,
restructuring and liability management, sovereign advisory, geopolitical advisory and other strategic
advisory matters and capital raising and placement, and
Asset Management, which offers a broad range of global investment solutions and investment and wealth
management services in equity and fixed income strategies, asset allocation strategies, alternative
investments and private equity funds to corporations, public funds, sovereign entities, endowments and
foundations, labor funds, financial intermediaries and private clients.
In addition, we record selected other activities in our Corporate segment, including management of cash,
investments, deferred tax assets, outstanding indebtedness, certain contingent obligations and certain assets and liabilities
associated with a special purpose acquisition company that was sponsored by an affiliate of the Company, Lazard Growth
Acquisition Corp. I (“LGAC”). We also invest our own capital from time to time, generally alongside capital of qualified
institutional and individual investors in alternative investments or private equity investments, and make investments to seed
our Asset Management strategies.
Our consolidated net revenue was derived from the following segments:
Financial Advisory
Asset Management
Corporate
Total
Year Ended December 31,
2023
2022
2021
55%
46
(1)
100%
60%
43
(3)
100%
55%
45
–
100%
40
Conversion to a U.S. C-Corporation
On January 1, 2024, we completed our Conversion from an exempted company incorporated under the laws of
Bermuda named Lazard Ltd to a U.S. C-Corporation named Lazard, Inc. We believe that the Conversion may expand our
shareholder base by simplifying tax reporting and enhancing trading liquidity.
Business Environment and Outlook
Economic and global financial market conditions can materially affect our financial performance. As described
above, our principal sources of revenue are derived from activities in our Financial Advisory and Asset Management
business segments. Our Financial Advisory revenues are primarily dependent on the successful completion of merger,
acquisition, sale, restructuring, capital raising or similar transactions, and our Asset Management revenues are primarily
driven by the levels of assets under management (“AUM”). Weak global economic and financial market conditions can
result in a challenging business environment for M&A and capital-raising activity as well as our Asset Management
business, but may provide opportunities for our restructuring business.
The global macroeconomic environment is improving and capital market trends are positive. At the same time,
there is a high degree of geopolitical uncertainty that continues to be top of mind for decision-makers. In our Financial
Advisory business, we are seeing M&A activity strengthen while financing, valuation, and regulatory headwinds abate. In
our Asset Management business, positive market sentiment and a widening dispersion of returns across asset classes is
leading to increased investor interest across a range of actively managed strategies.
Our outlook with respect to our Financial Advisory and Asset Management businesses is described below.
•
•
Financial Advisory—Despite M&A announcements in 2023 being at their lowest levels in a decade, we
remained actively engaged with our clients. The global scale and breadth of our Financial Advisory
business, with particular strength in both the U.S. and Europe, enables us to advise on a wide range of
strategic and restructuring transactions across a variety of industries. In 2024, we could see increased
M&A activity occurring alongside greater restructuring activity as rates remain high and debt maturities
approach. In addition, we continue to invest in our Financial Advisory business by selectively hiring
talented senior professionals in an effort to enhance our capabilities and sector expertise in M&A, capital
structure, restructuring, and public and private capital markets.
Asset Management—Given our diversified, actively managed investment platform and our ability to
provide investment solutions for a global mix of clients, we believe we are positioned to benefit from
opportunities across the asset management industry. We are continually developing new investment
strategies that extend our existing platforms and assessing potential product acquisitions or other
inorganic growth opportunities.
We operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge
continuously, and it is not possible for our management to predict all risks and uncertainties, nor can we assess the impact
of all potentially applicable factors on our business or the extent to which any factor, or combination of factors, may cause
actual results to differ materially from those contained in any forward-looking statements. See Item 1A, “Risk Factors” in
this Form 10-K. Furthermore, net income and revenue in any period may not be indicative of full-year results or the results
of any other period and may vary significantly from year to year and quarter to quarter.
Overall, we continue to focus on the development of our business, including the generation of revenue growth,
earnings growth and shareholder returns, the evaluation of potential growth opportunities, the investment in new
technology to support the development of existing and new business opportunities, the prudent management of our costs
and expenses, the efficient use of our assets and the return of capital to our shareholders.
Certain market data with respect to our Financial Advisory and Asset Management businesses is included below.
41
Financial Advisory
As reflected in the following table, which sets forth global M&A industry statistics, the value and number of all
completed transactions, including the subset of completed transactions involving values greater than $500 million,
decreased in 2023 as compared to 2022. With respect to announced M&A transactions, the value and number of all
transactions, including the subset of announced transactions involving values greater than $500 million, decreased in 2023
as compared to 2022.
Completed M&A Transactions:
All deals:
Value
Number
Deals Greater than $500 million:
Value
Number
Announced M&A Transactions:
All deals:
Value
Number
Deals Greater than $500 million:
Value
Number
________________________
Source: Dealogic as of January 5, 2024.
Year Ended December 31,
2023
2022
($ in billions)
%
Incr / (Decr)
$
$
$
$
2,915 $
33,219
4,285
42,993
2,274 $
948
3,252
1,407
3,134 $
36,014
3,743
43,538
2,380 $
1,096
2,716
1,235
(32) %
(23) %
(30) %
(33) %
(16) %
(17) %
(12) %
(11) %
Global restructuring activity during 2023, as measured by the number of corporate defaults, increased as
compared to 2022. The number of defaulting issuers was 159 in 2023, according to Moody’s Investors Service, Inc., as
compared to 157 in 2022.
Net revenue trends in Financial Advisory are generally correlated to the level of completed industry-wide M&A
transactions and restructuring transactions occurring subsequent to corporate debt defaults, respectively. However,
deviations from this relationship can occur in any given year for a number of reasons. For instance, our results can diverge
from industry-wide activity where there are material variances from the level of industry-wide M&A activity in a particular
market where Lazard has greater or lesser relative market share, or regarding the relative number of our advisory
engagements with respect to larger-sized transactions, and where we are involved in non-public or sovereign advisory
assignments.
42
Asset Management
The percentage change in major equity market indices (i) at December 31, 2023, as compared to such indices at
December 31, 2022, and (ii) at December 31, 2022, as compared to such indices at December 31, 2021, is shown in the
table below.
MSCI World Index
Euro Stoxx
MSCI Emerging Market
S&P 500
Percentage Changes
December 31,
2023 vs 2022
2022 vs 2021
24%
23%
10%
26%
(18%)
(9%)
(20%)
(18%)
The fees that we receive for providing investment management and advisory services are primarily driven by the
level of AUM and the nature of the AUM product mix. Accordingly, market movements, foreign currency exchange rate
volatility and changes in our AUM product mix will impact the level of revenues we receive from our Asset Management
business when comparing periodic results. A substantial portion of our AUM is invested in equities. Movements in AUM
during the period generally reflect the changes in equity market indices.
Financial Statement Overview
Net Revenue
The majority of Lazard’s Financial Advisory net revenue historically has been earned from advice and other
services provided in M&A transactions. The amount of the fee earned can vary depending upon the type, size and
complexity of the transaction Lazard is advising on. M&A fees can be earned as a retainer, working fee, announcement fee,
milestone fee, opinion fee or transaction completion fee. With most fees being paid upon completion of a transaction the
timing can be impacted by delays to securing financing, board approvals, regulatory approvals, shareholder votes, changing
market conditions or other factors.
Our restructuring and liability management team advises on situations where our clients are financially distressed,
providing advice on financial debt restructurings, liability management and M&A. Bankruptcy proceedings may require
court approval of our fees. The capital markets advisory team advises both public and private issuers on the raising of
capital, while the private capital advisory team provides fundraising and secondary advisory services for private equity,
private credit, real estate and real assets-focused investment firms. Additionally, Lazard earns fees from providing strategic
advice to clients, which may include shareholder advisory, geopolitical advisory and other strategic advisory matters, with
such fees not being dependent on the completion of a transaction.
Our Financial Advisory businesses may be impacted by overall M&A activity levels in the market, the level of
corporate debt defaults and the environment for capital raising activities, among other factors.
Significant fluctuations in Financial Advisory net revenue can occur over the course of any given year, because a
significant portion of such net revenue is earned upon the successful completion of a transaction, restructuring or capital
raising activity, the timing of which is uncertain and is not subject to Lazard’s control.
Lazard’s Asset Management segment principally includes LAM, LFG, LFB and Edgewater. Asset Management
net revenue is derived from fees for investment management and advisory services provided to clients. As noted above, the
main driver of Asset Management net revenue is the level and product mix of AUM, which is generally influenced by the
performance of the global equity markets and, to a lesser extent, fixed income markets as well as Lazard’s investment
performance, which impacts its ability to successfully attract and retain assets. As a result, fluctuations (including timing
thereof) in financial markets and client asset inflows and outflows have a direct effect on Asset Management net revenue
and operating income. Asset Management fees are generally based on the level of AUM measured daily, monthly or
quarterly, and an increase or reduction in AUM, due to market price fluctuations, currency fluctuations, changes in product
mix, or net client asset flows will result in a corresponding increase or decrease in management fees. Our investment
advisory contracts are generally terminable at any time or on notice of 30 days or less. Institutional and individual clients,
and firms with which we have strategic alliances, can terminate their relationship with us, reduce the aggregate amount of
AUM or shift their funds to other types of accounts with different rate structures for a number of reasons, including
43
investment performance, changes in prevailing interest rates and financial market performance. In addition, as Lazard’s
AUM includes significant amounts of assets that are denominated in currencies other than U.S. Dollars, changes in the
value of the U.S. Dollar relative to foreign currencies will impact the value of Lazard’s AUM and the overall amount of
management fees generated by the AUM. Fees vary with the type of assets managed and the vehicle in which they are
managed, with higher fees earned on equity assets and alternative investment funds, such as hedge funds and private equity
funds, and lower fees earned on fixed income and cash management products.
The Company earns performance-based incentive fees on various investment products, including traditional
products and alternative investment funds, such as hedge funds and private equity funds.
For hedge funds, incentive fees are calculated based on a specified percentage of a fund’s net appreciation, in
some cases in excess of established benchmarks or thresholds. The Company records incentive fees on traditional products
and hedge funds at the end of the relevant performance measurement period, when potential uncertainties regarding the
ultimate realizable amounts have been determined. The incentive fee measurement period is generally an annual period
(unless an account terminates or redemption occurs during the year). The incentive fees received at the end of the
measurement period are not subject to reversal or payback. Incentive fees on hedge funds are often subject to loss
carryforward provisions in which losses incurred by the hedge funds in any year are applied against certain gains realized
by the hedge funds in future periods before any incentive fees can be earned.
For private equity funds, incentive fees may be earned in the form of a “carried interest” if profits arising from
realized investments exceed a specified threshold. Typically, such carried interest is ultimately calculated on a whole-fund
or investment by investment basis and, therefore, clawback of carried interest toward the end of the life of the fund can
occur. As a result, the Company recognizes incentive fees earned on our private equity funds only when it is probable that a
clawback will not occur.
Corporate segment net revenue consists primarily of investment gains and losses on the Company’s investments to
seed strategies in our Asset Management business, net of hedging activities, and principal investments in private equity
funds, as well as gains and losses on investments held in connection with Lazard Fund Interests (“LFI”) and interest
income and interest expense. Corporate net revenue can fluctuate due to changes in the fair value of debt and equity
securities, as well as due to changes in interest and currency exchange rates and the levels of cash, investments and
indebtedness.
Corporate segment total assets represented 49% of Lazard’s consolidated total assets as of December 31, 2023,
which are attributable to cash and cash equivalents, investments in debt and equity securities, interests in alternative
investment, debt, equity and private equity funds and deferred tax assets.
Operating Expenses
The majority of Lazard’s operating expenses relate to compensation and benefits for managing directors and
employees. Our compensation and benefits expense includes (i) salaries and benefits, (ii) amortization of the relevant
portion of previously granted deferred incentive compensation awards, including (a) share-based incentive compensation
under Lazard’s 2018 Incentive Compensation Plan, as amended (the “2018 Plan”) and (b) LFI and other similar deferred
compensation arrangements (see Note 16 of Notes to Consolidated Financial Statements), (iii) a provision for discretionary
or guaranteed cash bonuses and profit pools and (iv) when applicable, severance payments. Compensation expense in any
given period is dependent on many factors, including general economic and market conditions, our actual and forecasted
operating and financial performance, staffing levels, estimated forfeiture rates, competitive pay conditions and the nature of
revenues earned, as well as the mix between current and deferred compensation.
We use “adjusted compensation and benefits expense” and the ratio of “adjusted compensation and benefits
expense” to “operating revenue,” both non-GAAP measures, for comparison of compensation and benefits expense
between periods. For the reconciliations and calculations with respect to “adjusted compensation and benefits expense” and
related ratios to “operating revenue,” see the table under “Consolidated Results of Operations” below.
Compensation and benefits expense is the largest component of our operating expenses. We seek to maintain
discipline with respect to compensation, including the rate at which we award deferred compensation. We focus on a ratio
of adjusted compensation and benefits expense to operating revenue to manage costs, balancing a view of current market
conditions alongside our objective to drive long-term shareholder value. Our goal remains to maintain a ratio of adjusted
compensation and benefits expense to operating revenue over the cycle in the mid- to high-50s percentage range, while
44
targeting a consistent deferral policy. While we have implemented policies and initiatives that we believe will assist us in
maintaining ratios within this range, there can be no guarantee that we will be able to maintain such ratios, or that our
policies or initiatives will not change, in the future. Our practice is to pay our employees competitively to foster retention
and motivate performance and, in doing so, we look to the market for talent and other factors, which are typically
correlated with industry revenues, but may vary year by year. At the same time, the amount of compensation we award in a
particular year is, in part, deferred and amortized over the successive years. Increased competition for professionals,
changes in the macroeconomic environment or the financial markets generally, lower operating revenue resulting from, for
example, a decrease in M&A activity, our share of the M&A market or our AUM levels, changes in the mix of revenues
from our businesses, investments in our businesses or various other factors could prevent us from achieving this goal.
Our operating expenses also include “non-compensation expense”, which includes costs for occupancy and
equipment, marketing and business development, technology and information services, professional services, fund
administration and outsourced services, amortization and other acquisition-related costs and other expenses. Our occupancy
costs represent a significant portion of our aggregate operating expenses and are subject to change from time to time,
particularly as leases for real property expire and are renewed or replaced with new, long-term leases for the same or other
real property.
We believe that “adjusted non-compensation expense”, a non-GAAP measure, when presented in conjunction
with measures prepared in accordance with accounting principles generally accepted in the United States of America (“U.S.
GAAP”) provides a meaningful and useful basis for our investors to assess our operating results. For calculations with
respect to “adjusted non-compensation expense”, see the table under “Consolidated Results of Operations” below. Our
operating expenses also include our “provision (benefit) pursuant to tax receivable agreement” .
To the extent inflation results in rising interest rates and has other effects upon the securities markets or general
macroeconomic conditions, it may adversely affect our financial position and results of operations by impacting overall
levels of M&A activity, reducing our AUM or net revenue, increasing non-compensation expense, or otherwise.
Cost-Saving Initiatives
The Company conducted firm-wide cost-saving initiatives over the course of 2023 that will continue through the
first quarter of 2024. See Note 18 of Notes to Consolidated Financial Statements.
Provision for Income Taxes
On January 1, 2024, we completed our Conversion from an exempted company incorporated under the laws of
Bermuda named Lazard Ltd to a U.S. C-Corporation named Lazard, Inc. Following the Conversion, all of our operating
income will be subject to U.S. federal corporate income taxes, which we anticipate will increase our effective tax rate.
Lazard, Inc. is subject to U.S. federal income taxes on all of its operating income and Lazard, through its
subsidiaries, is also subject to state and local taxes on its income apportioned to various state and local jurisdictions. Lazard
Group operates principally through subsidiary corporations including through those domiciled outside the U.S. that are
subject to local income taxes in foreign jurisdictions. In addition, Lazard Group is subject to Unincorporated Business Tax
(“UBT”) attributable to its operations apportioned to New York City.
Additionally, the Organization for Economic Cooperation and Development (the “OECD”) reached agreement
among various countries, including the EU member states, to establish a 15% minimum tax on certain multinational
companies, commonly called “Pillar Two”. Many countries continue to announce changes in their tax laws and regulations
to implement the OECD Pillar Two proposals. Lazard is continuing to evaluate the potential impact on future periods of the
Pillar Two proposals, as new guidance becomes available.
See “Critical Accounting Policies and Estimates—Income Taxes” below and Notes 19 and 21 of Notes to
Consolidated Financial Statements for additional information regarding income taxes, our deferred tax assets and the tax
receivable agreement obligation.
Noncontrolling Interests
Noncontrolling interests primarily consist of (i) amounts related to Edgewater’s management vehicles that the
Company is deemed to control but not own, (ii) LGAC interests (see Note 1 of Notes to Consolidated Financial
Statements), (iii) profits interest participation rights and (iv) consolidated VIE interests held by employees. See Notes 15
45
and 24 of Notes to Consolidated Financial Statements for information regarding the Company’s noncontrolling interests
and consolidated VIEs.
Consolidated Results of Operations
Lazard’s consolidated financial statements are presented in U.S. Dollars. Many of our non-U.S. subsidiaries have
a functional currency (i.e., the currency in which operational activities are primarily conducted) that is other than the U.S.
Dollar, generally the currency of the country in which the subsidiaries are domiciled. Such subsidiaries’ assets and
liabilities are translated into U.S. Dollars using exchange rates as of the respective balance sheet date, while revenue and
expenses are translated at average exchange rates during the respective periods based on the daily closing exchange rates.
Adjustments that result from translating amounts from a subsidiary’s functional currency are reported as a component of
stockholders’ equity. Foreign currency remeasurement gains and losses on transactions in non-functional currencies are
included in the consolidated statements of operations.
The consolidated financial statements are prepared in conformity with U.S. GAAP. Selected financial data derived
from the Company’s reported consolidated results of operations is set forth below, followed by a more detailed discussion
of both the consolidated and business segment results.
Net Revenue
Operating Expenses:
Compensation and benefits
Non-compensation
Provision (benefit) pursuant to tax receivable agreement
Total operating expenses
Operating Income (Loss)
Provision (benefit) for income taxes
Net Income (Loss)
Less - Net Income (Loss) Attributable to Noncontrolling Interests
Year Ended December 31,
2023
2022
2021
($ in thousands)
$ 2,515,489
$ 2,773,571
$ 3,193,048
1,946,010
1,656,451
1,895,859
693,330
(43,894)
601,481
(1,209)
571,142
2,199
2,595,446
2,256,723
2,469,200
(79,957)
(22,650)
(57,307)
18,172
516,848
124,365
392,483
34,966
723,848
181,303
542,545
14,481
Net Income (Loss) Attributable to Lazard Ltd
$
(75,479)
$
357,517
$
528,064
Operating Income (Loss), as a % of net revenue
(3.2) %
18.6 %
22.7 %
The tables below describe the components of operating revenue, adjusted compensation and benefits expense,
adjusted non-compensation expense, earnings from operations and related key ratios, which are non-GAAP measures used
by the Company to manage its business. We believe such non-GAAP measures in conjunction with U.S. GAAP measures
provide a meaningful and useful basis for comparison between present, historical and future periods, as described above.
46
Operating Revenue:
Net revenue
Adjustments:
Interest expense (a)
Distribution fees, reimbursable deal costs, bad debt expense and
other (b)
Asset impairment charges
Revenue related to noncontrolling interests (c)
(Gains) losses on investments pertaining to LFI (d)
Losses associated with cost-saving initiatives, restructuring and
closing of certain offices (e)
Operating revenue (f)
________________________
Year Ended December 31,
2023
2022
2021
($ in thousands)
$
2,515,489 $
2,773,571 $
3,193,048
77,457
76,528
74,375
(105,681)
19,129
(30,190)
(41,463)
(76,229)
–
(49,073)
44,261
(85,053)
–
(31,624)
(35,494)
4,878
2,439,619 $
$
–
2,769,058 $
23,645
3,138,897
(a)
(b)
(c)
(d)
(e)
(f)
Interest expense (excluding interest expense incurred by LFB) is added back in determining operating revenue
because such expense relates to corporate financing activities and is not considered to be a cost directly related to
the revenue of our business.
Represents certain distribution, introducer and management fees paid to third parties, reimbursable deal costs and
bad debt expenses relating to fees and other receivables that are deemed uncollectible for which an equal amount
is excluded for purposes of determining adjusted non-compensation expense.
Revenue or loss related to the consolidation of noncontrolling interests is excluded from operating revenue
because the Company has no economic interest in such amount.
Represents changes in the fair value of investments held in connection with LFI and other similar deferred
compensation arrangements for which a corresponding equal amount is excluded from compensation and benefits
expense.
Represents losses associated with the reclassification of currency translation adjustments to earnings from
accumulated other comprehensive losses in the year ended December 31, 2023 and 2021 and transactions related
to foreign currency exchange in the year ended December 31, 2023.
Operating revenue is a non-GAAP measure.
Adjusted Compensation and Benefits Expense:
Total compensation and benefits expense
Adjustments:
Noncontrolling interests (a)
(Charges) credits pertaining to LFI (b)
Expenses associated with senior management transition (c)
Expenses associated with cost-saving initiatives, restructuring and
closing of certain offices
Adjusted compensation and benefits expense (d)
Adjusted compensation and benefits expense, as a % of operating
revenue
________________________
Year Ended December 31,
2023
2022
2021
($ in thousands)
$ 1,946,010
$ 1,656,451
$ 1,895,859
(9,233)
(41,463)
(10,674)
(10,855)
44,261
(33,019)
(9,216)
(35,494)
–
(182,103)
$ 1,702,537
–
$ 1,656,838
(14,922)
$ 1,836,227
69.8 %
59.8 %
58.5 %
(a)
Expenses related to the consolidation of noncontrolling interests are excluded because Lazard has no economic
interest in such amounts.
47
(b)
(c)
(d)
Represents changes in fair value of the compensation liability recorded in connection with LFI and other similar
deferred incentive compensation awards for which a corresponding equal amount is excluded from operating
revenue.
Represents expenses associated with senior management transition reflecting the departure of certain executive
officers.
Adjusted compensation and benefits expense is a non-GAAP measure.
Adjusted Non-Compensation Expense:
Total non-compensation expense
Adjustments:
Expenses relating to office space reorganization (a)
Distribution fees, reimbursable deal costs, bad debt expense and
other (b)
Amortization and other acquisition-related costs
Noncontrolling interests (c)
Expenses associated with cost-saving initiatives, restructuring and
Year Ended December 31,
2023
2022
2021
($ in thousands)
$
693,330
$
601,481
$
571,142
–
(3,764)
(4,611)
(105,681)
(334)
(2,788)
(76,229)
(60)
(3,255)
(85,053)
(60)
(7,932)
closing of certain offices
Adjusted non-compensation expense (d)
(13,023)
–
(1,539)
$
571,504
$
518,173
$
471,947
Adjusted non-compensation expense, as a % of operating revenue
23.4 %
18.7 %
15.0 %
________________________
(a)
(b)
(c)
(d)
Represents building depreciation and other costs related to office space reorganization.
Represents certain distribution, introducer and management fees paid to third parties, reimbursable deal costs and
bad debt expenses relating to fees and other receivables that are deemed uncollectible for which an equal amount
is included for purposes of determining operating revenue.
Expenses related to the consolidation of noncontrolling interests are excluded because the Company has no
economic interest in such amounts.
Adjusted non-compensation expense is a non-GAAP measure.
Earnings From Operations (a):
Operating revenue
Deduct:
Adjusted compensation and benefits expense
Adjusted non-compensation expense
Earnings from operations
Earnings from operations, as a % of operating revenue
_________________
(a)
Earnings from operations is a non-GAAP measure.
Year Ended December 31,
2023
2022
2021
($ in thousands)
$ 2,439,619
$ 2,769,058
$ 3,138,897
(1,702,537)
(571,504)
165,578
$
(1,656,838)
(518,173)
594,047
$
(1,836,227)
(471,947)
830,723
$
6.8 %
21.5 %
26.5 %
48
Headcount information is set forth below:
Headcount:
Managing Directors:
Financial Advisory (a)
Asset Management
Corporate
Total Managing Directors
Other Business Segment Professionals and Support Staff:
Financial Advisory (a)
Asset Management
Corporate
Total
________________________
As of December 31,
2023
2022
2021
210
114
26
350
1,393
1,107
441
3,291
212
120
25
357
1,463
1,105
477
3,402
179
110
22
311
1,349
1,088
431
3,179
(a)
Financial Advisory headcount reflects that, in addition to customary year-end changes, 20 employees were
reclassified in the first quarter of 2022 from professionals to managing directors in connection with a
consolidation of the Lazard Middle Market LLC broker-dealer license.
A review of our operating results for the year ended December 31, 2023 compared to our operating results for the
year ended December 31, 2022 appears below. A detailed review of our operating results for the year ended December 31,
2022 compared to the year ended December 31, 2021 is set forth in Part II, Item 7 of our Annual Report on Form 10-K for
the year ended December 31, 2022 under the caption “Management’s Discussion and Analysis of Financial Condition and
Results of Operations—Operating Results”.
Operating Results
Year Ended December 31, 2023 versus December 31, 2022
The Company reported a net loss attributable to Lazard Ltd of $75 million, as compared to net income attributable
to Lazard Ltd of $358 million in 2022.
Net revenue decreased $258 million, or 9%, with operating revenue decreasing $329 million, or 12%, as compared
to 2022. Fee revenue from investment banking and other advisory activities decreased $275 million, or 17%, as compared
to 2022. Asset management fees, including incentive fees, decreased $48 million, or 4%, as compared to 2022. In the
aggregate, interest income, other revenue and interest expense increased $65 million as compared to 2022, the majority of
which is recorded in the Corporate segment.
Compensation and benefits expense increased $290 million, or 17%, as compared to 2022.
Adjusted compensation and benefits expense (which excludes certain items and which we believe allows for
improved comparability between periods, as described above) was $1,703 million, an increase of $46 million, or 3%, as
compared to $1,657 million in 2022. The ratio of adjusted compensation and benefits expense to operating revenue was
69.8% for 2023, as compared to 59.8% for 2022.
Non-compensation expense increased $92 million, or 15%, as compared to 2022, primarily due to higher
professional services expenses and travel and business development expenses, continued investments in technology and
expenses associated with the cost-saving initiatives in 2023. Adjusted non-compensation expense increased $53 million, or
10%, as compared to 2022. The ratio of adjusted non-compensation expense to operating revenue was 23.4% for 2023, as
compared to 18.7% for 2022.
The Company reported an operating loss of $80 million, as compared to operating income of $517 million in
2022.
49
Earnings from operations decreased $428 million, or 72%, as compared to 2022, and, as a percentage of operating
revenue, was 6.8%, as compared to 21.5% in 2022.
The provision for income taxes reflects an effective tax rate of 28.3%, as compared to 24.1% in 2022. See Note 19
of Notes to Consolidated Financial Statements.
Net income attributable to noncontrolling interests decreased $17 million as compared to 2022. See Note 15 of
Notes to Consolidated Financial Statements.
Business Segments
The following is a discussion of net revenue and operating income for the Company’s segments: Financial
Advisory, Asset Management and Corporate. See Note 23 of Notes to Consolidated Financial Statements for further
information regarding segments.
Financial Advisory
The following table summarizes the reported operating results attributable to the Financial Advisory segment:
Net Revenue
Operating Expenses (a)
Operating Income (Loss)
Year Ended December 31,
2023
2022
2021
($ in thousands)
$ 1,385,357
$ 1,666,156
$ 1,764,509
1,489,862
1,304,715
1,356,567
$
(104,505)
$
361,441
$
407,942
Operating Income (Loss), as a % of net revenue
(7.5) %
21.7 %
23.1 %
_______________________________________
(a) See Note 18 of Notes to Consolidated Financial Statements for information regarding cost-saving initiatives.
Certain Lazard fee and transaction statistics for the Financial Advisory segment are set forth below:
Lazard Statistics:
Number of clients with fees greater than $1 million:
Financial Advisory
Percentage of total Financial Advisory net revenue from top 10 clients
(a)
Number of M&A transactions completed with values greater than $500
million (b)
________________________
Year Ended December 31,
2023
2022
2021
299
304
370
19%
47
19%
91
15%
104
(a)
(b)
No individual client constituted more than 10% of our Financial Advisory segment net revenue in the years ended
December 31, 2023, 2022 and 2021.
Source: Dealogic as of January 5, 2024.
The geographical distribution of Financial Advisory net revenue is set forth below in percentage terms and is
based on the Lazard offices that generate Financial Advisory net revenue, which are located in the Americas (U.S. and
50
Latin America), EMEA (primarily in the U.K., France, Germany, Italy and Spain) and the Asia Pacific region and therefore
may not be reflective of the geography in which the clients are located.
Americas
EMEA
Asia Pacific
Total
Year Ended December 31,
2023
2022
2021
55%
44
1
100%
59%
40
1
100%
62%
37
1
100%
The Company’s managing directors and many of its professionals have significant experience, and many of them
are able to use this experience to advise on a combination of M&A, restructuring and other strategic advisory matters,
depending on clients’ needs. This adaptability enables Lazard to more effectively deploy its professionals to best advantage
based on the often counter-cyclical nature of restructuring as compared to our M&A business. While Lazard measures
revenue by practice area, Lazard does not separately measure the costs or profitability of M&A services as compared to
restructuring or other services. Accordingly, Lazard measures performance in its Financial Advisory segment based on
overall segment operating revenue and operating income margins.
Financial Advisory Results of Operations
Year Ended December 31, 2023 versus December 31, 2022
Financial Advisory net revenue decreased $281 million, or 17%, as compared to 2022. The decrease in Financial
Advisory net revenue was primarily driven by decreased number of completed M&A transactions with values greater than
$500 million as compared to 2022, reflecting a significant decline in industry-wide completed M&A transactions.
Operating expenses, which include $101 million associated with cost-saving initiatives in 2023, increased $185
million, or 14%, as compared to 2022.
The Financial Advisory operating loss was $105 million, as compared to operating income of $361 million in
2022 and, as a percentage of net revenue, was (7.5)%, as compared to 21.7% in 2022.
Asset Management
Assets Under Management
AUM primarily consists of debt and equity instruments, which have a value that is readily available based on
either prices quoted on a recognized exchange or prices provided by external pricing services.
Prices of equity and debt securities and other instruments that comprise our AUM are provided by well-
recognized, independent, third-party vendors. Such third-party vendors rely on prices provided by external pricing services
which are obtained from recognized exchanges or markets, or, for certain fixed income securities, from evaluated bids or
other similarly sourced price.
Either directly, or through our third-party vendors, we perform a variety of regular due diligence procedures on
our pricing service providers.
51
The following table shows the composition of AUM for the Asset Management segment (see Item 1, “Business—
Principal Business Lines—Asset Management—Investment Strategies”):
AUM by Asset Class:
Equity:
Emerging Markets
Global
Local
Multi-Regional
Total Equity
Fixed Income:
Emerging Markets
Global
Local
Multi-Regional
Total Fixed Income
Alternative Investments
Other Alternative Investments
Private Equity
Cash Management
Total AUM
As of December 31,
2023
2022
2021
($ in millions)
$
25,288 $
53,528
21,557 $
46,861
52,208
59,114
190,138
9,525
10,762
6,080
21,740
48,107
3,330
2,799
1,623
47,504
51,473
167,395
8,944
11,029
5,352
18,061
43,386
3,812
–
1,038
654
246,651 $
494
216,125 $
$
31,227
59,516
56,310
73,953
221,006
12,231
14,410
6,022
13,623
46,286
4,203
–
1,290
954
273,739
Total AUM at December 31, 2023 was $247 billion, an increase of $31 billion, or 14%, as compared to total
AUM of $216 billion at December 31, 2022 due to market and foreign exchange appreciation, partially offset by net
outflows. Average AUM for the year ended December 31, 2023 increased $6 billion, or 2%, as compared to 2022.
As of both December 31, 2023 and 2022, approximately 85% of our AUM was managed on behalf of institutional
and intermediary clients, including corporations, labor unions, public pension funds, insurance companies and banks, and
through sub-advisory relationships, mutual fund sponsors, broker-dealers and registered advisors. As of both December 31,
2023 and 2022, approximately 15% of our AUM was managed on behalf of individual client relationships.
As of December 31, 2023, AUM with foreign currency exposure represented approximately 64% of our total
AUM as compared to 65% at December 31, 2022. AUM with foreign currency exposure generally declines in value with
the strengthening of the U.S. Dollar and increases in value as the U.S. Dollar weakens, with all other factors held constant.
The following is a summary of changes in AUM by asset class for the years ended December 31, 2023, 2022 and
2021:
Year Ended December 31, 2023
AUM
Beginning
Balance
Inflows
Outflows
Net
Flows
($ in millions)
Market Value
Appreciation/
(Depreciation)
Foreign
Exchange
Appreciation/
(Depreciation)
AUM
Ending
Balance
Equity
Fixed Income
Other
Total
$ 167,395 $
24,545 $
(31,097) $
(6,552) $
28,125 $
1,170 $ 190,138
43,386
5,344
9,476
5,233
(9,192)
(2,507)
284
2,726
3,236
290
1,201
46
48,107
8,406
$ 216,125 $
39,254 $
(42,796) $
(3,542) $
31,651 $
2,417 $ 246,651
52
Inflows include approximately $3.9 billion related to a wealth management acquisition.
Inflows in the Equity asset class were primarily attributable to the Global and Multi-Regional platforms, and
inflows in the Fixed Income asset class were primarily attributable to the Multi-Regional and Global platforms. Outflows in
the Equity asset class were primarily attributable to the Global, Multi-Regional and Local platforms, and outflows in the
Fixed Income asset class were primarily attributable to the Multi-Regional and Global platforms.
Year Ended December 31, 2022
AUM
Beginning
Balance
Inflows
Outflows
Net
Flows
($ in millions)
Market Value
Appreciation/
(Depreciation)
Foreign
Exchange
Appreciation/
(Depreciation)
AUM
Ending
Balance
Equity
Fixed Income
Other
Total
$ 221,006 $
23,495 $
(39,319) $
(15,824) $
(30,438) $
(7,349) $ 167,395
46,286
6,447
9,890
2,645
(10,488)
(3,138)
(598)
(493)
(688)
(418)
(1,614)
(192)
43,386
5,344
$ 273,739 $
36,030 $
(52,945) $
(16,915) $
(31,544) $
(9,155) $ 216,125
Year Ended December 31, 2021
AUM
Beginning
Balance
Inflows
Outflows
Net
Flows
($ in millions)
Market Value
Appreciation/
(Depreciation)
Foreign
Exchange
Appreciation/
(Depreciation)
AUM
Ending
Balance
Equity
Fixed Income
Other
Total
$ 209,732 $
27,229 $
(44,372) $
(17,143) $
34,730 $
(6,313) $ 221,006
43,784
5,126
12,597
3,005
(8,517)
(1,515)
4,080
1,490
704
(50)
(2,282)
46,286
(119)
6,447
$ 258,642 $
42,831 $
(54,404) $
(11,573) $
35,384 $
(8,714) $ 273,739
Average AUM for the years ended December 31, 2023, 2022 and 2021 for each significant asset class is set forth
below. Average AUM generally represents the average of the monthly ending AUM balances for the period.
Average AUM by Asset Class:
Equity
Fixed Income
Alternative Investments
Other Alternative Investments
Private Equity
Cash Management
Total Average AUM
Year Ended December 31,
2023
2022
2021
($ in millions)
$
179,435 $
179,178 $
45,842
3,792
2,276
1,121
632
233,098 $
42,093
4,167
–
1,165
841
227,444 $
$
220,146
46,252
3,492
–
1,318
843
272,051
53
The following table summarizes the reported operating results attributable to the Asset Management segment:
Net Revenue
Operating Expenses (a)
Operating Income
Operating Income, as a % of net revenue
________________________
Year Ended December 31,
2023
2022
2021
($ in thousands)
$ 1,151,496
1,011,574
$ 1,204,927
963,640
$ 1,424,985
1,032,825
$
139,922
$
241,287
$
392,160
12.2 %
20.0 %
27.5 %
(a)
See Note 18 of Notes to Consolidated Financial Statements for information regarding cost-saving initiatives.
Our top ten clients accounted for 29%, 27% and 29% of our total AUM at December 31, 2023, 2022 and 2021,
respectively, and no individual client constituted more than 10% of our Asset Management segment net revenue during any
of the respective years.
The geographical distribution of Asset Management net revenue is set forth below in percentage terms, and is
based on the Lazard offices that manage and distribute the respective AUM amounts. Such geographical distribution may
not be reflective of the geography of the investment products or clients.
Americas
EMEA
Asia Pacific
Total
Year Ended December 31,
2023
2022
2021
42 %
46
12
100 %
48 %
41
11
100 %
48 %
42
10
100 %
Asset Management Results of Operations
Year Ended December 31, 2023 versus December 31, 2022
Asset Management net revenue decreased $53 million, or 4%, as compared to 2022. Management fees and other
revenue was $1,122 million, a decrease of $16 million, or 1%, as compared to $1,138 million in 2022. Incentive fees were
$30 million, a decrease of $38 million, as compared to $67 million in 2022.
Operating expenses, which included $57 million associated with cost-saving initiatives in 2023, increased $48
million, or 5%, as compared to 2022.
Asset Management operating income was $140 million, a decrease of $101 million, or 42%, as compared to
operating income of $241 million in 2022 and, as a percentage of net revenue, was 12.2%, as compared to 20.0% in 2022.
54
Corporate
The following table summarizes the reported operating results attributable to the Corporate segment:
Interest income
Interest expense
Net Interest Expense
Other Revenue (Loss)
Net Revenue (Loss)
Provision (benefit) pursuant to tax receivable agreement
Other operating expenses (credits) (a)
Operating Expenses (Credits)
Operating Loss
_________________________________
Year Ended December 31,
2023
2022
2021
($ in thousands)
$
20,709 $
(77,343)
19,135 $
(77,068)
(56,634)
35,270
(21,364)
(43,894)
137,904
94,010
(57,933)
(39,579)
(97,512)
(1,209)
(10,423)
(11,632)
2,819
(75,351)
(72,532)
76,086
3,554
2,199
77,609
79,808
$
(115,374) $
(85,880) $
(76,254)
(a) See Note 18 of Notes to Consolidated Financial Statements for information regarding cost-saving initiatives.
Corporate Results of Operations
Year Ended December 31, 2023 versus December 31, 2022
Net interest expense decreased $1 million, or 2%, as compared to 2022.
Other revenue (loss) was positively impacted by gains attributable to investments held in connection with LFI in
2023, as compared to losses in 2022. Such gains in 2023 were offset by losses incurred from the impairment of equity
method investments and the liquidation of LGAC in February 2023.
Operating expenses, excluding the benefits pursuant to the TRA, increased $148 million as compared to 2022
primarily due to $37 million associated with cost-saving initiatives in 2023, and charges in 2023 as compared to credits in
2022 pertaining to LFI.
Cash Flows
The Company’s cash flows are influenced primarily by the timing of the receipt of Financial Advisory and Asset
Management fees, the timing of distributions to shareholders, payments of incentive compensation to managing directors
and employees and purchases of common stock.
M&A and other advisory and Asset Management fees are generally collected within 60 days of billing, while
Restructuring fee collections may extend beyond 60 days, particularly those that involve bankruptcies with court-ordered
holdbacks. Fees from our Private Capital Advisory activities are generally collected over a four-year period from billing
and typically include an interest component.
The Company makes cash payments for a significant portion of its incentive compensation during the first three
months of each calendar year with respect to the prior year’s results. See the Consolidated Financial Statements—
Consolidated Statements of Cash Flows for further detail.
55
Summary of Cash Flows:
Cash Provided By (Used In):
Operating activities:
Net income (loss)
Adjustments to reconcile net income to net cash provided by
operating activities (a)
Other operating activities (b)
Net cash provided by (used in) operating activities
Investing activities
Financing activities (c)
Effect of exchange rate changes
Net Increase (Decrease) in Cash and Cash Equivalents and
Restricted Cash
Cash and Cash Equivalents and Restricted Cash (d):
Beginning of Period
End of Period
________________________
Year Ended December 31,
2023
2022
2021
($ in millions)
$
(57) $
392 $
543
463
(241)
165
(38)
(1,571)
30
551
(110)
833
(56)
(1,382)
(186)
623
(300)
866
(39)
196
(162)
(1,414)
(791)
861
2,639
3,430
$
1,225 $
2,639 $
2,569
3,430
(a)
(b)
(c)
(d)
Consists primarily of amortization of deferred expenses and share-based incentive compensation, noncash lease
expenses, depreciation and amortization of property and deferred tax provision (benefit).
Includes net changes in operating assets and liabilities.
Consists primarily of purchases of shares of common stock, tax withholdings related to the settlement of vested
RSUs, vested RSAs and vested PRSUs, common stock dividends, changes in customer deposits, distributions to
noncontrolling interest holders, distributions to redeemable noncontrolling interests associated with LGAC’s
redemption of all its outstanding Class A ordinary shares in 2023, and contributions from redeemable
noncontrolling interests and payments of underwriting fees and other offering costs associated with the LGAC
IPO in 2021.
Consists of cash and cash equivalents, deposits with banks and short-term investments and restricted cash.
Liquidity and Capital Resources
The Company’s liquidity and capital resources are derived from multiple sources as described in “—Sources and
Uses of Liquidity”.
Sources and Uses of Liquidity
Net revenue, operating income and cash receipts fluctuate significantly between periods and could be affected by
various risks and uncertainties. While cash flow from Asset Management activities is relatively stable, in the case of
Financial Advisory, fee receipts are generally dependent upon the successful completion of client transactions, the
occurrence and timing of which is irregular and not subject to Lazard’s control.
Liquidity is significantly impacted by cash payments for incentive compensation, a significant portion of which
are made during the first three months of the year. As a consequence, cash on hand generally declines in the beginning of
the year and gradually builds over the remainder of the year. We also pay certain tax advances during the year on behalf of
certain managing directors, which serve to reduce their respective incentive compensation payments. Additionally, we
made payments in August 2023 with respect to deferred cash awards and throughout the year relating to severance and
other employee termination costs associated with the cost-saving initiatives. We expect to make the majority of additional
payments relating to severance and other employee termination costs associated with the cost-saving initiatives through the
first half of 2024. (See Note 18 of Notes to Consolidated Financial Statements).
56
Liquidity is also affected by the level of LFB customer-related demand deposits, primarily from clients and funds
managed by LFG. To the extent that such deposits rise or fall, this has a corresponding impact on liquidity held at LFB,
with the majority of such amounts generally being recorded in “deposits with banks and short-term investments”. In the
year ended December 31, 2023, as reflected on the consolidated statements of financial condition, both “deposits and other
customer payables” and “deposits with banks and short-term investments” decreased as compared to December 31, 2022,
due primarily to customer deposits withdrawals driven by the rising interest rate environment. LFB is subject to, and in
compliance with, regulatory liquidity coverage ratios and liquidity levels are monitored on a daily basis.
We regularly monitor our liquidity position, including cash levels, lease obligations, investments, credit lines,
principal investment commitments, interest and principal payments on debt, capital expenditures, dividend payments,
purchases of shares of common stock, compensation and matters relating to liquidity and to compliance with regulatory net
capital requirements. At December 31, 2023, Lazard had approximately $971 million of cash, including approximately
$596 million held at Lazard’s operations outside the U.S. Lazard provides for income taxes on substantially all of its
foreign earnings. We expect that no material amount of additional taxes would be recognized upon receipt of dividends or
distributions of such earnings from our foreign operations.
As of December 31, 2023, the Company’s remaining lease obligations were $82 million for 2024, $138 million
from 2025 through 2026, $123 million from 2027 through 2028 and $222 million through 2034.
As of December 31, 2023, Lazard had approximately $209 million in unused lines of credit available to it,
including a $200 million, five-year, senior revolving credit facility under the Second Amended and Restated Credit
Agreement.
The Second Amended and Restated Credit Agreement contains customary terms and conditions, including
limitations on consolidations, mergers, indebtedness and certain payments, as well as financial condition covenants relating
to leverage and interest coverage ratios. Lazard Group’s obligations under the Second Amended and Restated Credit
Agreement may be accelerated upon customary events of default, including non-payment of principal or interest, breaches
of covenants, cross-defaults to other material debt, a change in control and specified bankruptcy events. Borrowings under
the Second Amended and Restated Credit Agreement generally will bear interest at adjusted term SOFR plus an applicable
margin for specific interest periods determined based on Lazard Group’s highest credit rating from an internationally
recognized credit agency.
The Second Amended and Restated Credit Agreement includes financial covenants that require that Lazard Group
not permit (i) its Consolidated Leverage Ratio (as defined in the Second Amended and Restated Credit Agreement) for the
12-month period ending on the last day of any fiscal quarter to be greater than 3.25 to 1.00, provided that the Consolidated
Leverage Ratio may be greater than 3.25 to 1.00 for four (consecutive or nonconsecutive) quarters so long as it is not
greater than 3.50 to 1.00 on the last day of any such quarter, or (ii) its Consolidated Interest Coverage Ratio (as defined in
the Second Amended and Restated Credit Agreement) for the 12-month period ending on the last day of any fiscal quarter
to be less than 3.00 to 1.00. For the 12-month period ended December 31, 2023, Lazard Group was in compliance with
such ratios. In any event, no amounts were outstanding under the Second Amended and Restated Credit Agreement as of
December 31, 2023.
In addition, the Second Amended and Restated Credit Agreement contains certain other covenants (none of which
relate to financial condition), events of default and other customary provisions. At December 31, 2023, the Company was
in compliance with all of these provisions.
Lazard’s annual cash flow generated from operations historically has been sufficient to enable it to meet its annual
obligations. We believe that the sources of liquidity described above should be sufficient for us to fund our current
obligations for the next 12 months.
See also Notes 14, 16, 17, 19, 21 and 22 of Notes to Consolidated Financial Statements regarding information in
connection with commitments, incentive plans, employee benefit plans, income taxes, tax receivable agreement obligations
and regulatory requirements, respectively.
57
Senior Debt
The table below sets forth our corporate indebtedness as of December 31, 2023 and 2022. The agreements with
respect to this indebtedness are discussed in more detail in our consolidated financial statements and related notes included
elsewhere in this Form 10-K.
Senior Debt
Maturity
Principal
Outstanding as of
December 31, 2023
December 31, 2022
Unamortized
Debt Costs
Carrying
Value
Principal
Unamortized
Debt Costs
Carrying
Value
($ in millions)
Lazard Group 2025 Senior Notes
2025 $ 400.0 $
0.5 $
399.5 $
400.0 $
1.0 $
Lazard Group 2027 Senior Notes
Lazard Group 2028 Senior Notes
Lazard Group 2029 Senior Notes
2027
2028
2029
300.0
500.0
500.0
1.3
4.0
4.0
298.7
496.0
496.0
300.0
500.0
500.0
1.6
4.9
4.8
399.0
298.4
495.1
495.2
$ 1,700.0 $
9.8 $ 1,690.2 $ 1,700.0 $
12.3 $ 1,687.7
The indenture and supplemental indentures relating to Lazard Group’s senior notes contain certain covenants
(none of which relate to financial condition), events of default and other customary provisions. At December 31, 2023, the
Company was in compliance with all of these provisions. We may, to the extent required and subject to restrictions
contained in our financing arrangements, use other financing sources, which may cause us to be subject to additional
restrictions or covenants.
See Note 13 of Notes to Consolidated Financial Statements for additional information regarding senior debt.
Stockholders’ Equity
At December 31, 2023, total stockholders’ equity was $482 million, as compared to $675 million and $1,078
million at December 31, 2022 and 2021, respectively, including $424 million, $556 million and $975 million attributable to
Lazard Ltd on the respective dates. The net activity in stockholders’ equity during the years ended December 31, 2023 and
2022 is reflected in the table below:
Stockholders’ Equity - Beginning of Year
Increase (decrease) due to:
Net income (loss) (a)
Other comprehensive income (loss)
Amortization of share-based incentive compensation
Purchase of common stock
Settlement of share-based incentive compensation (b)
Common stock dividends
LFI Consolidated Funds
Other - net
Stockholders’ Equity - End of Year
________________________
Year Ended December 31,
2023
2022
($ in millions)
$
675 $
1,078
(69)
6
251
(102)
(54)
(173)
(74)
22
$
482 $
378
(72)
241
(692)
(55)
(182)
18
(39)
675
(a)
(b)
Excludes net income associated with redeemable noncontrolling interests of $12 million and $14 million in 2023
and 2022, respectively.
The tax withholding portion of share-based compensation is settled in cash, not shares.
58
See the Consolidated Financial Statements—Consolidated Statements of Changes in Stockholders’ Equity and
Redeemable Noncontrolling Interests for further detail.
The Board of Directors of Lazard has issued a series of authorizations to repurchase common stock, which help
offset the dilutive effect of our share-based incentive compensation plans. The Company aims to repurchase at least as
many shares as it expects to issue pursuant to such compensation plans in respect of year-end incentive compensation over
time. The rate at which the Company purchases shares in connection with this annual objective may vary from period to
period due to a variety of factors. Purchases with respect to such program are set forth in the table below:
Year Ended December 31:
2021
2022
2023
Number of
Shares
Purchased
Average
Price Per
Share
9,124,295 $
19,666,798 $
2,782,662 $
44.51
35.17
36.67
As of December 31, 2023, a total of $200 million of share repurchase authorization remaining available under
Lazard’s share repurchase program will expire on December 31, 2024.
During the year ended December 31, 2023, Lazard had in place trading plans under Rule 10b5-1 of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”), pursuant to which it effected stock repurchases in the open
market.
On January 31, 2024, the Board of Directors of Lazard declared a quarterly dividend of $0.50 per share on our
common stock. The dividend is payable on February 23, 2024, to stockholders of record on February 12, 2024.
See Notes 15 and 16 of Notes to Consolidated Financial Statements for additional information regarding Lazard’s
stockholders’ equity and incentive plans, respectively.
Regulatory Capital
We actively monitor our regulatory capital base. Our principal subsidiaries are subject to regulatory requirements
in their respective jurisdictions to ensure their general financial soundness and liquidity, which require, among other things,
that we comply with rules regarding certain minimum capital requirements. These regulatory requirements may restrict the
flow of funds to and from affiliates. See Note 22 of Notes to Consolidated Financial Statements for further information.
These regulations differ in the U.S., the U.K., France and other countries in which we operate. Our capital structure is
designed to provide each of our subsidiaries with capital and liquidity consistent with its business and regulatory
requirements. For a discussion of regulations relating to us, see Item 1, “Business—Regulation” included in this Form
10-K.
Critical Accounting Policies and Estimates
The preparation of Lazard’s consolidated financial statements, in conformity with U.S. GAAP, requires us to
make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, and related
disclosure of contingent assets and liabilities. On an ongoing basis, Lazard evaluates its estimates, including those related
to revenue recognition, the allowance for credit losses, income taxes (including the impact on the tax receivable agreement
obligation), and goodwill. Lazard bases these estimates on historical experience and various other assumptions that it
believes to be reasonable under the circumstances, the results of which form the basis for making judgments, including
judgments regarding the carrying values of assets and liabilities, that are not readily apparent from other sources. Actual
results may differ from these estimates.
59
The following is a description of Lazard’s critical accounting estimates and judgments used in the preparation of
its consolidated financial statements.
Revenue Recognition
Lazard generates substantially all of its revenue from providing Financial Advisory and Asset Management
services to clients. Lazard recognizes revenue in accordance with the criteria in Note 2 of Notes to Consolidated Financial
Statements.
Assessment of these criteria requires the application of judgment in determining the timing and amount of revenue
recognized, including the probability of collection of fees.
Allowance for Credit Losses
We maintain an allowance for credit losses to provide coverage for estimated losses from our receivables. We
determine the adequacy of the allowance under the current expected credit losses (“CECL”) guidance by (i) applying a bad
debt charge-off rate based on historical charge-off experience; (ii) estimating the probability of loss based on our analysis
of the client’s creditworthiness resulting in specific reserves against exposures where we determine the receivables are
uncollectible, which may include situations where a fee is in dispute or litigation has commenced; and (iii) performing
qualitative assessments to monitor economic risks that may require additional adjustments.
The allowance for credit losses involves judgment including incorporation of historical loss experience and
assessment of risk characteristics of our clients. The bad debt charge-off rate based on historical charge-off experience was
an average annual rate estimated using the most recent two years of charge-off data. When assessing risk characteristics of
individual clients, we considered the macroeconomic environment in the local market, our collection experience and recent
communication with the client, as well as any potential future engagement with the client.
Income Taxes
As part of the process of preparing our consolidated financial statements, we estimate our income taxes for each of
our tax-paying entities in its respective jurisdiction. In addition to estimating actual current tax liabilities for these
jurisdictions, we also must account for the tax effects of differences between the financial reporting and tax reporting of
items, such as basis adjustments, compensation and benefits expense, and depreciation and amortization. Differences which
are temporary in nature result in deferred tax assets and liabilities. Significant judgment is required in determining our
provision for income taxes, our deferred tax assets and liabilities, any valuation allowance recorded against our deferred tax
assets and our unrecognized tax benefits.
We recognize a deferred tax asset if it is more likely than not (defined as a likelihood of greater than 50%) that a
tax benefit will be accepted by the relevant taxing authority. The measurement of deferred tax assets and liabilities is based
upon currently enacted tax rates in the applicable jurisdictions.
Subsequent to the initial recognition of deferred tax assets, we also must continually assess the likelihood that
such deferred tax assets will be realized. If we determine that we may not fully derive the benefit from a deferred tax asset,
we consider whether it would be appropriate to apply a valuation allowance against the applicable deferred tax asset, taking
into account all available information. The ultimate realization of a deferred tax asset for a particular entity depends, among
other things, on the generation of taxable income by such entity in the applicable jurisdiction.
We consider multiple possible sources of taxable income when assessing a valuation allowance against a deferred
tax asset. See Note 2 of Notes to Consolidated Financial Statements for additional information on sources of taxable
income, and the information considered when assessing whether a valuation allowance is required.
The weight we give to any particular item is, in part, dependent upon the degree to which it can be objectively
verified. We give greater weight to the recent results of operations of a relevant entity. Pre-tax operating losses on a three-
year cumulative basis or lack of sustainable profitability are considered objectively verifiable evidence and will generally
outweigh a projection of future taxable income.
Certain of our tax-paying entities have individually experienced losses on a cumulative three-year basis or have
tax attributes that may expire unused. In addition, some of our tax-paying entities have recorded a valuation allowance on
60
substantially all of their deferred tax assets due to the combined effect of operating losses in certain subsidiaries of these
entities as well as foreign taxes that together substantially offset any U.S. tax liability. Taking into account all available
information, we cannot determine that it is more likely than not that deferred tax assets held by these entities will be
realized. Consequently, we have recorded valuation allowances on deferred tax assets held by these entities as of
December 31, 2023.
We record tax positions taken or expected to be taken in a tax return based upon our estimates regarding the
amount that is more likely than not to be realized or paid, including in connection with the resolution of any related appeals
or other legal processes. Accordingly, we recognize liabilities for certain unrecognized tax benefits based on the amounts
that are more likely than not to be settled with the relevant taxing authority. Such liabilities are evaluated periodically as
new information becomes available and any changes in the amounts of such liabilities are recorded as adjustments to
“income tax expense.” Liabilities for unrecognized tax benefits involve significant judgment and the ultimate resolution of
such matters may be materially different from our estimates.
In addition to the discussion above regarding deferred tax assets and associated valuation allowances, as well as
unrecognized tax benefit liability estimates, other factors affect our provision for income taxes, including changes in the
geographic mix of our business, the level of our annual pre-tax income, transfer pricing and intercompany transactions.
See Item 1A, “Risk Factors” and Note 19 of Notes to Consolidated Financial Statements for additional
information related to income taxes.
Tax Receivable Agreement
The Second Amended and Restated Tax Receivable Agreement, dated as of October 26, 2015 (the “TRA”),
between Lazard and LTBP Trust (the “Trust”) provides for payments by our subsidiaries to the owners of the Trust, who
include certain of our executive officers.
The amount of the TRA liability is an undiscounted amount based upon current tax laws and the structure of the
Company and various assumptions regarding potential future operating profitability. The assumptions reflected in the
estimate involve significant judgment, and if our structure or income assumptions were to change, we could be required to
accelerate payments under the TRA. As such, the actual amount and timing of payments under the TRA could differ
materially from our estimates. See Note 21 of Notes to Consolidated Financial Statements for additional information
regarding the TRA.
The Company currently expects that approximately $31 million of such obligation will be paid within the next 12
months.
Goodwill
Goodwill has an indefinite life and is tested for impairment annually, as of November 1, or more frequently if
circumstances indicate impairment may have occurred. The Company performs a qualitative assessment about whether it is
more likely than not that the fair value of a reporting unit is less than its carrying amount in lieu of actually calculating the
fair value of the reporting unit. The qualitative assessment includes significant judgment on the business outlook
assumptions of each reporting unit based on historical data, current economic conditions, stock performance and industry
trends. If events indicate that it is more likely than not that the reporting unit’s fair value is less than its carrying value, the
Company performs a quantitative assessment to determine the fair value of the reporting unit and compares it to its
carrying values. If the carrying value of a reporting unit exceeds its fair value, the Company would recognize an
impairment loss equal to the excess. The goodwill impairment tests indicated no reporting units were at risk of impairment.
See Note 11 of Notes to Consolidated Financial Statements for additional information regarding goodwill.
Consolidation
The consolidated financial statements include entities in which Lazard has a controlling financial interest. Lazard
determines whether it has a controlling financial interest in an entity by first evaluating whether the entity is a voting
interest entity (“VOE”) or a variable interest entity (“VIE”) under U.S. GAAP.
•
Voting Interest Entities. VOEs are entities in which (i) the total equity investment at risk is sufficient to
enable the entity to finance itself independently and (ii) the equity holders have the obligation to absorb
61
losses, the right to receive residual returns and the right to make decisions about the entity’s activities.
Lazard is required to consolidate a VOE if it holds a majority of the voting interest in such VOE.
•
Variable Interest Entities. VIEs are entities that lack one or more of the characteristics of a VOE. If
Lazard has a variable interest, or a combination of variable interests, in a VIE, it is required to analyze
whether it needs to consolidate such VIE. Lazard is required to consolidate a VIE if we are the primary
beneficiary having (i) the power to direct the activities of the VIE that most significantly impact the
VIE’s economic performance and (ii) the obligation to absorb losses of, or receive benefits from, the VIE
that could be potentially significant to the VIE.
Lazard’s involvement with various entities that are VOEs or VIEs primarily arises from LFI investments, seed and
other investments in our Asset Management business, and LGAC. Lazard consolidates these entities when it has a
controlling financial interest.
The impact of seed and LFI investment entities that require consolidation on the consolidated financial statements,
including any consolidation or deconsolidation of such entities, is not material to our financial statements. Our exposure to
loss from entities in which we have made such investments is limited to the extent of our investment in, or investment
commitment to, such entities.
Generally, when the Company initially invests to seed an investment entity, the Company is the majority owner of
the entity. Our majority ownership in seed investment entities represents a controlling financial interest, except when we
are the general partner in such entities and the third-party investors have the right to replace the general partner. To the
extent material, we consolidate seed and LFI investment entities in which we own a controlling financial interest, and we
would deconsolidate any such entity when we no longer have a controlling financial interest in such entity.
Seed investments held in entities in which the Company maintained a controlling financial interest were $114
million in eleven entities as of December 31, 2023, as compared to $112 million in thirteen entities as of December 31,
2022. LFI investments held in entities in which the Company maintained a controlling financial interest were $144 million
in nine entities as of December 31, 2023, as compared to $139 million in nine entities as of December 31, 2022.
As of December 31, 2023 and 2022, the Company did not consolidate any seed investment entities or LFI
investment entities, with the exception of the consolidation of certain LFI funds (see Note 24 of Notes to Consolidated
Financial Statements). As such, seed investments and substantially all of LFI investments included in “investments” on the
consolidated statements of financial condition represented the Company’s economic interest in the seed and LFI
investments.
See Note 1 of Notes to Consolidated Financial Statements for additional information on the consolidation of
LGAC.
Risk Management
Investments
Investments consist primarily of debt and equity securities, and interests in alternative investment, debt, equity and
private equity funds. These investments are carried at fair value on the consolidated statements of financial condition and
any increases or decreases in the fair value of these investments are reflected in earnings. The fair value of investments is
generally based upon market prices or the net asset value (“NAV”) or its equivalent for investments in funds.
Investments also include those investments accounted for under the equity method of accounting. Any increases or
decreases in the Company’s share of net income or losses pertaining to its equity method investments are reflected in
earnings.
See Note 7 of Notes to Consolidated Financial Statements for additional information on the measurement of the
fair value of investments.
Lazard is subject to market and other risks on investments held. As such, gains and losses on investment positions
held, which arise from sales or changes in the fair value of the investments, are not predictable and can cause periodic
fluctuations in net income.
62
Data relating to investments is set forth below:
Seed investments by asset class:
Debt
Equities (a)
Fixed income
Alternative investments
Private equity
Total seed investments
Other investments owned:
Private equity
Fixed income and other
Total other investments owned
Subtotal
Private equity consolidated, not owned
Equity method
LFI
Total investments
________________________
December 31,
2023
2022
($ in thousands)
$
4,285 $
112,807
15,860
33,073
19,361
185,386
10,963
2,119
13,082
198,468
16,494
–
487,002
$
701,964 $
–
126,632
14,774
31,634
18,508
191,548
18,876
23,337
42,213
233,761
16,438
15,481
433,297
698,977
(a)
At December 31, 2023 and 2022, seed investments in directly owned equity securities were invested as follows:
Percentage invested in:
Financials
Consumer
Industrial
Technology
Other
Total
December 31,
2023
2022
14 %
15 %
32
15
20
19
34
12
17
22
100 %
100 %
The Company makes investments primarily to seed strategies in our Asset Management business or to reduce
exposure arising from LFI and other similar deferred compensation arrangements. The Company manages its net economic
exposure to market and other risks arising from seed investments and other investments owned. The Company does not
hedge investments associated with LFI and other similar deferred compensation arrangements, or investments in funds
owned entirely by the noncontrolling interest holders, as there is no net economic exposure.
The market risk associated with investments held in connection with LFI and other similar deferred compensation
arrangements is equally offset by the market risk associated with the derivative liability with respect to awards expected to
vest. The Company is subject to market risk associated with any portion of such investments that employees may forfeit.
See “—Risk Management—Risks Related to Derivatives” for risk management information relating to derivatives.
Risk sensitivities include the effects of economic hedging. For equity market price risk, investment portfolios and
their corresponding hedges are beta-adjusted to the All-Country World equity index. Interest rate and credit spread risk and
foreign exchange rate risks are hedged using relevant benchmark indices. Private equity risk is not hedged due to lack of
proxy hedging instruments. Fair value and sensitivity measurements presented herein are based on various portfolio
exposures at a particular point in time and may not be representative of future results. Risk exposures may change as a
result of ongoing portfolio activities and changing market conditions, among other things.
63
Equity Market Price Risk—At December 31, 2023 and 2022, the Company’s exposure to equity market price risk
in its investment portfolio, which primarily relates to investments in equity securities, equity funds and hedge funds, was
approximately $150 million and $147 million, respectively. The Company hedges market exposure arising from a
significant portion of our equity investment portfolios by entering into total return swaps. The Company estimates that a
hypothetical 10% adverse change in market prices would result in a net increase of approximately $0.2 million as of
December 31, 2023 and a net decrease of approximately $2.0 million as of December 31, 2022 in the carrying value of
such investments, including the effect of the hedging transactions.
Interest Rate and Credit Spread Risk—At December 31, 2023 and 2022, the Company’s exposure to interest rate
and credit spread risk in its investment portfolio related to investments in debt securities or funds which invest primarily in
debt securities was $18 million and $53 million, respectively. The Company hedges market exposure arising from a portion
of our debt investment portfolios by entering into total return swaps. The Company estimates that a hypothetical 100 basis
point adverse change in interest rates or credit spreads would result in a net increase of approximately $0.05 million as of
December 31, 2023 and a net decrease of approximately $0.1 million as of December 31, 2022 in the carrying value of
such investments, including the effect of the hedging transactions.
Foreign Exchange Rate Risk—At December 31, 2023 and 2022, the Company’s exposure to foreign exchange rate
risk in its investment portfolio, which primarily relates to investments in foreign currency denominated equity and debt
securities and, at December 31, 2023, private equity investments, was $69 million and $63 million, respectively. A
significant portion of the Company’s foreign currency exposure related to our equity and debt investment portfolios is
hedged through the aforementioned total return swaps. The Company estimates that a 10% adverse change in foreign
exchange rates versus the U.S. Dollar would result in a net decrease of approximately $2.0 million and $3.0 million in the
carrying value of such investments as of December 31, 2023 and 2022, respectively, including the effect of the hedging
transactions.
Private Equity—The Company invests in private equity primarily as a part of its co-investment activities and in
connection with certain legacy businesses. At December 31, 2023 and 2022, the Company’s exposure to changes in fair
value of such investments was approximately $30 million and $37 million, respectively. The Company estimates that a
hypothetical 10% adverse change in fair value would result in a decrease of approximately $3.0 million and $3.7 million in
the carrying value of such investments as of December 31, 2023 and 2022, respectively.
For additional information regarding risks associated with our investments, see Item 1A, “Risk Factors—Other
Business Risks—Our results of operations may be affected by fluctuations in the fair value of positions held in our
investment portfolios”.
Risks Related to Receivables
We maintain an allowance for credit losses to provide coverage for expected losses from our receivables. At
December 31, 2023, total receivables amounted to $762 million, net of an allowance for credit losses of $29 million. As of
that date, Financial Advisory and Asset Management fees, and customers and other receivables comprised 74% and 26% of
total receivables, respectively. At December 31, 2022, total receivables amounted to $653 million, net of an allowance for
credit losses of $18 million. As of that date, Financial Advisory and Asset Management fees, and customers and other
receivables comprised 75% and 25% of total receivables, respectively. See also “Critical Accounting Policies and
Estimates—Revenue Recognition” above and Note 5 of Notes to Consolidated Financial Statements for additional
information regarding receivables.
LFG and LFB offer wealth management and banking services to high net worth individuals and families. At
December 31, 2023 and 2022, customers and other receivables included $86 million and $129 million, respectively, of LFB
loans. Such loans were fully collateralized and monitored for counterparty creditworthiness. Therefore, there was no
allowance for credit losses required at those dates related to such receivables.
Credit Concentrations
The Company monitors its exposures to individual counterparties and diversifies where appropriate to reduce the
exposure to concentrations of credit.
64
Risks Related to Derivatives
Lazard enters into forward foreign currency exchange contracts and interest rate swaps to hedge exposures to
currency exchange rates and interest rates and uses total return swap contracts on various equity and debt indices to hedge a
portion of its market exposure with respect to certain investments that seed strategies in our Asset Management business.
Derivative contracts are recorded at fair value. In entering into derivative agreements, the Company is subject to
counterparty risk. Net derivative assets amounted to $3 million and $15 million at December 31, 2023 and 2022,
respectively, and net derivative liabilities, excluding the derivative liability arising from the Company’s obligation
pertaining to LFI and other similar deferred compensation arrangements amounted to $3 million and $1 million at
December 31, 2023 and 2022, respectively.
The Company also records derivative liabilities relating to its obligations pertaining to LFI awards and other
similar deferred compensation arrangements, the fair value of which is based on the value of the underlying investments,
adjusted for estimated forfeitures. Changes in the fair value of the derivative liabilities are equally offset by the changes in
the fair value of investments which are expected to be delivered upon settlement of LFI awards. Derivative liabilities
relating to LFI amounted to $365 million and $326 million at December 31, 2023 and 2022, respectively.
Risks Related to Cash and Cash Equivalents and Corporate Indebtedness
A significant portion of the Company’s indebtedness has fixed interest rates, while its cash and cash equivalents
generally have market interest rates. Based on account balances as of December 31, 2023, Lazard estimates that its annual
operating income relating to cash and cash equivalents would increase by approximately $10 million in the event interest
rates were to increase by 1% and decrease by approximately $10 million if rates were to decrease by 1%.
As of December 31, 2023, the Company’s cash and cash equivalents totaled approximately $971 million.
Substantially all of the Company’s cash and cash equivalents were invested in (i) highly liquid institutional money market
funds (a significant majority of which were invested solely in U.S. Government or agency money market funds), (ii) in
short-term interest bearing and non-interest bearing accounts at a number of leading banks throughout the world, and (iii)
in short-term certificates of deposit from such banks. Cash and cash equivalents are continuously monitored. On a regular
basis, management reviews its investment profile as well as the credit profile of its list of depositor banks in order to adjust
any deposit or investment thresholds as necessary.
Operational Risk
Operational risk is inherent in all of our businesses and may, for example, manifest itself in the form of errors,
breaches in the system of internal controls, employee misconduct, business interruptions, fraud, including fraud perpetrated
by third parties, legal actions due to operating deficiencies, noncompliance or cyber attacks. The Company maintains a
framework including policies and a system of internal controls designed to monitor and manage operational risk and
provide management with timely and accurate information. Management within each of our operating subsidiaries is
primarily responsible for its operational risk programs. The Company has in place business continuity and disaster recovery
programs that manage its capabilities to provide services in the case of a disruption. We purchase insurance policies
designed to help protect the Company against accidental loss and losses that may significantly affect our financial
objectives, personnel, property or our ability to continue to meet our responsibilities to our various stakeholder groups. See
Item 1A, “Risk Factors” above for more information regarding operational risk in our business and Item 1C,
“Cybersecurity” above for more information on the Company’s processes to identify, assess and manage cybersecurity
risks.
Item 7A.
Quantitative and Qualitative Disclosures About Market Risk
Risk Management
Quantitative and qualitative disclosures about market risk are included under the caption “Management’s
Discussion and Analysis of Financial Condition and Results of Operations—Risk Management.”
65
Item 8.
Financial Statements and Supplementary Data
Index to Consolidated Financial Statements
Management’s Report on Internal Control Over Financial Reporting
Reports of Independent Registered Public Accounting Firm
Consolidated Statements of Financial Condition as of December 31, 2023 and 2022
Consolidated Statements of Operations for the years ended December 31, 2023, 2022 and 2021
Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2023,
2022 and 2021
Consolidated Statements of Cash Flows for the years ended December 31, 2023, 2022 and 2021
Consolidated Statements of Changes in Stockholders’ Equity and Redeemable Noncontrolling
Interests for the years ended December 31, 2023, 2022 and 2021
Notes to Consolidated Financial Statements
Supplemental Financial Information
Financial Statement Schedules
Schedule I—Condensed Financial Information of Registrant (Parent Company Only) Condensed
Statements of Financial Condition as of December 31, 2023 and 2022
Condensed Statements of Operations for the years ended December 31, 2023, 2022 and 2021
Condensed Statements of Comprehensive Income (Loss) for the years ended December 31, 2023,
2022 and 2021
Condensed Statements of Cash Flows for the years ended December 31, 2023, 2022 and 2021
Notes to Condensed Financial Statements
Page
67
68
71
73
74
75
77
80
128
F-2
F-3
F-4
F-5
F-6
66
MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Management of Lazard, Inc. (formerly Lazard Ltd) and its subsidiaries (the “Company”) is responsible for
establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is a
process designed under the supervision of the Company’s principal executive and principal financial officers to provide
reasonable assurance regarding the reliability of financial reporting and the preparation of the Company’s consolidated
financial statements for external purposes in accordance with U.S. generally accepted accounting principles.
Our internal control over financial reporting includes those policies and procedures that:
•
•
•
pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of the Company;
provide reasonable assurance that transactions are recorded as necessary to permit preparation of
consolidated financial statements in accordance with U.S. generally accepted accounting principles, and
that our receipts and expenditures are being made only in accordance with authorizations of the
Company’s management and directors; and
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or
disposition of our assets that could have a material effect on the consolidated financial statements.
Management assessed the effectiveness of the Company’s internal control over financial reporting as of
December 31, 2023. In making this assessment, management used the criteria set forth by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework (2013). Based on
management’s assessment and those criteria, management concluded that the Company maintained effective internal
control over financial reporting as of December 31, 2023.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may
become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may
deteriorate.
The Company’s independent registered public accounting firm, Deloitte & Touche LLP, audited the Company’s
internal control over financial reporting as of December 31, 2023, as stated in their report which appears under “Report of
Independent Registered Public Accounting Firm.”
67
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the stockholders and the Board of Directors of Lazard, Inc. (formerly Lazard Ltd):
Opinion on Internal Control over Financial Reporting
We have audited the internal control over financial reporting of Lazard Ltd and subsidiaries (the “Company”) as
of December 31, 2023, based on criteria established in Internal Control — Integrated Framework (2013) issued by the
Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained,
in all material respects, effective internal control over financial reporting as of December 31, 2023, based on criteria
established in Internal Control — Integrated Framework (2013) issued by COSO.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board
(United States) (PCAOB), the consolidated financial statements and schedule as listed in the Index at Item 8 as of and for
the year ended December 31, 2023, of the Company and our report dated February 23, 2024, expressed an unqualified
opinion on those consolidated financial statements and schedule.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and
for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying
“Management's Report on Internal Control Over Financial Reporting”. Our responsibility is to express an opinion on the
Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the
PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities
laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was
maintained in all material respects. Our audit included obtaining an understanding of internal control over financial
reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness
of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the
circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes
those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are
recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting
principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of
management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection
of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial
statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls
may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures
may deteriorate.
/s/ Deloitte & Touche LLP
New York, New York
February 23, 2024
68
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the stockholders and the Board of Directors of Lazard, Inc. (formerly Lazard Ltd):
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated statements of financial condition of Lazard Ltd and subsidiaries
(the “Company”) as of December 31, 2023 and 2022, and the related consolidated statements of operations, comprehensive
income, cash flows, and changes in stockholders’ equity and redeemable noncontrolling interests for each of the three years
in the period ended December 31, 2023, the related notes and the schedule listed in the Index at Item 8 (collectively the
“consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material
respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its
cash flows for each of the three years in the period ended December 31, 2023, in conformity with accounting principles
generally accepted in the United States of America (U.S. GAAP).
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board
(United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2023, based on
criteria established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring
Organizations of the Treadway Commission and our report dated February 23, 2024, expressed an unqualified opinion on
the Company’s internal control over financial reporting.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility
is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public
accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance
with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission
and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of
material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of
material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures
that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and
disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and
significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial
statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current-period audit of the consolidated
financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to
accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially
challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our
opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit
matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Investment banking and other advisory fees—Refer to Note 4 Revenue Recognition to the consolidated financial
statements
Critical Audit Matter Description
The Company generally recognizes investment banking and other advisory fees as the benefits of these advisory
services are provided to the Company’s clients. These advisory services typically include transaction announcement and
transaction completion fees. These fees are not typically recognized until there is an announcement or completion due to
the uncertainty associated with those events. However, earlier recognition is appropriate if it is probable that significant
reversal of the applicable revenue will not occur.
69
We identified the recognition of investment banking and other advisory fees as a critical audit matter because of
the judgment required in determining the appropriate period to recognize transaction announcement and transaction
completion fees, including obtaining and evaluating appropriate supporting documentation. As such, auditing these
transactions required a high degree of auditor judgment when performing audit procedures and evaluating the results of
those procedures.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to investment banking and other advisory fees included the following, among others:
•
•
•
We tested the effectiveness of controls over the recognition of investment banking and other advisory fees,
including those over the timing of revenue recognition.
We selected a sample of contracts with clients and performed the following:
–
–
–
Evaluated the terms and conditions of the respective contract to verify the Company appropriately
identified its performance obligations and the related fees.
Evaluated the accuracy of management’s calculation of investment banking and other advisory fees
recognized by recalculating the revenue amounts and comparing our expectation to the amount recorded
by management.
Evaluated third party and the Company’s evidence, including, but not limited to, confirmations, court and
regulatory approvals, press releases, executed agreements, communications and underlying transaction
closing documents, to verify that the revenue recognition criteria were met and revenue was recognized
in accordance with U.S. GAAP, including in the appropriate period.
On a sample basis, we performed the above procedures on investment banking and other advisory fees recognized
in the subsequent year to determine if such revenue should have been recorded in the current year.
/s/ Deloitte & Touche LLP
New York, New York
February 23, 2024
We have served as the Company’s auditor since 2000.
70
LAZARD LTD
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
DECEMBER 31, 2023 AND 2022
(dollars in thousands, except for per share data)
ASSETS
Cash and cash equivalents
Deposits with banks and short-term investments
Restricted cash
Receivables (net of allowance for credit losses of $28,503 and $17,738 at December 31,
2023 and 2022, respectively):
Fees
Customers and other
Investments
Property (net of accumulated amortization and depreciation of $414,547 and $395,109 at
December 31, 2023 and 2022, respectively, including $72,921 of property held for
sale at December 31, 2023)
Operating lease right-of-use assets
Goodwill and other intangible assets (net of accumulated amortization of $67,681 and
$70,118 at December 31, 2023 and 2022, respectively)
Deferred tax assets
Other assets
Total Assets
December 31,
2023
2022
$
971,316 $
1,234,773
219,576
34,091
779,246
625,381
560,552
201,767
762,319
701,964
232,516
407,213
394,928
497,340
414,518
491,861
160,897
652,758
698,977
250,073
431,608
377,330
407,657
394,758
$
4,635,781 $
5,852,561
See notes to consolidated financial statements.
71
LAZARD LTD
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
DECEMBER 31, 2023 AND 2022
(dollars in thousands, except for per share data)
December 31,
2023
2022
$
443,262 $
781,375
485,191
115,087
1,690,200
3,857
546,947
921,834
735,576
513,688
191,189
1,687,714
3,920
539,770
4,065,919
4,593,691
87,675
583,471
–
–
–
–
1,128
247,204
1,128
167,890
1,402,636
1,676,713
(289,950)
(295,854)
1,361,018
1,549,877
(937,259)
(993,414)
423,759
58,428
482,187
4,635,781 $
556,463
118,936
675,399
5,852,561
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND
STOCKHOLDERS’ EQUITY
Liabilities:
Deposits and other customer payables
Accrued compensation and benefits
Operating lease liabilities
Tax receivable agreement obligation
Senior debt
Deferred tax liabilities
Other liabilities
Total Liabilities
Commitments and contingencies
Redeemable noncontrolling interests
STOCKHOLDERS’ EQUITY
Preferred stock, par value $.01 per share; 15,000,000 shares authorized:
Series A - no shares issued and outstanding
Series B - no shares issued and outstanding
Common stock:
Class A, par value $.01 per share (500,000,000 shares authorized; 112,766,091
shares issued at December 31, 2023 and 2022, including shares held by
subsidiaries)
Additional paid-in-capital
Retained earnings
Accumulated other comprehensive loss, net of tax
Class A common stock held by subsidiaries, at cost (25,340,287 and 26,814,213
shares at December 31, 2023 and 2022, respectively)
Total Lazard Ltd Stockholders’ Equity
Noncontrolling interests
Total Stockholders’ Equity
Total Liabilities, Redeemable Noncontrolling Interests and Stockholders’ Equity
$
See notes to consolidated financial statements.
72
LAZARD LTD
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 2023, 2022 AND 2021
(dollars in thousands, except for per share data)
REVENUE
Investment banking and other advisory fees
Asset management fees
Interest income
Other
Total revenue
Interest expense
Net revenue
OPERATING EXPENSES
Compensation and benefits
Occupancy and equipment
Marketing and business development
Technology and information services
Professional services
Fund administration and outsourced services
Amortization and other acquisition-related costs
Provision (benefit) pursuant to tax receivable agreement
Other
Total operating expenses
OPERATING INCOME (LOSS)
Provision (benefit) for income taxes
NET INCOME (LOSS)
LESS - NET INCOME ATTRIBUTABLE TO
NONCONTROLLING INTERESTS
Year Ended December 31,
2023
2022
2021
$
1,383,799 $
1,659,079 $
1,786,472
1,077,753
42,022
89,588
2,593,162
77,673
2,515,489
1,125,955
29,457
40,602
2,855,093
81,522
2,773,571
1,354,622
5,551
127,171
3,273,816
80,768
3,193,048
1,946,010
1,656,451
1,895,859
131,117
99,357
189,670
89,308
110,878
334
122,251
83,103
171,702
69,535
109,978
60
(43,894)
72,666
(1,209)
44,852
128,040
42,755
146,765
77,702
130,502
60
2,199
45,318
2,595,446
2,256,723
2,469,200
(79,957)
(22,650)
(57,307)
516,848
124,365
392,483
723,848
181,303
542,545
18,172
34,966
14,481
NET INCOME (LOSS) ATTRIBUTABLE TO LAZARD LTD
$
(75,479) $
357,517 $
528,064
ATTRIBUTABLE TO LAZARD LTD CLASS A COMMON
STOCKHOLDERS:
WEIGHTED AVERAGE SHARES OF COMMON STOCK
OUTSTANDING:
Basic
Diluted
NET INCOME (LOSS) PER SHARE OF COMMON STOCK:
Basic
Diluted
88,993,985
88,993,985
95,664,129
100,997,674
106,035,808
113,674,699
$
$
(0.90) $
(0.90) $
3.68 $
3.51 $
4.90
4.63
See notes to consolidated financial statements.
73
LAZARD LTD
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
FOR THE YEARS ENDED DECEMBER 31, 2023, 2022 AND 2021
(dollars in thousands)
NET INCOME (LOSS)
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX:
Currency translation adjustments:
Year Ended December 31,
2023
2022
2021
$
(57,307) $
392,483 $
542,545
Currency translation adjustments before reclassification
Adjustment for items reclassified to earnings
31,107
1,826
(64,778)
32
(48,099)
23,645
Employee benefit plans:
Actuarial gain (loss) (net of tax expense (benefit) of $(7,606),
$(5,978) and $13,263 for the years ended December 31, 2023,
2022 and 2021, respectively)
Prior service cost (net of tax benefit of $2,567 for the year ended
(24,510)
(11,413)
33,315
December 31, 2023)
(7,751)
–
–
Adjustment for items reclassified to earnings (net of tax expense
of $1,521, $994 and $1,609 for the years ended December 31,
2023, 2022 and 2021, respectively)
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX
COMPREHENSIVE INCOME (LOSS)
LESS - COMPREHENSIVE INCOME ATTRIBUTABLE TO
5,233
5,905
(51,402)
4,152
(72,007)
320,476
5,660
14,521
557,066
NONCONTROLLING INTERESTS
18,173
34,966
14,481
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO
LAZARD LTD
$
(69,575) $
285,510 $
542,585
See notes to consolidated financial statements.
74
LAZARD LTD
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2023, 2022 AND 2021
(dollars in thousands)
Year Ended December 31,
2023
2022
2021
$
(57,307) $
392,483 $
542,545
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)
Adjustments to reconcile net income (loss) to net cash provided by (used in)
operating activities:
Depreciation and amortization of property
Noncash lease expense
Currency translation adjustment reclassification
Amortization of deferred expenses and share-based incentive compensation
Amortization and other acquisition-related costs
Deferred tax provision (benefit)
Provision (benefit) pursuant to tax receivable agreement
Impairment of equity method investments and other receivables
Impairment of assets associated with cost-saving initiatives
Loss on LGAC liquidation
(Increase) decrease in operating assets and increase (decrease) in operating liabilities:
Receivables-net
Investments
Other assets
Accrued compensation and benefits and other liabilities
Net cash provided by operating activities
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property
Disposals of property
Acquisition of business, net of cash acquired
Other investing activities
Net cash used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from:
Customer deposits, net
LGAC IPO
Contributions from noncontrolling interests
Payments for:
Customer deposits, net
Distributions to noncontrolling interests
Tax receivable agreement
LGAC IPO underwriting fees and other offering costs
Distribution to redeemable noncontrolling interests in connection with LGAC
redemption
Purchase of Class A common stock
Class A common stock dividends
Settlement of share-based incentive compensation in satisfaction of tax
withholding requirements
LFI Consolidated Funds redemptions
Other financing activities
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH
EQUIVALENTS AND RESTRICTED CASH
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS AND
RESTRICTED CASH
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH— January 1
42,853
63,552
1,826
429,523
334
(81,068)
(43,894)
22,981
8,801
17,929
(100,501)
(145,010)
(47,671)
52,314
164,662
(28,297)
490
(10,516)
–
(38,323)
–
–
2,077
(572,025)
(5,802)
(32,208)
–
(585,891)
(102,051)
(173,075)
(54,529)
(35,238)
(12,452)
42,336
60,624
32
406,242
60
42,709
(1,209)
–
–
–
140,745
178,025
(55,444)
(372,619)
833,984
38,315
74,024
23,645
394,114
60
90,643
2,199
–
–
–
(81,609)
(458,593)
(33,410)
274,146
866,079
(49,511)
(39,698)
573
–
(7,500)
(56,438)
–
–
514
(373,044)
(32,051)
(21,036)
–
–
(691,705)
(181,880)
(61,916)
(10,020)
(10,897)
642
–
–
(39,056)
350,868
575,000
334
–
(11,398)
(10,215)
(9,352)
–
(406,149)
(195,944)
(68,013)
(20,915)
(8,380)
195,836
Net cash provided by (used in) financing activities
(1,571,194)
(1,382,035)
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH— December 31
$
1,224,983 $
2,639,400 $
See notes to consolidated financial statements.
75
30,438
(186,125)
(161,672)
(1,414,417)
2,639,400
(790,614)
3,430,014
861,187
2,568,827
3,430,014
RECONCILIATION OF CASH AND CASH EQUIVALENTS AND RESTRICTED
CASH WITHIN THE CONSOLIDATED STATEMENTS OF FINANCIAL
CONDITION:
Cash and cash equivalents
Deposits with banks and short-term investments
Restricted cash
December 31,
2023
2022
2021
$
971,316 $
1,234,773 $
219,576
34,091
779,246
625,381
1,465,022
1,347,544
617,448
TOTAL CASH AND CASH EQUIVALENTS AND RESTRICTED CASH
$
1,224,983 $
2,639,400 $
3,430,014
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the year for:
Interest
Income taxes, net of refunds
$
$
73,684 $
44,230 $
77,441 $
144,312 $
77,986
74,095
See notes to consolidated financial statements.
76
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77
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_
LAZARD LTD
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands, except for per share data, unless otherwise noted)
1.
ORGANIZATION AND BASIS OF PRESENTATION
Organization
On January 1, 2024, Lazard Ltd completed its conversion (the “Conversion”) from an exempted company
incorporated under the laws of Bermuda named Lazard Ltd to a U.S. C-Corporation named Lazard, Inc. Pursuant to the
Conversion, each share of Lazard Ltd common stock was converted into one share of Lazard, Inc. common stock. As the
Conversion became effective on January 1, 2024, the accompanying consolidated financial statements as of December 31,
2023 and 2022, and for the years ended December 31, 2023, 2022 and 2021 and related notes reflect Lazard as an
exempted company incorporated under the laws of Bermuda named Lazard Ltd.
Lazard Ltd, a Bermuda holding company, and its subsidiaries (collectively referred to as “Lazard Ltd”, “Lazard”,
“we” or the “Company”), including Lazard Ltd’s indirect investment in Lazard Group LLC, a Delaware limited liability
company (collectively referred to, together with its subsidiaries, as “Lazard Group”), is one of the world’s preeminent
financial advisory and asset management firms that specializes in crafting solutions to the complex financial and strategic
challenges of our clients. We serve a diverse set of clients around the world, including corporations, governments,
institutions, partnerships and individuals.
Lazard Ltd indirectly held 100% of all outstanding Lazard Group common membership interests as of
December 31, 2023 and 2022. Lazard Ltd, through its control of the managing members of Lazard Group, controls Lazard
Group, which as of December 31, 2022 was governed by an Amended and Restated Operating Agreement dated as of
February 4, 2019. Such operating agreement was subsequently amended and restated effective as of January 1, 2023 (as so
amended and restated, the “Operating Agreement”).
Lazard Ltd’s primary operating asset is its indirect ownership of the common membership interests of, and
managing member interests in, Lazard Group, whose principal operating activities are included in two business segments:
•
•
Financial Advisory, which offers corporate, partnership, institutional, government, sovereign and
individual clients across the globe a wide array of financial advisory services regarding strategic and
mergers and acquisitions (“M&A”) advisory, capital markets advisory, shareholder advisory,
restructuring and liability management, sovereign advisory, geopolitical advisory and other strategic
advisory matters and capital raising and placement, and
Asset Management, which offers a broad range of global investment solutions and investment and wealth
management services in equity and fixed income strategies, asset allocation strategies, alternative
investments and private equity funds to corporations, public funds, sovereign entities, endowments and
foundations, labor funds, financial intermediaries and private clients.
In addition, we record selected other activities in our Corporate segment, including management of cash,
investments, deferred tax assets, outstanding indebtedness, certain contingent obligations and certain assets and liabilities
associated with a special purpose acquisition company that was sponsored by an affiliate of the Company, Lazard Growth
Acquisition Corp. I (“LGAC”).
Basis of Presentation
The consolidated financial statements are prepared in conformity with accounting principles generally accepted in
the United States of America (“U.S. GAAP”).
The Company’s policy is to consolidate entities in which it has a controlling financial interest. The Company
consolidates:
•
•
Voting interest entities (“VOEs”) where the Company holds a majority of the voting interest in such
VOEs, and
Variable interest entities (“VIEs”) where the Company is the primary beneficiary having the power to
direct the activities of the VIE that most significantly impact the VIE’s economic performance and the
80
LAZARD LTD
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(dollars in thousands, except for per share data, unless otherwise noted)
obligation to absorb losses of, or receive benefits from, the VIE that could be potentially significant to
the VIE (see Note 24).
When the Company does not have a controlling interest in an entity, but exerts significant influence over such
entity’s operating and financial decisions, the Company either (i) applies the equity method of accounting in which it
records a proportionate share of the entity’s net earnings or losses or (ii) elects the option to measure its investment at fair
value.
Intercompany transactions and balances have been eliminated.
The consolidated financial statements include Lazard Ltd, Lazard Group and Lazard Group’s principal operating
subsidiaries: Lazard Frères & Co. LLC (“LFNY”), a New York limited liability company, along with its subsidiaries,
including Lazard Asset Management LLC and its subsidiaries (collectively referred to as “LAM”); the French limited
liability companies Compagnie Financière Lazard Frères SAS (“CFLF”), along with its subsidiaries, Lazard Frères Banque
SA (“LFB”) and Lazard Frères Gestion SAS (“LFG”), and Maison Lazard SAS and its subsidiaries; and Lazard & Co.,
Limited (“LCL”), through Lazard & Co., Holdings Limited (“LCH”), an English private limited company, together with
their jointly owned affiliates and subsidiaries.
Lazard Growth Acquisition Corp. I
In February 2021, LGAC consummated its $575,000 initial public offering (the “LGAC IPO”). LGAC was a
special purpose acquisition company, that was incorporated as a Cayman Islands exempted company for the purpose of
effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with
one or more businesses (a “Business Combination”). LGACo 1 LLC, a Delaware series limited liability company and the
Company’s subsidiary, was the sponsor of LGAC. LGAC was considered to be a VIE. The Company held a controlling
financial interest in LGAC through the sponsor’s ownership of Class B founder shares of LGAC. As a result, both LGAC
and the sponsor were consolidated in the Company’s financial statements.
The proceeds from the LGAC IPO of $575,000 were held in a trust account, until the earlier of: (i) the completion
of a Business Combination and (ii) the distribution of the funds in the trust account to the LGAC shareholders in
connection with the redemption of LGAC’s Class A ordinary shares, subject to certain conditions. The cash held in the
trust account was recorded in “restricted cash” on the consolidated statements of financial condition as of December 31,
2022.
Transaction costs, which consisted of a net underwriting fee of $8,500, $20,125 of non-cash deferred underwriting
fees (included in “other liabilities” on the consolidated statements of financial condition as of December 31, 2022) and
$852 of other offering costs, were charged against the gross proceeds of the LGAC IPO.
“Redeemable noncontrolling interests” of $583,471 associated with the publicly held LGAC Class A ordinary
shares were recorded on the Company’s consolidated statements of financial condition as of December 31, 2022 at
redemption value and classified as temporary equity. Changes in redemption value were recognized immediately as they
occurred and adjusted the carrying value of redeemable noncontrolling interests to equal the redemption value at the end of
each reporting period. Increases or decreases in the carrying amount of redeemable noncontrolling interests were affected
by credits or charges to additional paid-in-capital and noncontrolling interests attributable to certain members of LGACo 1
LLC based on pro rata ownership.
The warrants exercisable for LGAC Class A ordinary shares that were issued in connection with the LGAC IPO
(the “LGAC Warrants”) met the definition of a liability under Financial Accounting Standards Board (“FASB”)
Accounting Standards Codification (“ASC”) Topic 815 and were classified as derivative liabilities which were remeasured
at fair value at each balance sheet date until exercised or cancelled, with changes in fair value reported to earnings. See
Note 8.
On February 23, 2023, LGAC redeemed all of its outstanding publicly held Class A ordinary shares as a result of
LGAC not consummating a Business Combination within the time period required by its amended and restated
81
LAZARD LTD
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(dollars in thousands, except for per share data, unless otherwise noted)
memorandum and articles of association resulting in the distribution of $585,891 of the cash held in the trust account to the
LGAC shareholders. The Company recognized $17,929 of losses on the liquidation of LGAC in “revenue-other” on the
consolidated statements of operations for the year ended December 31, 2023. In addition, the $20,125 of non-cash deferred
underwriting fees noted above was no longer probable of being incurred and therefore was reversed from other liabilities to
additional paid-in-capital. There were no redemption rights or liquidating distributions with respect to the LGAC warrants.
2.
SIGNIFICANT ACCOUNTING POLICIES
The accounting policies below relate to reported amounts and disclosures in the consolidated financial statements.
Foreign Currency —The consolidated financial statements are presented in U.S. Dollars. Many of the Company’s
non-U.S. subsidiaries have a functional currency (i.e., the currency in which operational activities are primarily conducted)
that is other than the U.S. Dollar, generally the currency of the country in which such subsidiaries are domiciled. Such
subsidiaries’ assets and liabilities are translated into U.S. Dollars at year-end exchange rates, while revenue and expenses
are translated at average exchange rates during the year based on the daily closing exchange rates. Adjustments that result
from translating amounts from a subsidiary’s functional currency to U.S. Dollars are reported in “accumulated other
comprehensive income (loss), net of tax” (“AOCI”). Foreign currency remeasurement gains and losses on transactions in
non-functional currencies are included on the consolidated statements of operations. Foreign currency remeasurement gains
(losses), net of gains and losses from forward foreign currency exchange rate contracts (see Note 8) amounted to $(5,574),
$399 and $(1,234) for the years ended December 31, 2023, 2022 and 2021, respectively, and are included in “revenue-
other” on the respective consolidated statements of operations.
Use of Estimates—The preparation of consolidated financial statements in conformity with U.S. GAAP requires
the use of management’s estimates. In preparing the consolidated financial statements, management makes estimates and
assumptions regarding:
•
•
•
•
•
•
•
•
•
•
valuations of assets and liabilities requiring fair value estimates including, but not limited to,
investments, derivatives and assumptions used to value pension and other post-retirement plans;
the assessment of probability with respect to recognizing revenue;
the discount rate used to measure operating lease right-of-use assets and operating lease liabilities;
the adequacy of the allowance for credit losses;
the realization of deferred tax assets and adequacy of tax reserves for uncertain tax positions;
the measurement of our tax receivable agreement obligation;
the outcome of litigation;
the carrying amount of goodwill and other intangible assets;
the vesting of share-based and other deferred compensation plan awards; and
other matters that affect the reported amounts and disclosure of contingencies in the consolidated
financial statements.
Estimates, by their nature, are based on judgment and available information. Therefore, actual results could differ
from those estimates and could have a material impact on the consolidated financial statements.
Cash and Cash Equivalents—The Company defines cash equivalents as short-term, highly liquid securities and
cash deposits with original maturities of 90 days or less when purchased.
Deposits with Banks and Short-Term Investments—Represents LFB’s short-term deposits, including with the
Banque de France and amounts placed by LFB in short-term, highly liquid securities with original maturities of 90 days or
less when purchased. The level of these deposits and investments may be driven by the level of LFB demand deposits
(which can fluctuate significantly on a daily basis) and by changes in asset allocation.
82
LAZARD LTD
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(dollars in thousands, except for per share data, unless otherwise noted)
Restricted Cash—Primarily represents LGAC restricted cash (see Note 1) in 2022, escrowed cash balances that
the Company cannot access prior to meeting certain requirements and other restricted cash deposits made by the Company,
including those to satisfy the requirements of clearing organizations.
Receivables and Allowance for Credit Losses—The Company’s receivables represent fee receivables, amounts
due from customers and other receivables. The fee receivables are generally due within 60 days from the date of invoice,
except as related to certain restructuring services and certain capital raising activities where fees are due upon specified
contractual payment terms. For customer loans within customers and other receivables, the Company has elected to apply
the practical expedient, in accordance with the current expected credit losses (“CECL”) guidance for financial assets with
collateral maintenance provisions, which generally results in no expected credit losses given that these loans are fully
collateralized and monitored for counterparty creditworthiness, with such collateral having a fair value in excess of the
carrying amount of the loans.
Receivables are stated net of an estimated allowance for credit losses determined in accordance with the CECL
model, for general credit risk of the overall portfolio and for specific accounts deemed uncollectible, which may include
situations where a fee is in dispute.
For fee receivables, the allowance for credit losses is determined together for all Financial Advisory fees, except
for Private Capital Advisory given the different nature of the business, client composition, and risk characteristics. An
allowance for credit losses is determined separately for Private Capital Advisory. In addition, a separate allowance for
credit losses is determined for all Asset Management fees. The allowances are measured by the application of an average
charge-off rate, determined annually based on historical bad debt charge-off experience, to the fee receivable balance of the
respective services, adjusted for the specific allowance recognized based on current conditions of individual clients. The
current conditions are considered on a quarterly basis and include the aging of the receivables, the client’s ability to make
payments, and the Company’s relationship with the client. In addition, the Company also performs a qualitative assessment
on a quarterly basis to monitor economic factors and other uncertainties that may require additional adjustment to the
expected credit losses allowance.
Financial Advisory and Asset Management fee receivables are generally deemed past due when they are
outstanding 60 days from the date of invoice, except for certain transactions that include specific contractual payment terms
that may vary from approximately one month to four years following the invoice date (as is the case for certain Private
Capital Advisory fees) or may be subject to court approval (as is the case with Restructuring activities that include
bankruptcy proceedings). In such cases, receivables are deemed past due when payment is not received by the agreed-upon
contractual date or the court approval date, respectively. Financial Advisory and Asset Management fee receivables past
due in excess of 180 days and 10 months, respectively, are generally fully provided for unless there is evidence that the
balance is collectible. Notwithstanding our policy for receivables past due, any specific receivables that are deemed
uncollectible result in specific reserves against such exposures.
See Note 5 for additional information regarding the Company’s receivables and allowance for credit losses.
Investments—Investments in debt and marketable equity securities held either directly, or indirectly through asset
management funds are accounted for at fair value, with any increase or decrease in fair value recorded in earnings. Such
amounts are reflected in “revenue-other” in the consolidated statements of operations.
Investments also include interests in alternative investment funds and private equity funds, each accounted for at
fair value, and investments accounted for under the equity method of accounting. Any increases or decreases in the
carrying value of the investments accounted for at fair value and the Company’s share of net income or losses pertaining to
its equity method investments are reflected in “revenue-other” in the consolidated statements of operations. Additionally,
equity method investments are tested for impairment if circumstances indicate impairment may have occurred. Impairment
charges are reflected in “revenue-other” in the consolidated statements of operations.
Dividend income is reflected in “revenue-other” in the consolidated statements of operations. Securities
transactions and the related revenue and expenses are recorded on a “trade date” basis.
83
LAZARD LTD
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(dollars in thousands, except for per share data, unless otherwise noted)
See Notes 6 and 7 for additional information regarding the Company’s investments.
Property-net—Property is stated at cost less accumulated depreciation and amortization. Buildings are depreciated
on a straight-line basis over their estimated useful lives. Leasehold improvements are capitalized and are amortized over
the lesser of the economic useful life of the improvement or the term of the lease. Depreciation of furniture and equipment,
including computer hardware and software, is determined on a straight-line basis using estimated useful lives. Depreciation
and amortization expenses aggregating $42,853, $42,336 and $38,315 for the years ended December 31, 2023, 2022 and
2021, respectively, are included on the consolidated statements of operations in “occupancy and equipment” or
“technology and information services”, depending on the nature of the underlying asset. Repairs and maintenance are
expensed as incurred.
Operating Lease Right-of-use Assets and Operating Lease Liabilities—The Company determines if an
arrangement is, or contains, a lease at its inception and reevaluates the arrangement if the terms are modified. Operating
lease right-of-use assets (“ROU assets”) represent the right to use an underlying asset for the lease term and operating lease
liabilities reflect the obligation to make lease payments arising from the lease. At any given time during the lease term, the
operating lease liability represents the present value of the remaining lease payments and the operating lease ROU asset is
measured at the amount of the lease liability, adjusted for rent prepayments, unamortized initial direct costs and the
remaining balance of lease incentives received. Both the operating lease ROU asset and the operating lease liability are
reduced to zero at the end of the lease.
See Note 10 for additional information regarding the Company’s ROU assets and operating lease liabilities.
Goodwill and Other Intangible Assets—Goodwill has an indefinite life and is tested for impairment annually, as
of November 1, or more frequently if circumstances indicate impairment may have occurred. The Company performs a
qualitative assessment about whether it is more likely than not that the fair value of a reporting unit is less than its carrying
amount in lieu of actually calculating the fair value of the reporting unit. If events indicate that it is more likely than not
that a reporting unit’s fair value is less than its carrying value, the Company performs a quantitative assessment to
determine the fair value of the reporting unit and compares it to its carrying value. If the carrying value of a reporting unit
exceeds its fair value, the Company would recognize an impairment loss equal to the excess.
Intangible assets that are not deemed to have an indefinite life are amortized over their estimated useful lives and
are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets
may not be recoverable. The pattern of amortization reflects the timing of the realization of the economic benefits of such
intangible assets. For acquired customer contracts, the period of realization is deemed to be the period when the related
revenue is recognized. The impairment analysis is performed by comparing the carrying value of the intangible asset being
reviewed for impairment to the current and expected future cash flows expected to be generated from such asset on an
undiscounted basis, including eventual disposition. An impairment loss would be measured for the amount by which the
carrying amount of the intangible asset exceeds its fair value.
See Note 11 with respect to goodwill and other intangible assets.
Derivative Instruments—A derivative is typically defined as a financial instrument whose value is “derived” from
underlying assets, indices or reference rates, such as a future, forward, swap, warrant or option contract, or other financial
instrument with similar characteristics. Derivative contracts often involve future commitments to exchange interest
payment streams or currencies based on a notional or contractual amount (e.g., interest rate swaps or currency forwards) or
to purchase or sell other financial instruments at specified terms on a specified date (e.g., options to buy or sell securities or
currencies).
The Company enters into forward foreign currency exchange rate contracts, interest rate swaps, interest rate
futures, total return swap contracts on various equity and debt indices and other derivative contracts to economically hedge
exposures to fluctuations in currency exchange rates, interest rates and equity and debt prices. The Company reports its
derivative instruments separately as assets and liabilities unless a legal right of set-off exists under a master netting
agreement enforceable by law, in which case the Company would net the applicable assets and liabilities and related
receivable and payable for net cash collateral under such contracts. The Company’s derivative instruments are recorded at
84
LAZARD LTD
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(dollars in thousands, except for per share data, unless otherwise noted)
their fair value, and are included in “other assets” and “other liabilities” on the consolidated statements of financial
condition. Gains and losses on the Company’s derivative instruments are generally included in “interest income” and
“interest expense” or “revenue-other”, depending on the nature of the underlying item, in the consolidated statements of
operations.
In addition to the derivative instruments described above, the Company records derivative liabilities relating to its
obligations pertaining to Lazard Fund Interests (“LFI”) and other similar deferred compensation arrangements, the fair
value of which is based on the value of the underlying investments, adjusted for estimated forfeitures, and is included in
“accrued compensation and benefits” in the consolidated statements of financial condition. Changes in the fair value of the
derivative liabilities are included in “compensation and benefits” in the consolidated statements of operations, the impact of
which equally offsets the changes in the fair value of investments which are currently expected to be delivered upon
settlement of LFI and other similar deferred compensation arrangements, which are reported in “revenue-other” in the
consolidated statements of operations. For information regarding LFI and other similar deferred compensation
arrangements, see Notes 6, 8 and 16.
For information regarding LGAC Warrants that are accounted for as derivative liabilities, see Notes 1 and 8.
Deposits and Other Customer Payables—Principally consists of LFB customer-related demand deposits.
Securities Sold, Not Yet Purchased—Securities sold, not yet purchased represents liabilities for securities sold for
which payment has been received and the obligations to deliver such securities are included within “other liabilities” in the
consolidated statements of financial condition. These securities are accounted for at fair value, with any increase or
decrease in fair value recorded in earnings in accordance with standard securities industry practices. Such gains and losses
are reflected in “revenue-other” in the consolidated statements of operations.
Fair Value of Financial Assets and Liabilities—The majority of the Company’s financial assets and liabilities
are recorded at fair value or at amounts that approximate fair value. Such assets and liabilities include cash and cash
equivalents, deposits with banks and short-term investments, restricted cash, receivables, investments (excluding
investments accounted for under the equity method of accounting), derivative instruments, deposits and other customer
payables.
Redeemable Noncontrolling Interests—See Notes 15 and 24 for information regarding consolidated VIE interests
held by employees and Note 1 for information regarding interests in LGAC classified as temporary equity.
Investment Banking and Other Advisory Fees —Fees for Financial Advisory services are recorded when: (i) a
contract with a client has been identified, (ii) the performance obligations in the contract have been identified, (iii) the fee
or other transaction price has been determined, (iv) the fee or other transaction price has been allocated to each
performance obligation in the contract, and (v) the Company has satisfied the applicable performance obligation. The
expenses that are directly related to such transactions are recorded as incurred and presented within operating expenses
when the Company is primarily responsible for fulfilling the promise of the arrangement. Revenues associated with the
reimbursement of such expenses are recorded when the Company is contractually entitled to reimbursement and presented
within investment banking and other advisory fees.
Asset Management Fees—Fees for Asset Management services are primarily comprised of management fees and
incentive fees. Management fees are derived from fees for investment management and other services provided to clients.
Revenue is recorded in accordance with the same five criteria as Financial Advisory fees, which generally results in
management fees being recorded on a daily, monthly or quarterly basis, primarily based on a percentage of client assets
managed. Fees vary with the type of assets managed, with higher fees earned on equity assets, alternative investment (such
as hedge fund) and private equity funds, and lower fees earned on fixed income and money market products. Expenses that
are directly related to the sale or distribution of fund interests are recorded as incurred and presented within operating
expenses when the Company is primarily responsible for fulfilling the promise of the arrangement. Revenues associated
with the reimbursement of such expenses are recorded when the Company is contractually entitled to reimbursement and
presented within asset management fees.
85
LAZARD LTD
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(dollars in thousands, except for per share data, unless otherwise noted)
In addition, the Company earns performance-based incentive fees on various investment products, including
traditional products and alternative investment funds such as hedge funds and private equity funds.
For hedge funds, incentive fees are calculated based on a specific percentage of a fund’s net appreciation, in some
cases in excess of established benchmarks or thresholds. The Company records incentive fees on traditional products and
hedge funds when a significant reversal in the amount of the cumulative revenue to be recognized is not probable, which is
typically at the end of the relevant performance measurement period. The incentive fee measurement period is generally an
annual period (unless an account is terminated during the year). The incentive fees received at the end of the measurement
period are not subject to reversal or clawback. Incentive fees on hedge funds generally are subject to loss carryforward
provisions in which losses incurred by the hedge funds in any year are applied against certain gains realized by the hedge
funds in future periods before any incentive fees can be earned.
For private equity funds, incentive fees may be earned in the form of a “carried interest” if profits arising from
realized investments exceed a specified threshold. Typically, such carried interest is ultimately calculated on a whole-fund
or investment by investment basis and, therefore, clawback of carried interest toward the end of the life of the fund can
occur. As a result, the Company recognizes incentive fees earned on our private equity funds only when it is probable that a
clawback will not occur.
Receivables relating to asset management and incentive fees are reported in “fees receivable” on the consolidated
statements of financial condition.
Equity-Based Incentive Compensation Awards—Equity-based incentive compensation awards that do not require
future service are expensed immediately. Equity-based compensation awards that require future service are expensed over
the applicable requisite service period, based on the grant date fair value of the award. Compensation expense recognized
for equity-based incentive compensation is determined based on the number of awards that in the Company’s estimate are
considered probable of vesting (including as a result of any applicable performance conditions). Equity-based incentive
compensation is primarily recognized in “compensation and benefits” expense.
Income Taxes—Deferred income taxes reflect the net tax effects of temporary differences between the financial
reporting and tax basis of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect
when such differences are expected to reverse. Such temporary differences are reflected as “deferred tax assets” and
“deferred tax liabilities” on the consolidated statements of financial condition. A deferred tax asset is recognized if it is
more likely than not (defined as a likelihood of greater than 50%) that a tax benefit will be accepted by the relevant taxing
authority.
In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that
some portion or all of the deferred tax assets will not be realized and, when necessary, a valuation allowance is established.
The ultimate realization of the deferred tax assets is dependent upon the generation of future taxable income during the
periods in which temporary differences become deductible. Management considers the following possible sources of
taxable income when assessing the realization of deferred tax assets:
•
•
•
•
future reversals of existing taxable temporary differences;
future taxable income exclusive of reversing temporary differences and carryforwards;
taxable income in prior carryback years; and
tax-planning strategies.
The assessment regarding whether a valuation allowance is required or should be adjusted also considers all
available information, including the following:
•
•
•
nature, frequency, magnitude and duration of any past losses and current operating results;
duration of statutory carryforward periods;
historical experience with tax attributes expiring unused; and
86
LAZARD LTD
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(dollars in thousands, except for per share data, unless otherwise noted)
•
near-term and medium-term financial outlook.
The Company records tax positions taken or expected to be taken in a tax return based upon the Company’s
estimates regarding the amount that is more likely than not to be realized or paid, including in connection with the
resolution of any related appeals or other legal processes. Accordingly, the Company recognizes liabilities for certain
unrecognized tax benefits based on the amounts that are more likely than not to be settled with the relevant taxing
authority. The Company recognizes interest and/or penalties related to unrecognized tax benefits in “provision for income
taxes”. See Note 19 for additional information relating to income taxes.
3.
RECENT ACCOUNTING DEVELOPMENTS
Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures—In November 2023, the
Financial Accounting Standards Board (“FASB”) issued an accounting standard update to improve the disclosures about a
public entity’s reportable segments and address requests from investors for additional, more detailed information about
reportable segment’s expenses. The amendments include new annual and interim disclosure requirements primarily related
to significant segment expenses, reportable segments’ profit or loss, and information on the chief operating decision maker.
The new guidance is effective for annual periods beginning after December 15, 2023, and interim periods beginning after
December 15, 2024. The amendments shall be applied retrospectively to all prior periods presented in the consolidated
financial statements. The Company is currently evaluating the new guidance.
Income Taxes (Topic 740): Improvements to Income Tax Disclosures —In December 2023, the FASB issued an
accounting standard update to enhance the transparency and decision usefulness of income tax disclosures. The
amendments include new annual disclosure requirements related to the rate reconciliation, information about income taxes
paid, and disaggregated information on pre-tax income or loss and income tax expense from continuing operations. The
amendments also eliminated certain disclosure requirements. The new guidance is effective for annual periods beginning
after December 15, 2024, and shall be applied on a prospective basis. The Company is currently evaluating the new
guidance.
4.
REVENUE RECOGNITION
The Company disaggregates revenue based on its business segment results and believes that the following
information provides a reasonable representation of how performance obligations relate to the nature, amount, timing and
uncertainty of revenue and cash flows:
Net Revenue:
Financial Advisory (a)
Asset Management:
Management fees and other (b)
Incentive fees (c)
Total Asset Management
________________________
Year Ended December 31,
2023
2022
2021
$
1,385,357 $
1,666,156 $
1,764,509
$
$
1,121,950 $
29,546
1,151,496 $
1,137,583 $
67,344
1,204,927 $
1,304,582
120,403
1,424,985
(a)
Financial Advisory is comprised of a wide array of financial advisory services regarding M&A advisory, capital
markets advisory, shareholder advisory, restructuring and liability management, sovereign advisory, geopolitical
advisory and other strategic advisory and capital raising and placement work for clients. The benefits of these
advisory services are generally transferred to the Company’s clients over time, and consideration for these
advisory services typically includes transaction completion, transaction announcement and retainer fees. Retainer
fees are generally fixed and recognized over the period in which the advisory services are performed. However,
transaction announcement and transaction completion fees are variable and subject to constraints, and they are
87
LAZARD LTD
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(dollars in thousands, except for per share data, unless otherwise noted)
typically not recognized until there is an announcement date or a completion date, respectively, due to the
uncertainty associated with those events. Therefore, in any given period, advisory fees recognized for certain
transactions may relate to services performed in prior periods. The advisory fees that may be unrecognized as of
the end of a reporting period, primarily comprised of fees associated with transaction announcements and
transaction completions, generally remain unrecognized due to the uncertainty associated with those events.
Management fees and other is primarily comprised of management services. The benefits of these management
services are transferred to the Company’s clients over time. Consideration for these management services
generally includes management fees, which are based on assets under management and recognized over the period
in which the management services are performed. The selling or distribution of fund interests is a separate
performance obligation within management fees and other, and the benefits of such services are transferred to the
Company’s clients at the point in time that such fund interests are sold or distributed.
Incentive fees is primarily comprised of management services. The benefits of these management services are
transferred to the Company’s clients over time. Consideration for these management services is generally variable
and includes performance or incentive fees. The fees allocated to these management services that are
unrecognized as of the end of the reporting period are generally amounts that are subject to constraints due to the
uncertainty associated with performance targets and clawbacks.
(b)
(c)
In addition to the above, contracts with clients include trade-based commission income, which is recognized at the
point in time of execution and presented within other revenue. Such income may be earned by providing trade facilitation,
execution, clearance and settlement, custody, and trade administration services to clients.
With regard to the disclosure requirement for remaining performance obligations, the Company elected the
practical expedients permitted in the guidance to (i) exclude contracts with a duration of one year or less; and (ii) exclude
variable consideration, such as transaction completion and transaction announcement fees, that is allocated entirely to
unsatisfied performance obligations. Excluded variable consideration typically relates to contracts with a duration of one
year or less, and is generally constrained due to uncertainties. Therefore, when applying the practical expedients, amounts
related to remaining performance obligations are not material to the Company’s consolidated financial statements.
5.
RECEIVABLES AND ALLOWANCE FOR CREDIT LOSSES
The Company’s receivables represent fee receivables, amounts due from customers and other receivables. Where
applicable, receivables are stated net of an estimated allowance for credit losses determined in accordance with the CECL
model.
Of the Company’s fee receivables at December 31, 2023 and 2022, $113,929 and $97,964, respectively,
represented financing receivables for our Private Capital Advisory fees.
At December 31, 2023 and 2022, customers and other receivables included $86,412 and $128,890, respectively, of
customer loans, which are fully collateralized and monitored for counterparty creditworthiness, with such collateral having
a fair value in excess of the carrying amount of the loans as of both December 31, 2023 and 2022.
The aggregate carrying amount of other fees and customers and other receivables was $561,978 and $425,904 at
December 31, 2023 and 2022, respectively.
Activity in the allowance for credit losses for the years ended December 31, 2023, 2022 and 2021 was as follows:
Beginning Balance
Bad debt expense, net of reversals
$
17,738 $
20,875
33,957 $
4,012
Charge-offs, foreign currency translation and other adjustments
(10,110)
(20,231)
Ending Balance
$
28,503 $
17,738 $
36,649
3,807
(6,499)
33,957
Year Ended December 31,
2023
2022
2021
88
LAZARD LTD
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(dollars in thousands, except for per share data, unless otherwise noted)
Bad debt expense, net of reversals represents the current period provision of expected credit losses and is included
in “operating expenses-other” on the consolidated statements of operations.
The allowance for credit losses is substantially all related to Financial Advisory fee receivables and other
receivables.
6.
INVESTMENTS
The Company’s investments consist of the following at December 31, 2023 and 2022:
Debt
Equities
Funds:
Alternative investments (a)
Debt (a)
Equity (a)
Private equity
Investments, at fair value
Equity method investments
Total investments
________________________
December 31,
2023
2022
$
4,285 $
54,717
–
43,889
61,680
191,325
343,139
46,818
642,962
701,964
–
56,947
178,556
350,282
53,822
639,607
683,496
15,481
$
701,964 $
698,977
(a)
Interests in alternative investment funds, debt funds and equity funds include investments, including those held by
LFI Consolidated Funds (see Note 24), with fair values of $27,454, $175,449 and $284,099, respectively, at
December 31, 2023 and $24,137, $142,632 and $266,528, respectively, at December 31, 2022, held in order to
satisfy the Company’s obligation upon vesting of previously granted LFI and other similar deferred compensation
arrangements. LFI represent grants by the Company to eligible employees of interests in a number of Lazard-
managed funds, subject to service-based vesting conditions (see Notes 8 and 16).
Debt primarily consists of investments in government securities held within separately managed accounts in order
to seed strategies in our Asset Management business.
Equities primarily consist of investments in marketable equity securities of large-, mid- and small-cap domestic,
international and global companies held within separately managed accounts in order to seed strategies in our Asset
Management business.
Alternative investment funds primarily consist of interests in various Lazard-managed hedge funds, funds of funds
and mutual funds. Such amounts primarily consist of investments in funds in order to seed strategies in our Asset
Management business, and amounts related to LFI discussed above.
Debt funds primarily consist of investments in debt securities in order to seed strategies in our Asset Management
business, amounts related to LFI discussed above and an investment in a Lazard-managed debt fund.
Equity funds primarily consist of investments in equity securities in order to seed strategies in our Asset
Management business, and amounts related to LFI discussed above.
Private equity investments include those owned by Lazard and those consolidated but not owned by Lazard.
Private equity investments owned by Lazard are primarily comprised of investments in private equity funds. Such
investments primarily include (i) Edgewater Growth Capital Partners III, L.P. (“EGCP III”), a fund primarily making
89
LAZARD LTD
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(dollars in thousands, except for per share data, unless otherwise noted)
equity and buyout investments in middle market companies, (ii) a fund targeting significant noncontrolling-stake
investments in established private companies and (iii) a seed investment in a fund that invests in sustainable private
infrastructure opportunities.
Private equity investments consolidated but not owned by Lazard relate to the economic interests that are owned
by the management team and other investors in the Edgewater Funds (“Edgewater”).
Equity method investments represent certain partnership interests accounted for under the equity method of
accounting.
During the years ended December 31, 2023, 2022 and 2021, the Company reported in “revenue-other” on its
consolidated statements of operations net unrealized investment gains and losses pertaining to equity securities and trading
debt securities still held as of the reporting date as follows:
Net unrealized investment gains (losses)
$
54,228 $
(92,793) $
14,154
Year Ended December 31,
2023
2022
2021
7.
FAIR VALUE MEASUREMENTS
Fair Value Hierarchy of Investments and Certain Other Assets and Liabilities—Lazard categorizes its
investments and certain other assets and liabilities recorded at fair value into a three-level fair value hierarchy as follows:
Level 1. Assets and liabilities whose values are based on unadjusted quoted prices for identical assets or liabilities in an
active market that Lazard has the ability to access.
Level 2. Assets and liabilities whose values are based on (i) quoted prices for similar assets or liabilities in an active
market, or quoted prices for identical or similar assets or liabilities in non-active markets, or (ii) inputs other than
quoted prices that are directly observable or derived principally from, or corroborated by, market data.
Level 3. Assets and liabilities whose values are based on prices or valuation techniques that require inputs that are both
unobservable and significant to the overall fair value measurement. These inputs reflect our own assumptions
about the assumptions a market participant would use in pricing the asset or liability. Items included in Level 3
include securities or other financial assets whose trading volume and level of activity have significantly decreased
when compared with normal market activity and there is no longer sufficient frequency or volume to provide
pricing information on an ongoing basis.
The fair value of debt is classified as Level 1 when the fair values are based on unadjusted quoted prices in active
markets.
The fair value of equities is classified as Level 1 or Level 3 as follows: marketable equity securities are classified
as Level 1 and are valued based on the last trade price on the primary exchange for that security as provided by external
pricing services; equity interests in private companies are generally classified as Level 3.
The fair value of investments in alternative investment funds, debt funds and equity funds is classified as Level 1
when the fair values are based on the publicly reported closing price for the fund, or Level 2 when based on one or more
quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly.
The fair value of investments in certain private equity funds is classified as Level 3 for (i) certain investments that
are valued based on the potential transaction value and (ii) when the acquisition price is considered the best measure of fair
value.
The fair value of securities sold, not yet purchased, is classified as Level 1 when the fair values are based on
unadjusted quoted prices in active markets.
90
LAZARD LTD
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(dollars in thousands, except for per share data, unless otherwise noted)
The fair value of the contingent consideration liability is classified as Level 3. The contingent consideration
liability is initially recorded at fair value on the acquisition date and is included in “other liabilities” on the consolidated
statements of financial condition. The fair value of the contingent consideration liability is remeasured at each reporting
period. The inputs used to derive the fair value of the contingent consideration include the application of probabilities when
assessing certain performance thresholds for the relevant periods. Any change in the fair value is recognized in
“amortization and other acquisition-related costs” in the consolidated statements of operations. Our business acquisitions
may involve the potential payment of contingent consideration upon the achievement of certain performance thresholds.
The fair value of derivatives classified as Level 1 is based on the listed market price of such instruments. The fair
value of derivatives classified as Level 2 is based on the values of the related underlying assets, indices or reference rates as
follows: the fair value of forward foreign currency exchange rate contracts is a function of the spot rate and the interest rate
differential of the two currencies from the trade date to settlement date; the fair value of total return swaps is based on the
change in fair value of the related underlying equity security, financial instrument or index and a specified notional
holding; the fair value of interest rate swaps is based on the interest rate yield curve; and the fair value of derivative
liabilities related to LFI and other similar deferred compensation arrangements is based on the value of the underlying
investments, adjusted for forfeitures. The fair value of derivatives classified as Level 3 is based on a Black-Scholes
valuation model that utilizes both observable and unobservable inputs. Unobservable inputs include model adjustments for
valuation uncertainty. See Note 8.
Investments Measured at Net Asset Value (“NAV”)—As a practical expedient, the Company uses NAV or its
equivalent to measure the fair value of certain investments. NAV is primarily determined based on information provided by
external fund administrators. The Company’s investments valued at NAV as a practical expedient in (i) alternative
investment funds, debt funds and equity funds are redeemable in the near term, and (ii) private equity funds are not
redeemable in the near term as a result of redemption restrictions.
The following tables present, as of December 31, 2023 and 2022, the classification of (i) investments and certain
other assets and liabilities measured at fair value on a recurring basis within the fair value hierarchy and (ii) investments
measured at NAV or its equivalent as a practical expedient:
Level 1
Level 2
Level 3
NAV
Total
December 31, 2023
Assets:
Investments:
Debt
Equities
Funds:
Alternative investments
Debt
Equity
Private equity
Derivatives
Total
Liabilities:
Securities sold, not yet purchased
Contingent consideration liability
Derivatives
Total
$
$
$
– $
–
4,285
54,717
$
4,285 $
54,224
15,676
180,907
343,094
–
–
598,186 $
– $
–
–
10,413
–
–
2,789
13,202 $
– $
493
–
–
–
273
–
766 $
46,004
5
45
46,545
–
92,599 $
4,809 $
–
–
– $
–
368,673
– $
– $
6,583
–
–
–
4,809 $
368,673 $
6,583 $
– $
91
61,680
191,325
343,139
46,818
2,789
704,753
4,809
6,583
368,673
380,065
LAZARD LTD
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(dollars in thousands, except for per share data, unless otherwise noted)
Assets:
Investments:
Equities
Funds:
Level 1
Level 2
Level 3
NAV
Total
December 31, 2022
$
43,243 $
– $
646 $
– $
43,889
Alternative investments
Debt
Equity
Private equity
Derivatives
Total
Liabilities:
Securities sold, not yet purchased
Derivatives
Total
$
$
$
27,073
178,552
350,242
–
–
599,110 $
–
–
–
–
–
–
–
18,772
29,874
4
40
35,050
14,554
14,554 $
–
19,418 $
–
64,968 $
4,651 $
– $
115
327,045
4,766 $
327,045 $
– $
–
– $
– $
–
– $
56,947
178,556
350,282
53,822
14,554
698,050
4,651
327,160
331,811
The following tables provide a summary of changes in fair value of the Company’s Level 3 assets and liabilities
for the years ended December 31, 2023, 2022 and 2021:
Year Ended December 31, 2023
Net Unrealized/
Realized
Gains/Losses
Included In
Earnings (a)
Beginning
Balance
Purchases/
Acquisitions/
Issuances
Sales/
Settlements/
Transfers (b)
Foreign
Currency
Translation
Adjustments
Ending
Balance
646 $
18,772
19,418 $
54 $
–
54 $
– $
–
(281) $
(18,508)
– $
(18,789) $
74 $
9
83 $
493
273
766
– $
– $
274 $
274 $
7,754 $
7,754 $
(1,445) $
(1,445) $
– $
– $
6,583
6,583
Assets:
Investments:
Equities
Private equity funds
Total Level 3 assets
Liabilities:
Contingent consideration
liability (c)
Total Level 3 liabilities
$
$
$
$
92
LAZARD LTD
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(dollars in thousands, except for per share data, unless otherwise noted)
Assets:
Investments:
Equities
Private equity funds
Total Level 3 assets
Year Ended December 31, 2022
Net Unrealized/
Realized
Gains/Losses
Included In
Earnings (a)
Beginning
Balance
Purchases/
Issuances
Sales/
Settlements
Foreign
Currency
Translation
Adjustments
Ending
Balance
$
$
578 $
293
871 $
99 $
–
99 $
– $
18,000
18,000 $
– $
(13)
(13) $
(31) $
492
461 $
646
18,772
19,418
Year Ended December 31, 2021
Net Unrealized/
Realized
Gains/Losses
Included In
Earnings (a)
Beginning
Balance
Purchases/
Issuances
Sales/
Settlements/
Transfers (b)
Foreign
Currency
Translation
Adjustments
Ending
Balance
Assets:
Investments:
Equities
Private equity funds
Total Level 3 assets
Liabilities:
Derivatives
$
$
$
Total Level 3 liabilities $
_____________________
1,671 $
1,486
3,157 $
(796) $
951
155 $
– $
–
(235) $
(2,121)
– $
(2,356) $
(62) $
(23)
(85) $
– $
– $
– $
– $
11,500 $
(11,500) $
11,500 $
(11,500) $
– $
– $
578
293
871
–
–
(a)
(b)
(c)
Earnings recorded in “other revenue” for investments in Level 3 assets for the years ended December 31, 2023,
2022 and 2021 include net unrealized gains (losses) of $(6), $99 and $155, respectively. Unrealized losses of $274
were recorded in “amortization and other acquisition-related costs” for the contingent consideration liability for
the year ended December 31, 2023.
Transfers out of Level 3 private equity funds during the years ended December 31, 2023 and 2021 reflect
investments valued at NAV as of December 31, 2023 and 2021. Transfers out of Level 3 derivatives during the
year ended December 31, 2021 reflected transfers of derivative liabilities for LGAC Warrants to Level 1
principally due to a change in the inputs used to value these derivatives.
For the year ended December 31, 2023, acquisitions represent the initial recognition of the contingent
consideration liability (noncash transaction), and settlements represent aggregate cash and noncash settlement of
contingent consideration after the acquisition date.
There were no other transfers into or out of Level 3 within the fair value hierarchy during the years ended
December 31, 2023, 2022 and 2021.
93
LAZARD LTD
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(dollars in thousands, except for per share data, unless otherwise noted)
Financial Instruments Not Measured at Fair Value—The tables below present the carrying value, fair value and
fair value hierarchy category of certain financial instruments as of December 31, 2023 and 2022 that are not measured at
fair value in the Company’s consolidated statement of financial condition.
December 31, 2023
Fair Value Measurements Using:
Carrying Value
Fair Value
Level 1
Level 2
Level 3
Financial Assets:
Cash and cash equivalents
Deposits with banks and short-term
investments
Restricted cash
Financing receivables
Customer loans
Other fees and customers and other
receivables
Financial Liabilities:
Deposits and other customer
payables
Senior debt
Financial Assets:
Cash and cash equivalents
Deposits with banks and short-term
investments
Restricted cash
Financing receivables
Customer loans
Other fees and customers and other
receivables
Financial Liabilities:
Deposits and other customer
payables
Senior debt
$
971,316 $
971,316 $
971,316 $
– $
219,576
34,091
113,929
86,412
219,576
34,091
113,694
86,412
219,576
34,091
–
–
561,978
561,978
561,978
–
–
–
–
–
–
–
–
113,694
86,412
$
443,262 $
443,262 $
443,262 $
– $
1,690,200
1,651,726
–
1,651,726
December 31, 2022
Fair Value Measurements Using:
Carrying Value
Fair Value
Level 1
Level 2
Level 3
$
1,234,773 $
1,234,773 $
1,234,773 $
– $
779,246
625,381
97,964
128,890
779,246
625,381
98,362
128,890
779,246
625,381
–
–
425,904
425,904
425,904
–
–
–
–
–
$
921,834 $
921,834 $
921,834 $
– $
1,687,714
1,601,917
–
1,601,917
98,362
128,890
–
–
–
–
–
–
–
–
–
Cash and cash equivalents are carried at either cost or amortized cost that approximates fair value due to their
short-term maturities.
The carrying value of deposits with banks and short-term investments, and restricted cash, approximates fair value
because of the relatively short period of time between their origination and expected maturity.
Fair values of financing receivables were generally determined by discounting both principal and interest cash
flows expected to be collected, using a discount rate approximating current market interest rates for comparable financial
instruments and based on unobservable inputs.
94
LAZARD LTD
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(dollars in thousands, except for per share data, unless otherwise noted)
The carrying value of customer loans approximates fair value as such loans are fully collateralized and bear
interest at rates that regularly reset in accordance with market reference rates.
The carrying value of other fees and customers and other receivables and deposits and other customer payables
approximates fair value due to their short-term nature.
The Company’s senior debt is carried at its principal amount outstanding, net of unamortized debt costs. The fair
value of the Company’s senior debt is based on market quotations.
The following tables present, at December 31, 2023 and 2022, certain investments that are valued using NAV or
its equivalent as a practical expedient in determining fair value:
December 31, 2023
% of
NAV
Not
Redeemable
Investments Redeemable
Redemption
Frequency
Redemption
Notice Period
NAV
Unfunded
Commitments
$
45,324 $
680
5
45
–
–
–
–
NA
NA
NA
NA
46,545
5,505 (e)
100 % (f)
$
92,599 $
5,505
(a)
(b)
(c)
(d)
NA
30-60 days
<30-30 days
<30 days
<30-60 days
NA
Alternative investment funds:
Hedge funds
Other
Debt funds
Equity funds
Private equity funds:
Equity growth
Total
_____________________
(a)
(b)
(c)
(d)
(e)
(f)
monthly (74%) and quarterly (26%)
daily (4%) and monthly (96%)
daily (100%)
monthly (34%) and annually (66%)
Unfunded commitments to private equity investments consolidated but not owned by Lazard of $9,605 are
excluded. Such commitments are required to be funded by capital contributions from noncontrolling interest
holders.
Distributions from each fund will be received as the underlying investments of the funds are liquidated.
95
LAZARD LTD
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(dollars in thousands, except for per share data, unless otherwise noted)
December 31, 2022
% of
NAV
Not
Redeemable
Investments Redeemable
Redemption
Frequency
Redemption
Notice Period
NAV
Unfunded
Commitments
$
29,259 $
615
4
40
–
–
–
–
NA
NA
NA
NA
35,050
5,455 (e)
100 % (f)
$
64,968 $
5,455
(a)
(b)
(c)
(d)
NA
30-60 days
<30-30 days
<30 days
<30-60 days
NA
Alternative investment funds:
Hedge funds
Other
Debt funds
Equity funds
Private equity funds:
Equity growth
Total
_____________________
(a)
(b)
(c)
(d)
(e)
(f)
monthly (68%) and quarterly (32%)
daily (5%) and monthly (95%)
daily (100%)
monthly (35%) and annually (65%)
Unfunded commitments to private equity investments consolidated but not owned by Lazard of $8,003 are
excluded. Such commitments are required to be funded by capital contributions from noncontrolling interest
holders.
Distributions from each fund will be received as the underlying investments of the funds are liquidated.
8.
DERIVATIVES
The tables below present the fair value of the Company’s derivative instruments reported within “other assets” and
“other liabilities” and the fair value of the Company’s derivative liabilities relating to its obligations pertaining to LFI and
other similar deferred compensation arrangements reported within “accrued compensation and benefits” (see Note 16) on
the accompanying consolidated statements of financial condition as of December 31, 2023 and 2022. Notional amounts
provide an indication of the volume of the Company's derivative activity.
Derivative assets and liabilities, as well as the related cash collateral from the same counterparty, have been netted
on the consolidated statements of financial condition where the Company has obtained an appropriate legal opinion with
respect to the master netting agreement. Where such a legal opinion has not been either sought or obtained, amounts are not
eligible for netting on the consolidated statements of financial condition, and those derivative assets and liabilities are
shown separately in the table below.
In addition to the cash collateral received and transferred that is presented on a net basis with derivative assets and
liabilities, the Company receives and transfers additional securities and cash collateral. These amounts mitigate
96
LAZARD LTD
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(dollars in thousands, except for per share data, unless otherwise noted)
counterparty credit risk associated with the Company’s derivative instruments, but are not eligible for net presentation on
the consolidated statements of financial condition.
Forward foreign currency exchange rate contracts
$
Total return swaps and other
LFI and other similar deferred compensation
arrangements
Total gross derivatives
Counterparty and cash collateral netting:
Forward foreign currency exchange rate contracts
Total return swaps and other
Net derivatives in "other assets" and "other liabilities"
Amounts not netted (a):
Cash collateral
Securities collateral
December 31, 2023
Derivative Assets
Derivative Liabilities
Fair Value
Notional
Fair Value
Notional
3,400 $
133
283,635 $
4,478
1,847 $
12,290
170,704
117,139
–
3,533 $
–
288,113
365,420
379,557 $
352,891
640,734
(604)
(140)
2,789
–
–
(603)
(10,281)
368,673
(243)
–
$
2,789
$
368,430
December 31, 2022
Derivative Assets
Derivative Liabilities
Fair Value
Notional
Fair Value
Notional
Forward foreign currency exchange rate contracts
$
1,356 $
170,103 $
921 $
128,098
Total return swaps and other
LGAC Warrants
LFI and other similar deferred compensation
arrangements
Total gross derivatives
Counterparty and cash collateral netting:
Forward foreign currency exchange rate contracts
Total return swaps and other
Net derivatives in "other assets" and "other liabilities"
Amounts not netted (a):
Cash collateral
Securities collateral
_____________________
13,427
155,026
–
–
–
–
72
115
326,282
14,783 $
325,129
327,390 $
1,398
11,500
338,126
479,122
(157)
(72)
14,554
–
–
14,554
$
(158)
(72)
327,160
–
–
327,160
$
(a)
Amounts are subject to master netting arrangements but do not meet the criteria for netting on the consolidated
statements of financial condition under U.S. GAAP. For some counterparties, the collateral amounts of securities
and cash collateral pledged may exceed the derivative assets and derivative liabilities balances. Where this is the
case, the total amount reported is limited to the net derivative assets and net derivative liabilities balances with
that counterparty.
97
LAZARD LTD
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(dollars in thousands, except for per share data, unless otherwise noted)
Net gains (losses) with respect to derivative instruments (included in “revenue-other”) and the Company’s
derivative liabilities relating to its obligations pertaining to LFI and other similar deferred compensation arrangements
(included in “compensation and benefits” expense) as reflected on the accompanying consolidated statements of operations
for the years ended December 31, 2023, 2022 and 2021, were as follows:
Forward foreign currency exchange rate contracts
$
(2,701) $
4,721 $
11,007
LFI and other similar deferred compensation arrangements
LGAC Warrants
Total return swaps and other
Total
(41,463)
115
(16,957)
(61,006) $
44,261
9,890
23,212
82,084 $
(35,494)
1,495
(14,460)
(37,452)
$
Year Ended December 31,
2023
2022
2021
See Note 1 for additional information on LGAC Warrants.
9.
PROPERTY, NET
At December 31, 2023 and 2022, property consisted of the following:
Buildings (a)
Leasehold improvements (a)
Furniture and equipment
Construction in progress
Total
Less - Accumulated depreciation and amortization (a)
Property, net
________________________
Estimated
Depreciable
Life in Years
December 31,
2023
2022
33 $
170,830 $
3-20
3-10
233,732
230,713
11,788
647,063
414,547
$
232,516 $
135,103
208,323
236,194
65,562
645,182
395,109
250,073
(a)
The Company classified assets relating to an owned office building as held for sale as of December 31, 2023, the
carrying amount of which was $72,921 (net of accumulated depreciation). The owned office building is available
for immediate sale in its present condition and the Company expects the owned office building to be sold within
one year. The property held for sale is reported within the Corporate segment. Effective January 1, 2024,
depreciation expense will no longer be recorded on this asset.
10.
LEASES
The Company as a Lessee
The Company leases office space and equipment under non-cancelable lease agreements, which expire on various
dates through 2034. Substantially all of these arrangements are operating leases relating to office space. Certain leases have
renewal options that can be exercised at the discretion of the Company. The Company only includes renewal options in the
lease term when it is reasonably certain to exercise the option. The Company does not record leases with a lease term of 12
months or less on the consolidated statements of financial condition; lease expense for these leases is recognized over the
lease term on a straight-line basis.
The operating lease liabilities at commencement reflect total lease payments discounted using an incremental
borrowing rate (on a collateralized basis) based on the lease term (the “Discount”), as an implicit rate was not readily
determinable for any of the Company’s operating leases. The Company determines its Discount with consideration of the
Company’s public debt issuances as well as publicly available data for instruments with similar characteristics.
98
LAZARD LTD
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(dollars in thousands, except for per share data, unless otherwise noted)
For office space and equipment leases, the Company accounts for the lease and non-lease components as a single
lease component.
In addition to rent payments, operating leases for office space generally contain payments for real estate taxes,
insurance costs, common area maintenance, and utilities that are not fixed. The Company accounts for these costs as
variable payments and does not include them in the lease component. There are certain office leases outside of the U.S. that
have annual rent increases based on a year-over-year change in an index that are also accounted for as variable payments
and are excluded from the lease component.
The following table summarizes the components of operating lease expense reflected on the accompanying
consolidated statements of operations for the years ended December 31, 2023, 2022 and 2021:
Operating lease cost
Variable lease cost
Sublease income
Total
Year Ended December 31,
2023
2022
2021
$
80,257 $
78,482 $
23,521
21,086
(934)
(4,969)
86,232
21,193
(7,303)
$
102,844 $
94,599 $
100,122
The following table summarizes the supplemental cash flow information and certain other information related to
operating leases for the years ended December 31, 2023 and 2022:
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows paid for operating leases
Operating lease right-of-use assets obtained in exchange for operating lease liabilities
Weighted average remaining lease term
Weighted average discount rate
Year Ended December 31,
2023
2022
$
$
81,737
35,282
$
$
81,415
34,559
8 years
9 years
3.9%
3.7%
Maturities of the operating lease liabilities outstanding at December 31, 2023 for each of the years in the period
ending December 31, 2028 and thereafter are set forth in the table below.
Year Ending December 31,
2024
2025
2026
2027
2028
Thereafter
Total lease payments
Less - Discount
Operating lease liabilities
99
$
82,321
73,201
64,811
63,334
59,863
221,452
564,982
79,791
$
485,191
LAZARD LTD
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(dollars in thousands, except for per share data, unless otherwise noted)
In addition, to the table above, the Company had undiscounted future lease payments of $119,225 related to an
operating lease that was signed but not yet commenced at December 31, 2023. This operating lease will commence in 2024
with a lease term of 15 years.
The Company as a Lessor
The Company has entered into a lease agreement which provides a third-party the right to use its owned office
building. The lease contains options to renew and terminate and is classified as an operating lease.
The following table presents the carrying value of the assets subject to leases reported on the consolidated
statements of financial condition:
Property, net
Accumulated depreciation
Year Ending
December 31, 2023
$
$
72,921
104,171
The Company classified the owned office building as held for sale as of December 31, 2023. See Note 9.
For the year ended December 31, 2023, the Company’s operating lease income included in “revenue-other” on the
consolidated statements of operations was $6,393.
The following table presents undiscounted future cash inflows under the operating lease as of December 31, 2023:
Year Ending December 31,
2024
2025
2026
2027
2028
Thereafter
Total lease payment to be received
$
$
2,758
8,273
8,273
8,273
8,273
24,820
60,670
11.
GOODWILL AND OTHER INTANGIBLE ASSETS
The components of goodwill and other intangible assets at December 31, 2023 and 2022 are presented below:
Goodwill
Other intangible assets (net of accumulated amortization)
December 31,
2023
2022
$
$
394,898 $
30
394,928 $
377,240
90
377,330
100
LAZARD LTD
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(dollars in thousands, except for per share data, unless otherwise noted)
Changes in the carrying amount of goodwill for the years ended December 31, 2023, 2022 and 2021 are as
follows:
2023
Year Ended December 31,
2022
2021
Financial
Advisory
Asset
Management
Total
Financial
Advisory
Asset
Management
Total
Financial
Advisory
Asset
Management
Total
Balance, January 1
$ 312,699 $
64,541 $ 377,240 $ 314,880 $
64,541 $ 379,421 $ 319,320 $
64,541 $ 383,861
Acquisition of
business
Foreign currency
translation
adjustments
–
16,729
16,729
–
929
–
929
(2,181)
–
–
–
–
(2,181)
(4,440)
–
–
–
(4,440)
Balance, December 31 $ 313,628 $
81,270 $ 394,898 $ 312,699 $
64,541 $ 377,240 $ 314,880 $
64,541 $ 379,421
The Company tests goodwill for impairment annually or more frequently if circumstances indicate that
impairment may have occurred. Pursuant to the Company’s goodwill impairment tests for the years ended December 31,
2023, 2022 and 2021, the Company determined that no impairment existed.
Amortization expense of intangible assets, included in “amortization and other acquisition-related costs” in the
consolidated statements of operations, for the years ended December 31, 2023, 2022 and 2021 was $60, $60 and $60,
respectively.
12.
OTHER ASSETS AND OTHER LIABILITIES
The following table sets forth the Company’s other assets, by type, as of December 31, 2023 and 2022:
Current income and other tax receivables
Prepaid compensation (see Note 16)
Other advances and prepayments
Other
Total
December 31,
2023
2022
$
69,700 $
115,972
117,452
111,394
73,672
112,124
105,717
103,245
$
414,518 $
394,758
101
LAZARD LTD
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(dollars in thousands, except for per share data, unless otherwise noted)
The following table sets forth the Company’s other liabilities, by type, as of December 31, 2023 and 2022:
Accrued expenses
Current income and other taxes payable
Employee benefit-related liabilities
Unclaimed funds at LFB
Deferred revenue (a)
Securities sold, not yet purchased
Deferred offering costs
Other
Total
_____________________
December 31,
2023
2022
$
195,572 $
138,056
23,829
16,994
140,417
4,809
–
27,270
196,624
117,308
30,580
16,435
137,330
4,651
20,125
16,717
$
546,947 $
539,770
(a)
Deferred revenue primarily relates to cash received for carried interest subject to clawback and unearned advisory
fees received from private equity investments. Revenue recognized during the year ended December 31, 2023 that
was included in the deferred revenue balance as of December 31, 2022 was $18,775.
13.
SENIOR DEBT
Senior debt is comprised of the following as of December 31, 2023 and 2022:
Initial
Principal
Amount
Maturity
Date
Annual
Interest
Rate(a)
Principal
Unamortized
Debt Costs
Carrying
Value
Principal
Unamortized
Debt Costs
Carrying
Value
December 31, 2023
December 31, 2022
Outstanding as of
Lazard Group
2025 Senior
Notes
Lazard Group
2027 Senior
Notes
Lazard Group
2028 Senior
Notes
Lazard Group
2029 Senior
Notes
Total
$ 400,000
2/13/25
3.75 % $
400,000 $
531 $
399,469 $
400,000 $
1,003 $
398,997
300,000
3/1/27
3.625 %
300,000
1,235
298,765
300,000
1,625
298,375
500,000
9/19/28
4.50 %
500,000
4,012
495,988
500,000
4,864
495,136
500,000
3/11/29
4.375 %
500,000
4,022
495,978
500,000
4,794
495,206
$ 1,700,000 $
9,800 $ 1,690,200 $ 1,700,000 $
12,286 $ 1,687,714
_____________________
(a)
The effective interest rates of Lazard Group’s 3.75% senior notes due February 13, 2025 (the “2025 Notes”),
Lazard Group’s 3.625% senior notes due March 1, 2027 (the “2027 Notes”), Lazard Group’s 4.50% senior notes
due September 19, 2028 (the “2028 Notes”) and Lazard Group’s 4.375% senior notes due March 11, 2029 (the
“2029 Notes”) are 3.87%, 3.76%, 4.67% and 4.53%, respectively.
On June 6, 2023, Lazard Group entered into a Second Amended and Restated Credit Agreement with a group of
lenders for a five-year, $200,000 senior revolving credit facility expiring in June 2028 (the “Second Amended and Restated
Credit Agreement”). The Second Amended and Restated Credit Agreement amended and restated the three-year, $200,000
senior revolving credit facility that was due to expire in July 2023 (the “Previous Credit Agreement”) in its entirety.
Borrowings under the Second Amended and Restated Credit Agreement generally will bear interest at adjusted term SOFR
plus an applicable margin for specific interest periods determined based on Lazard Group’s highest credit rating from an
102
LAZARD LTD
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(dollars in thousands, except for per share data, unless otherwise noted)
internationally recognized credit agency. The Second Amended and Restated Credit Agreement contains certain covenants,
events of default and other customary provisions, including customary benchmark-replacement mechanics.
At December 31, 2023 and 2022, no amounts were outstanding under the Second Amended and Restated Credit
Agreement and the Previous Credit Agreement, respectively.
As of December 31, 2023, the Company had approximately $209,400 in unused lines of credit available to it,
including the credit facility provided under the Second Amended and Restated Credit Agreement.
The Second Amended and Restated Credit Agreement and the indenture and the supplemental indentures relating
to Lazard Group’s senior notes contain certain covenants, events of default and other customary provisions, including a
customary make-whole provision in the event of early redemption, where applicable. As of December 31, 2023, the
Company was in compliance with such provisions. All of the Company’s senior debt obligations are unsecured.
Debt maturities relating to senior borrowings outstanding at December 31, 2023 for each of the five years in the
period ending December 31, 2028 and thereafter are set forth in the table below.
Year Ending December 31,
2024
2025
2026
2027
2028
Thereafter
Total
$
–
400,000
–
300,000
500,000
500,000
$
1,700,000
The Company’s senior debt at December 31, 2023 and 2022 is carried at the principal amount outstanding, net of
unamortized debt costs. See Note 7 for information regarding the fair value and fair value hierarchy category of the
Company’s senior debt.
14.
COMMITMENTS AND CONTINGENCIES
Commitments—See Notes 7 and 17 for information regarding commitments relating to investment capital funding
commitments and obligations to fund our pension plans, respectively.
The fulfillment of the commitments described herein should not have a material adverse effect on the Company’s
consolidated financial position or results of operations.
Legal—The Company is involved from time to time in judicial, governmental, regulatory and arbitration
proceedings and inquiries concerning matters arising in connection with the conduct of our businesses, including
proceedings initiated by former employees alleging wrongful termination. The Company reviews such matters on a case-
by-case basis and establishes any required accrual if a loss is probable and the amount of such loss can be reasonably
estimated. The Company may experience significant variation in its revenue and earnings on an annual basis. Accordingly,
the results of any pending matter or matters could be significant when compared to the Company’s earnings in any
particular year. The Company believes, however, based on currently available information, that the results of any pending
matters, in the aggregate, will not have a material effect on its business or financial condition.
103
LAZARD LTD
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(dollars in thousands, except for per share data, unless otherwise noted)
15.
STOCKHOLDERS’ EQUITY AND REDEEMABLE NONCONTROLLING INTERESTS
Share Repurchase Program—The Board of Directors of Lazard authorized the repurchase of Lazard Ltd Class A
common stock (“common stock”), the only class of common stock of Lazard outstanding as set forth in the table below.
Date
February 2022
July 2022
Repurchase
Authorization
Expiration
$
$
300,000 December 31, 2024
500,000 December 31, 2024
The Company expects that the share repurchase program will continue to be used to offset a portion of the shares
that have been or will be issued under Lazard’s 2018 Incentive Compensation Plan, as amended (the “2018 Plan”).
Pursuant to the share repurchase program, purchases have been made in the open market or through privately negotiated
transactions. The rate at which the Company purchases shares in connection with the share repurchase program may vary
from period to period due to a variety of factors. Purchases with respect to such program are set forth in the table below:
Year Ended December 31:
2021
2022
2023
Number of
Shares
Purchased
Average
Price Per
Share
9,124,295 $
19,666,798 $
2,782,662 $
44.51
35.17
36.67
There were 25,340,287 and 26,814,213 shares of our common stock held by our subsidiaries at December 31,
2023 and 2022, respectively. Such shares of common stock are reported, at cost, as “Class A common stock held by
subsidiaries” on the accompanying consolidated statements of financial condition.
During 2023, 2022 and 2021, certain of our executive officers received common stock in connection with the
vesting or settlement of previously-granted deferred equity incentive awards. The vesting or settlement of such equity
awards gave rise to a tax payable by the executive officers, and, consistent with our past practice, the Company purchased
shares of common stock from certain of our executive officers equal in value to all or a portion of the estimated amount of
such tax. In addition, during the years ended December 31, 2023, 2022 and 2021, the Company purchased shares of
common stock from certain of our executive officers. The aggregate value of all such purchases in 2023, 2022 and 2021
was approximately $11,100, $16,500 and $19,800, respectively. Such shares of common stock are reported at cost, and are
included in “Class A common stock held by subsidiaries” on the accompanying consolidated statements of financial
condition.
As of December 31, 2023, a total of $200,095 of share repurchase authorization remaining available under Lazard
Ltd’s share repurchase program will expire on December 31, 2024.
During the year ended December 31, 2023, Lazard Ltd had in place trading plans under Rule 10b5-1 of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”), pursuant to which it effected stock repurchases in the
open market.
Preferred Stock—Lazard Ltd has 15,000,000 authorized shares of preferred stock, par value $0.01 per share,
inclusive of its Series A and Series B preferred stock. Series A and Series B preferred shares were issued in connection
with certain prior year business acquisitions and were each non-participating securities convertible into common stock, and
had no voting or dividend rights. As of December 31, 2023, 2022 and 2021, no shares of Series A or Series B preferred
stock were outstanding.
104
LAZARD LTD
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(dollars in thousands, except for per share data, unless otherwise noted)
Accumulated Other Comprehensive Income (Loss) (“AOCI”), Net of Tax—The tables below reflect the balances
of each component of AOCI at December 31, 2023, 2022 and 2021 and activity during the years then ended:
Balance, January 1, 2023
Activity:
Other comprehensive income (loss)
before reclassifications
Adjustments for items reclassified to
earnings, net of tax
Net other comprehensive income (loss)
Balance, December 31, 2023
Currency
Translation
Adjustments
Employee
Benefit
Plans
Total
AOCI
Amount
Attributable to
Noncontrolling
Interests
Total
Lazard Ltd
AOCI
$
(156,924) $
(138,930) $
(295,854) $
– $
(295,854)
31,107
(32,261)
(1,154)
1,826
5,233
7,059
1
–
(1,155)
7,059
32,933
(123,991) $
(27,028)
(165,958) $
5,905
(289,949) $
$
1
1 $
5,904
(289,950)
Currency
Translation
Adjustments
Employee
Benefit
Plans
Total
AOCI
Amount
Attributable to
Noncontrolling
Interests
Total
Lazard Ltd
AOCI
Balance, January 1, 2022
$
(92,178) $
(131,669) $
(223,847) $
– $
(223,847)
Activity:
Other comprehensive loss before
reclassifications
Adjustments for items reclassified to
earnings, net of tax
(64,778)
(11,413)
(76,191)
32
4,152
4,184
Net other comprehensive loss
(64,746)
(7,261)
(72,007)
–
–
–
(76,191)
4,184
(72,007)
Balance, December 31, 2022
$
(156,924) $
(138,930) $
(295,854) $
– $
(295,854)
Balance, January 1, 2021
Activity:
Currency
Translation
Adjustments
Employee
Benefit
Plans
Total
AOCI
Amount
Attributable to
Noncontrolling
Interests
Total
Lazard Ltd
AOCI
$
(67,724) $
(170,644) $
(238,368) $
– $
(238,368)
Other comprehensive income (loss)
before reclassifications
Adjustments for items reclassified to
earnings, net of tax
Net other comprehensive income (loss)
Balance, December 31, 2021
$
(48,099)
33,315
(14,784)
–
(14,784)
23,645
(24,454)
(92,178) $
5,660
38,975
(131,669) $
29,305
14,521
(223,847) $
–
–
– $
29,305
14,521
(223,847)
105
LAZARD LTD
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(dollars in thousands, except for per share data, unless otherwise noted)
The table below reflects adjustments for items reclassified out of AOCI, by component, for the years ended
December 31, 2023, 2022 and 2021:
Currency translation losses (a)
$
1,826 $
32 $
23,645
Year Ended December 31,
2023
2022
2021
Employee benefit plans:
Amortization relating to employee benefit plans (b)
Less - related income taxes
Total reclassifications, net of tax
________________________
6,754
1,521
5,233
5,146
994
4,152
7,269
1,609
5,660
$
7,059 $
4,184 $
29,305
(a)
(b)
Represents currency translation losses reclassified from AOCI associated with closing certain of our offices. Such
amounts are included in “revenue–other” on the consolidated statements of operations.
Included in the computation of net periodic benefit cost (see Note 17). Such amounts are included in “operating
expenses–other” on the consolidated statements of operations.
Noncontrolling Interests—Noncontrolling interests principally represent (i) interests held in Edgewater’s
management vehicles that the Company is deemed to control, but does not own, (ii) profits interest participation rights (see
Note 16), (iii) LGAC interests (see Note 1) and (iv) consolidated VIE interests held by employees (see Note 24).
The tables below summarize net income (loss) attributable to noncontrolling interests for the years ended
December 31, 2023, 2022 and 2021 and noncontrolling interests as of December 31, 2023 and 2022 in the Company’s
consolidated financial statements:
Edgewater
LFI Consolidated Funds
LGAC
Other
Total
Edgewater
Profits interest participation rights
LFI Consolidated Funds
LGAC
Other
Total
Net Income (Loss)
Attributable to Noncontrolling Interests
Year Ended December 31,
2023
2022
2021
$
6,051 $
31,314 $
10,150
1,968
3
18,172 $
(11,415)
15,064
3
34,966 $
$
10,466
7,950
(3,940)
5
14,481
$
Noncontrolling Interests
as of December 31,
2023
2022
46,571 $
11,843
–
–
14
44,681
10,792
74,164
(10,714)
13
$
58,428 $
118,936
Redeemable Noncontrolling Interests—Redeemable noncontrolling interests principally represent LGAC
interests as of December 31, 2022 (see Note 1) and consolidated VIE interests held by employees as of December 31, 2023
(see Note 24). Consolidated VIE interests held by employees (vested LFI awards), which may be redeemed at any time at
106
LAZARD LTD
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(dollars in thousands, except for per share data, unless otherwise noted)
the option of the holder for cash, are recorded on the Company’s consolidated statements of financial position at
redemption value and classified as temporary equity. Changes in redemption value are recognized immediately as they
occur and will adjust the carrying value of redeemable noncontrolling interests to equal the redemption value at the end of
each reporting period.
Dividends Declared, January 31, 2024—On January 31, 2024, the Board of Directors of Lazard declared a
quarterly dividend of $0.50 per share on our common stock. The dividend is payable on February 23, 2024, to stockholders
of record on February 12, 2024.
16.
INCENTIVE PLANS
Share-Based Incentive Plan Awards
A description of the Company’s 2018 Plan and 2008 Incentive Compensation Plan (the “2008 Plan”) and activity
with respect thereto during the years ended December 31, 2023, 2022 and 2021 is presented below.
Shares Available Under the 2018 Plan and 2008 Plan
Total shares available for issuance under incentive compensation plans are primarily from the 2018 Plan, which
became effective on April 24, 2018. The aggregate number of shares authorized for issuance under the 2018 Plan is
50,000,000. Such shares may be issued pursuant to the grant or exercise of stock options, stock appreciation rights,
restricted stock units (“RSUs”), performance-based restricted stock units (“PRSUs”), restricted stock awards (“RSAs”),
profits interest participation rights (“PIPRs”), and other share-based awards, as further discussed below.
The 2008 Plan authorized the issuance of shares of common stock pursuant to the grant or exercise of stock
options, stock appreciation rights, RSUs, PRSUs and other share-based awards. The 2008 Plan was terminated on April 24,
2018, although outstanding deferred stock unit (“DSU”) awards granted under the 2008 Plan before its termination
continue to be subject to its terms.
Expense
The following reflects the expense recorded with respect to share-based incentive plans within “compensation and
benefits” expense (with respect to RSUs, PRSUs, RSAs and PIPRs) and “professional services” expense (with respect to
DSUs) within the Company’s accompanying consolidated statements of operations:
Share-based incentive awards:
RSUs
PRSUs
RSAs
PIPRs
DSUs
Total
Year Ended December 31,
2023
2022
2021
$
$
165,435 $
2,488
25,073
55,712
1,862
250,570 $
125,664 $
2,011
23,923
86,810
2,233
240,641 $
124,895
6,136
17,765
83,046
2,116
233,958
Compensation and benefits expense relating to share-based awards with service and/or performance conditions is
reversed if the awards are forfeited due to these conditions not being met. Compensation and benefits expense relating to
share-based awards with market-based conditions is not reversed if these awards are forfeited based solely on failing to
meet such market-based conditions.
The Company periodically assesses forfeiture rates, including as a result of any applicable performance
conditions. A change in estimated forfeiture rates or performance results in a cumulative adjustment to compensation and
107
LAZARD LTD
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(dollars in thousands, except for per share data, unless otherwise noted)
benefits expense and also would cause the aggregate amount of compensation expense recognized in future periods to
differ from the estimated unrecognized compensation expense described below.
The Company’s share-based incentive plans and awards are described below.
RSUs, PRSUs and DSUs
RSUs generally require future service as a condition for vesting (unless the recipient is then eligible for retirement
under the Company’s retirement policy) and convert into shares of common stock on a one-for-one basis after the
stipulated vesting periods. The grant date fair value of the RSUs, net of an estimated forfeiture rate, is expensed over the
requisite service periods (generally, one-third after two years and the remaining two-thirds after the third year), and is
adjusted for actual forfeitures over such period.
RSUs generally include a dividend participation right that provides that, during the applicable vesting period, each
RSU is attributed additional RSUs equivalent to any dividends paid on common stock during such period. During the year
ended December 31, 2023, dividend participation rights required the issuance of 711,673 RSUs and the associated charge
to “retained earnings” (with corresponding credits to “additional paid-in-capital”) was $21,638. In connection with RSUs
that settled during the year ended December 31, 2023, the Company satisfied its minimum statutory tax withholding
requirements in lieu of delivering 1,213,264 shares of common stock during the year. Accordingly, 2,158,820 shares of
common stock, respectively, held by the Company were delivered during the year ended December 31, 2023.
PRSUs are RSUs that are subject to performance-based and service-based vesting conditions, and beginning with
awards granted in February 2021, a market-based condition. The number of shares of common stock that a recipient
receives upon vesting of a PRSU is calculated by reference to certain performance-based and market-based metrics that
relate to Lazard Ltd’s performance over a three-year period. The target number of shares of common stock subject to each
PRSU is one; however, based on the achievement of both the performance-based and market-based conditions, the number
of shares of common stock that may be received will range from zero to 2.4 times the target number. PRSUs vest on a
single date approximately three years following the date of the grant, provided the applicable service and performance
conditions are satisfied. PRSUs include dividend participation rights that are subject to the same vesting restrictions
(including performance conditions) as the underlying PRSUs to which they relate and are settled in cash at the same rate
that dividends are paid on common stock. Compensation expense recognized for PRSU awards is determined by
multiplying the number of shares of common stock underlying such awards that, based on the Company’s estimate, are
considered probable of vesting, by the grant date fair value.
Non-executive members of the Board of Directors (“Non-Executive Directors”) receive a portion of their
compensation for service on the Board of Directors and its committees in the form of DSUs and can elect to receive the
cash-portion of their compensation in DSUs in lieu of cash. Total DSUs granted to Non-Executive Directors during the
year ended December 31, 2023 were 62,654. DSUs are convertible into shares of common stock on a one-for-one basis at
the time of cessation of service to the Board of Directors. DSUs include a cash dividend participation right equivalent to
dividends paid on common stock. DSU awards are expensed at their fair value on their date of grant.
108
LAZARD LTD
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(dollars in thousands, except for per share data, unless otherwise noted)
The following is a summary of activity relating to RSUs, PRSUs and DSUs for the year ended December 31,
2023:
RSUs
PRSUs
DSUs
Weighted
Average
Grant Date
Fair Value
Units
Units
Weighted
Average
Grant Date
Fair Value
Units
Weighted
Average
Grant Date
Fair Value
Balance, January 1, 2023
9,022,917 $
37.97
94,690 $
39.27
400,820 $
37.66
Granted (including 711,673 RSUs
relating to dividend participation)
Forfeited
Settled
PRSUs performance units earned (a)
Balance, December 31, 2023
_____________________
5,700,485 $
(282,967) $
(3,372,084) $
36.49
35.37
41.65
11,068,351 $
36.15
– $
– $
–
–
– $
30,775 $
125,465 $
–
46.63
41.07
62,654 $
- $
(134,744) $
29.71
–
36.21
328,730 $
36.74
(a)
Represents PRSUs earned during the fiscal year under the performance conditions of previously-granted PRSU
awards in excess of the target payout levels of such awards.
The weighted-average grant date fair value of RSUs granted in 2023, 2022 and 2021 was $36.49, $33.73 and
$43.38, respectively. The weighted-average grant date fair value of PRSUs granted in 2022 and 2021 was $35.44 and
$46.63, respectively. The weighted-average grant date fair value of DSUs granted in 2023, 2022 and 2021 was $29.71,
$35.78 and $46.75, respectively.
As of December 31, 2023, the total estimated unrecognized compensation expense of RSUs and PRSUs was
$122,498 and $1,185, respectively. The Company expects to expense such amounts over weighted-average periods of
approximately 0.9 and 0.4 years, respectively, subsequent to December 31, 2023.
RSAs
The following is a summary of activity related to RSAs associated with compensation arrangements during the
year ended December 31, 2023:
Balance, January 1, 2023
Granted (including 94,985 relating to dividend participation)
Forfeited
Settled
Balance, December 31, 2023
Weighted
Average
Grant Date
Fair Value
36.99
37.60
39.14
39.13
36.10
RSAs
1,266,424 $
670,064 $
(15,897) $
(684,645) $
1,235,946 $
The weighted-average grant date fair value of RSAs granted in 2023, 2022 and 2021 was $37.60, $33.37 and
$43.80, respectively.
In connection with RSAs that settled during the year ended December 31, 2023, the Company satisfied its
minimum statutory tax withholding requirements in lieu of delivering 279,385 shares of common stock during the year.
Accordingly, 405,260 shares of common stock held by the Company were delivered during the year ended December 31,
2023.
109
LAZARD LTD
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(dollars in thousands, except for per share data, unless otherwise noted)
RSAs generally include a dividend participation right that provides that during the applicable vesting period each
RSA is attributed additional RSAs equivalent to any dividends paid on common stock during such period. During the year
ended December 31, 2023, dividend participation rights required the issuance of 94,985 RSAs and the associated charge to
“retained earnings” (with corresponding credits to “additional paid-in-capital”) was $2,977.
At December 31, 2023, estimated unrecognized RSAs expense was $15,967, with such expense to be recognized
over a weighted average period of approximately 0.8 years subsequent to December 31, 2023.
Profits Interest Participation Rights
Profits interest participation rights (“PIPRs”) are equity incentive awards that, subject to certain vesting and other
conditions described below, may be exchanged for shares of common stock pursuant to the 2018 Plan. They are a class of
membership interests in Lazard Group that are intended to qualify as “profits interests” for U.S. federal income tax
purposes and are recorded as noncontrolling interests within stockholders’ equity in the Company’s consolidated
statements of financial condition until they are exchanged into common stock, at which time there is a reclassification to
additional paid-in-capital.
PIPRs,with the exception of Stock Price PIPRs (“SP-PIPRs”), as explained below, generally provide for vesting
approximately three years following the grant date, so long as applicable vesting and other conditions have been satisfied.
Like outstanding RSUs and similar awards, PIPRs are subject to continued employment and other conditions and
restrictions and are forfeited if those conditions and restrictions are not fulfilled.
A recipient generally realizes value from PIPRs only to the extent that applicable vesting and other conditions are
satisfied, and an amount of economic appreciation in the assets of Lazard Group occurs as necessary to satisfy certain
partnership tax rules (referred to as the “Minimum Value Condition”), otherwise the PIPRs will be forfeited. Upon
satisfaction of such conditions, PIPRs that are in parity with the value of common stock will be exchanged on a one-for-one
basis for shares of common stock. If forfeited based solely on failing to meet the Minimum Value Condition, or, if
applicable, common stock price milestones as described below, the associated compensation expense would not be
reversed.
All PIPR awards are subject to service-based vesting conditions. In addition to PIPR awards with only service-
based vesting conditions (“Ordinary PIPRs”) granted to certain of our executive officers and a limited number of
employees, the Company has granted the following types of PIPRs to certain of our executive officers, that are subject to
additional vesting and market-based conditions:
•
•
Performance PIPRs (“P-PIPRs”), which are subject to service-based and performance-based vesting conditions,
and beginning in February 2021, incremental market-based conditions.
SP-PIPRs, which are subject to service-based vesting conditions and common stock price milestones and are
eligible to vest in three tranches.
The number of shares of common stock that a recipient will receive upon the exchange of a P-PIPR award is
calculated by reference to applicable performance-based vesting conditions and, beginning with P-PIPRs granted in 2021,
incremental market-based conditions and only result in value to the recipient to the extent the vesting and other conditions
are satisfied. The target number of shares of common stock subject to each P-PIPR is one. Based on the achievement of
performance conditions, as determined and approved by the Compensation Committee, the number of shares of common
stock that may be received in connection with the P-PIPR awards granted prior to February 2021 will range from zero to
two times the target number. For the P-PIPR awards granted beginning in February 2021, subject to both performance-
based and incremental market-based conditions, the number of shares that may be received will range from zero to 2.4
times the target number. Unless applicable vesting and other conditions are satisfied during the three-year performance
period, and the Minimum Value Condition is satisfied within five years following the grant date, all P-PIPRs will be
forfeited.
SP-PIPRs are eligible to vest in three tranches (each, a “Tranche”) based on the achievement of service conditions
and Tranche-specific common stock price milestones measured as of a specified anniversary of the date of grant, as
110
LAZARD LTD
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(dollars in thousands, except for per share data, unless otherwise noted)
described below. Their aggregate fair value at the grant date, which based on the estimated probability of achieving the
common stock price milestones is approximately $33,900, is expensed over the requisite service periods.
SP-PIPRs will vest:
•
•
•
20% if, during the three years following the date of grant, the Company’s common stock price has appreciated
25% above the average trailing 30 consecutive day stock price preceding the date of grant (the “Grant Date Stock
Price”);
40% if, during the five years following the date of grant, the Company’s common stock price has appreciated 50%
above the Grant Date Stock Price;
40% if, during the seven years following the date of grant, the Company’s common stock price has appreciated
100% above the Grant Date Stock Price.
Each Tranche is subject to the executive’s continued employment through the applicable anniversary of the date of
grant and requires that the applicable common stock price milestone is sustained for any 30 consecutive day period prior to
the anniversary of the date of grant of the applicable Tranche (the “Expiration Date”).
If the service conditions and common stock price milestones, as described above, are not achieved as of the
Expiration Date, all SP-PIPRs in such Tranche will be forfeited.
The following is a summary of activity relating to all PIPRs during the year ended December 31, 2023:
Ordinary PIPRs (a)
P-PIPRs
SP-PIPRs
Weighted
Average
Grant Date
Fair Value
Units
Weighted
Average
Grant Date
Fair Value
Units
Weighted
Average
Grant Date
Fair Value
Units
Balance, January 1, 2023
1,684,404 $ 39.96
2,447,224 $ 40.29
– $
–
Granted
Forfeited
Settled
Performance units earned (b)
Balance, December 31, 2023
_____________________
1,521,458 $ 34.50
(16,695) $ 43.23
– $
– $
–
–
(548,398) $ 42.89
(973,222) $ 41.76
2,250,000 $ 15.06
– $
– $
–
–
2,640,769 $ 36.19
1,958,829 $ 41.12
2,250,000 $ 15.06
484,827 $ 46.63
(a)
(b)
Includes PIPR awards with only service-based vesting conditions.
Represents P-PIPRs earned during the fiscal year under the performance conditions of previously-granted P-PIPR
awards in excess of the target payout levels of such awards.
Fair values shown above represent the weighted average as of grant date. The weighted-average grant date fair
value of ordinary PIPRs and SP-PIPRs granted in 2023 was $34.50 and $15.06, respectively. The weighted-average grant
date fair value of ordinary PIPRs and P-PIPRs granted in 2022 was $32.95 and $35.44, respectively. The weighted-average
grant date fair value of ordinary PIPRs and P-PIPRs granted in 2021 was $43.23 and $46.63, respectively.
Compensation expense recognized for ordinary PIPRs and P-PIPRs is determined by multiplying the number of
shares of common stock underlying such awards that, based on the Company’s estimate, are considered probable of
vesting, by the grant date fair value. Compensation expense recognized for SP-PIPRs is determined by multiplying the
number of shares of common stock underlying such awards by the grant date fair value. As of December 31, 2023, the total
estimated unrecognized compensation expense of all profits interest participation rights was $57,954 and the Company
expects to expense such amount over a weighted-average period of approximately 1.8 years subsequent to December 31,
2023.
111
LAZARD LTD
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(dollars in thousands, except for per share data, unless otherwise noted)
LFI and Other Similar Deferred Compensation Arrangements
In connection with LFI and other similar deferred compensation arrangements, granted to eligible employees,
which generally require future service as a condition for vesting, the Company records a prepaid compensation asset and a
corresponding compensation liability on the grant date based upon the fair value of the award. The prepaid asset is
amortized on a straight-line basis over the applicable requisite service periods (which are generally similar to the
comparable periods for RSUs) and is charged to “compensation and benefits” expense within the Company’s consolidated
statements of operations. LFI and similar deferred compensation arrangements that do not require future service are
expensed immediately. The related compensation liability is accounted for at fair value as a derivative liability, which
contemplates the impact of estimated forfeitures, and is adjusted for changes in fair value primarily related to changes in
value of the underlying investments.
The following is a summary of activity relating to LFI and other similar deferred compensation arrangements
during the year ended December 31, 2023:
Balance, January 1, 2023
Granted
Settled
Amortization and the impact of forfeitures
Change in fair value of underlying investments
Other
Balance, December 31, 2023
Prepaid
Compensation
Asset
Compensation
Liability
$
112,124 $
159,981
–
(156,254)
–
121
326,282
159,981
(171,738)
8,103
41,463
1,329
$
115,972 $
365,420
The amortization of the prepaid compensation asset will generally be recognized over a weighted average period
of approximately 0.8 years subsequent to December 31, 2023.
The following is a summary of the impact of LFI and other similar deferred compensation arrangements on
“compensation and benefits” expense within the accompanying consolidated statements of operations for the years ended
December 31, 2023, 2022 and 2021:
Amortization and the impact of forfeitures
Change in the fair value of underlying investments
Total
Year Ended December 31,
2023
2022
2021
$
$
164,357 $
41,463
205,820 $
154,878 $
(44,261)
110,617 $
151,604
35,494
187,098
Incentive Awards Granted in the First Quarter of 2024
In the first quarter of 2024, the Company granted approximately $374,000 of deferred share-based incentive
compensation awards to eligible employees as part of the 2023 year-end compensation process. These grants included:
RSUs; PIPRs; and LFI and other similar deferred compensation arrangements. The Company also granted approximately
$95,000 of cash retention awards that are subject to a required three-year service period subsequent to payment by the
Company. If the service requirement is not met, the award is subject to clawback. The cash retention awards will be
amortized over the requisite service period beginning on the grant date.
17.
EMPLOYEE BENEFIT PLANS
The Company provides retirement and other post-retirement benefits to certain of its employees through defined
benefit pension plans (the “pension plans”). The Company also offers defined contribution plans to its employees. The
112
LAZARD LTD
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(dollars in thousands, except for per share data, unless otherwise noted)
pension plans generally provide benefits to participants based on average levels of compensation. Expenses related to the
Company’s employee benefit plans are included in “compensation and benefits” expense for the service cost component,
and “operating expenses–other” for the other components of benefit costs on the consolidated statements of operations.
Employer Contributions to Pension Plans—The Company’s funding policy for its U.S. and non-U.S. pension
plans is to fund when required or when applicable upon an agreement with the plans’ trustees. Management also evaluates
from time to time whether to make voluntary contributions to the plans.
Contributions to the non-U.S. pension plans during the year ending December 31, 2024 are not expected to be
material.
The following table summarizes the changes in the benefit obligations, the fair value of the assets, the funded
status and amounts recognized in the consolidated statements of financial condition for the post-retirement plans. The
Company uses December 31 as the measurement date for its post-retirement plans.
Change in benefit obligation
Benefit obligation at beginning of year
Service cost
Interest cost
Amendments
Actuarial (gain) loss
Benefits paid
Foreign currency translation and other adjustments
Benefit obligation at end of year
Change in plan assets
Fair value of plan assets at beginning of year
Actual return on plan assets
Employer contributions
Benefits paid
Foreign currency translation and other adjustments
Fair value of plan assets at end of year
Funded (deficit) at end of year
Amounts recognized in the consolidated statements of financial condition at
December 31, 2023 and 2022 consist of:
Prepaid pension asset (included in “other assets”)
Accrued benefit liability (included in “other liabilities”)
Net amount recognized
Amounts recognized in AOCI (excluding tax benefits of $40,017 and $31,365 at
December 31, 2023 and 2022, respectively) consist of:
Actuarial net loss
Prior service cost
Net amount recognized
$
$
$
$
$
For the years ended December 31, 2023 and 2022, the change in the benefit obligation related to the actuarial
(gain) loss is principally attributable to changes in the discount rates.
113
Pension Plans
2023
2022
$
440,050 $
731,978
338
20,930
10,201
21,937
(25,542)
22,787
490,701
468,872
22,461
5,673
(25,542)
24,987
496,451
5,750 $
543
11,130
–
(203,009)
(29,357)
(71,235)
440,050
782,463
(215,237)
4,206
(29,357)
(73,203)
468,872
28,822
10,507 $
(4,757)
5,750 $
35,268
(6,446)
28,822
193,193 $
12,782
205,975 $
167,724
2,572
170,296
LAZARD LTD
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(dollars in thousands, except for per share data, unless otherwise noted)
The following table summarizes the fair value of plan assets, the accumulated benefit obligation and the projected
benefit obligation at December 31, 2023 and 2022:
U.S. Pension Plans
As Of December 31,
Non-U.S. Pension Plans
As Of December 31,
Total
As Of December 31,
2023
2022
2023
2022
2023
2022
Fair value of plan assets
Accumulated benefit obligation
Projected benefit obligation
$
$
$
15,511 $
19,999 $
14,983 $ 480,940 $ 453,889 $ 496,451 $ 468,872
20,518 $ 470,702 $ 419,532 $ 490,701 $ 440,050
19,999 $
20,518 $ 470,702 $ 419,532 $ 490,701 $ 440,050
The following table summarizes the components of net periodic benefit cost (credit), the return on the Company’s
post-retirement plan assets, benefits paid, contributions and other amounts recognized in AOCI for the years ended
December 31, 2023, 2022 and 2021:
Components of Net Periodic Benefit Cost (Credit):
Service cost
Interest cost
Expected return on plan assets
Amortization of:
Prior service cost
Net actuarial loss
Settlement loss
Net periodic benefit cost (credit)
Actual return on plan assets
Employer contributions
Benefits paid
Other changes in plan assets and benefit obligations recognized in
AOCI (excluding tax expense (benefit) of $(8,652), $(4,984) and
$14,872 during the years ended December 31, 2023, 2022 and 2021,
respectively):
Net actuarial (gain) loss
Prior service cost
Reclassification of prior service (cost) credit to earnings
Reclassification of actuarial gain (loss) to earnings
Currency translation and other adjustments
Total recognized in AOCI
Net amount recognized in total periodic benefit cost and AOCI
Pension Plans
For The Year Ended
December 31,
2023
2022
2021
$
338 $
543 $
20,930
11,130
876
8,679
(23,942)
(24,482)
(26,077)
107
6,647
–
106
5,040
–
118
7,151
1,056
4,080 $
(7,663) $
(8,197)
22,461 $
(215,237) $
5,673 $
4,206 $
25,542 $
29,357 $
26,046
4,493
29,327
23,521 $
10,172
(107)
(6,647)
8,740
35,679 $
39,759 $
31,174 $
–
(106)
(5,040)
(13,783)
12,245 $
4,582 $
(40,717)
–
(118)
(7,151)
(5,860)
(53,846)
(62,043)
$
$
$
$
$
$
$
114
LAZARD LTD
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(dollars in thousands, except for per share data, unless otherwise noted)
The assumptions used to develop actuarial present value of the projected benefit obligation and net periodic
pension cost as of or for the years ended December 31, 2023, 2022 and 2021 are set forth below:
Pension Plans
December 31,
2023
2022
2021
Weighted average assumptions used to determine benefit obligations:
Discount rate
4.4%
4.7%
1.8%
Weighted average assumptions used to determine net periodic benefit
cost:
Discount rate
Expected long-term rate of return on plan assets
4.3%
5.1%
2.1%
3.4%
1.1%
3.3%
Generally, the Company determined the discount rates for its defined benefit plans by utilizing indices for long-
term, high-quality bonds and ensuring that the discount rate does not exceed the yield reported for those indices after
adjustment for the duration of the plans’ liabilities.
In selecting the expected long-term rate of return on plan assets, the Company considered the average rate of
earnings expected on the funds invested or to be invested to provide for the benefits of the plan, giving consideration to
expected returns on different asset classes held by the plans in light of prevailing economic conditions as well as historical
returns. This basis is consistent for all years presented.
Expected Benefit Payments—The following table summarizes the expected benefit payments for the Company’s
pension plans for each of the next five fiscal years and in the aggregate for the five fiscal years thereafter:
2024
2025
2026
2027
2028
2029-2033
$
Pension
Plans
28,564
27,844
28,130
28,654
29,105
146,096
115
LAZARD LTD
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(dollars in thousands, except for per share data, unless otherwise noted)
Plan Assets—The following tables present the categorization of our pension plans’ assets as of December 31,
2023 and 2022, measured at fair value, into a fair value hierarchy and investments measured at NAV or its equivalent as a
practical expedient in accordance with fair value measurement disclosure requirements:
Assets:
Cash
Debt
Equities
Funds:
Alternative investments
Debt
Equity
Other
Total
Assets:
Cash
Debt
Equities
Funds:
Alternative investments
Debt
Equity
Other
Total
_____________________
Level 1
Level 2
Level 3
NAV (a)
Total
As of December 31, 2023
$
9,286 $
41,215
11,496
–
7,268
58,773
–
– $
–
–
–
58,876
55,692
4,218
– $
–
–
–
–
–
–
– $
–
–
6,640
236,553
6,434
–
9,286
41,215
11,496
6,640
302,697
120,899
4,218
$
128,038 $
118,786 $
– $
249,627 $
496,451
Level 1
Level 2
Level 3
NAV (a)
Total
As of December 31, 2022
$
18,084 $
– $
– $
– $
79,505
15,480
–
6,350
49,041
–
–
–
–
–
49,297
14,723
–
–
–
–
–
–
–
–
9,113
220,141
7,138
–
18,084
79,505
15,480
9,113
226,491
105,476
14,723
$
168,460 $
64,020 $
– $
236,392 $
468,872
(a)
Represents certain investments measured at NAV or its equivalent as a practical expedient in determining fair
value. In accordance with current accounting guidance, these investments have not been classified in the fair value
hierarchy.
Included in equity funds are $63,927 and $54,810 as of December 31, 2023 and 2022, respectively, that are
invested in funds managed by the Company.
Consistent with the plans’ investment strategies, at December 31, 2023 and 2022, the Company’s U.S. pension
plan had 50% and 57%, respectively, of the plans’ assets invested in equity funds in Level 1 and measured at NAV or its
equivalent as a practical expedient, 47% and 42%, respectively, invested in Level 1 debt funds, and at December 31, 2023
and 2022, 3% and 1%, respectively, invested in cash, which is a Level 1 asset. The Company’s non-U.S. pension plans at
December 31, 2023 and 2022 had 26% and 25%, respectively, of the plans’ assets invested in equities and equity funds that
are primarily Level 1 and Level 2 assets; 70% and 66%, respectively, of the plans’ assets invested in debt and debt funds
that are Level 1, Level 2 and measured at NAV or its equivalent as a practical expedient, and 4% and 9%, respectively, of
the plans’ assets invested in cash, which is a Level 1 asset, other investments, which is a Level 2 asset, or in alternative
investment funds that are primarily measured at NAV.
116
LAZARD LTD
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(dollars in thousands, except for per share data, unless otherwise noted)
Investment Policies and Strategies—The primary investment goal is to ensure that the pension plans remain well
funded, taking account of the likely future risks to investment returns and contributions. As a result, a portfolio of assets is
maintained with appropriate liquidity and diversification that can be expected to generate long-term future returns that
minimize the long-term costs of the pension plans without exposing the plans to an unacceptable risk of under-funding. The
Company’s likely future ability to pay such contributions as are required to maintain the funded status of the plans over a
reasonable time period is considered when determining the level of risk that is appropriate. The fair value of plan
investments classified as Level 1 assets are based on market quotes. The fair value of plan investments classified as Level 2
assets are based on (i) quoted prices for similar assets or liabilities in an active market, or quoted prices for identical or
similar assets or liabilities in non-active markets, or (ii) inputs other than quoted prices that are directly observable or
derived principally from, or corroborated by, market data. The fair value of plan investments measured at NAV or its
equivalent as a practical expedient is determined based on information provided by external fund administrators and such
investments are redeemable in the near term.
Defined Contribution Plans—Pursuant to certain matching contributions, the Company contributes to employer
sponsored defined contribution plans. Such contributions amounted to $22,190, $19,692 and $17,864 for the years ended
December 31, 2023, 2022 and 2021, respectively, which are included in “compensation and benefits” expense on the
consolidated statements of operations.
18.
COST-SAVING INITIATIVES
The Company conducted firm-wide cost-saving initiatives that will continue through the first quarter of 2024.
Expenses and losses associated with the cost-saving initiatives for the year ended December 31, 2023 consisted of
the following:
Severance and other employee
termination expenses (included
in "compensation and benefits"
expense)
Technology asset impairments
(included in "technology and
information services")
Foreign exchange related losses
associated with closing
of certain offices (included in
"revenue-other")
Other
Total
Financial Advisory
Asset Management
Corporate
Total
Year Ended December 31, 2023
$
98,219 $
49,152 $
34,732 $
182,103
144
7,877
–
8,021
1,824
2,241
102,428 $
–
470
57,499 $
3,054
2,291
40,077 $
4,878
5,002
200,004
$
117
LAZARD LTD
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(dollars in thousands, except for per share data, unless otherwise noted)
Additional compensation and benefits expense of approximately $40,000 was incurred in the first quarter of 2024.
Activity related to the obligations pursuant to the cost-saving initiatives during the year ended December 31, 2023
was as follows:
Balance, January 1, 2023
Total expenses
Less:
Noncash expenses (a)
Payments and settlements
Balance, December 31, 2023
___________________________________
Accrued
Compensation and
Benefits
Other
Total
$
$
– $
– $
182,103
17,901
33,790
96,967
51,346 $
10,626
6,323
952 $
–
200,004
44,416
103,290
52,298
(a)
Noncash expenses reflected in “accrued compensation and benefits” activity principally represents accelerated
amortization of deferred incentive compensation awards. Noncash expenses reflected in “other” activity principally
relates to technology asset impairments and certain foreign exchange related losses.
19.
INCOME TAXES
Lazard Ltd, through its subsidiaries, is subject to U.S. federal income taxes on all of its U.S. operating income, as
well as on the portion of non-U.S. income attributable to its U.S. subsidiaries. In addition, Lazard Ltd, through its
subsidiaries, is subject to state and local taxes on its income apportioned to various state and local jurisdictions. Outside the
U.S., Lazard Group operates principally through subsidiary corporations that are subject to local income taxes in foreign
jurisdictions. Lazard Group is also subject to Unincorporated Business Tax (“UBT”) attributable to its operations
apportioned to New York City. See Note 1 for information on Lazard’s Conversion to a U.S. C-Corporation on January 1,
2024.
118
LAZARD LTD
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(dollars in thousands, except for per share data, unless otherwise noted)
The components of the Company’s provision (benefit) for income taxes for the years ended December 31, 2023,
2022 and 2021, and a reconciliation of the U.S. federal statutory income tax rate to the Company’s effective tax rates for
such years, are shown below.
Current:
Federal
Foreign
State and local
Total current
Deferred:
Federal
Foreign
State and local
Total deferred
Total
U.S. federal statutory income tax rate
BEAT and GILTI tax
Foreign source income not subject to U.S. income tax
Change in U.S. federal valuation allowance
Share-based incentive compensation
Foreign taxes
Foreign tax credits
State and local taxes
Income attributable to noncontrolling interests
Uncertain tax positions
Other
Effective income tax rate
Year Ended December 31,
2023
2022
2021
$
96 $
2,081 $
(12,772)
55,513
2,809
58,418
(58,600)
(5,123)
(17,345)
(81,068)
73,410
6,165
81,656
31,980
3,960
6,769
42,709
100,235
3,197
90,660
69,633
6,709
14,301
90,643
$
(22,650) $
124,365 $
181,303
Year Ended December 31,
2023
2022
2021
21.0%
–
1.0
4.3
(4.5)
(20.9)
5.0
19.2
5.7
(0.3)
(2.2)
28.3%
21.0%
–
(0.4)
2.0
0.2
4.0
(3.7)
2.3
(1.4)
(0.1)
0.2
24.1%
21.0%
0.4
(2.6)
1.1
0.1
6.1
(3.6)
2.6
(0.3)
(0.6)
0.8
25.0%
See Note 23 regarding “operating income (loss)” by geographic region.
119
LAZARD LTD
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(dollars in thousands, except for per share data, unless otherwise noted)
Deferred income taxes are provided for the effects of temporary differences between the tax basis of an asset or
liability and its reported amount in the consolidated statements of financial condition. These temporary differences result in
taxable or deductible amounts in future years. Details of the Company’s deferred tax assets and liabilities are as follows:
Deferred Tax Assets:
Basis adjustments (a)
Compensation and benefits
Net operating loss and tax credit carryforwards
Depreciation and amortization
Interest carryover - Section 163(j) limitation
Other
Gross deferred tax assets
Valuation allowance
Deferred tax assets (net of valuation allowance)
Deferred Tax Liabilities:
Depreciation and amortization
Compensation and benefits
Goodwill
Other
Deferred tax liabilities
Net deferred tax assets
_____________________
December 31,
2023
2022
$
96,534 $
199,989
277,103
30,530
42,581
41,969
688,706
(99,600)
589,106
9,221
22,129
46,686
17,587
95,623
493,483 $
$
131,353
173,047
227,280
11,777
21,150
31,056
595,663
(88,239)
507,424
10,074
23,631
43,448
26,534
103,687
403,737
(a)
The basis adjustments recorded as of December 31, 2023 and 2022 are primarily the result of additional basis
from acquisitions of interests, including the impact of the tax receivable agreement obligation.
The historical profitability of each tax-paying entity is an important factor in determining whether to record a
valuation allowance and when to release any such allowance. Certain of our tax-paying entities have individually
experienced losses on a cumulative three year basis or have tax attributes that may expire unused. In addition, some of our
tax-paying entities have recorded a valuation allowance on substantially all of their deferred tax assets due to the combined
effect of operating losses in certain subsidiaries of these entities as well as foreign taxes that together substantially offset
any U.S. tax liability. Taking into account all available information, we cannot determine that it is more likely than not that
deferred tax assets held by these entities will be realized. Consequently, we have recorded valuation allowances on $99,600
and $88,239 of deferred tax assets held by these entities as of December 31, 2023 and 2022, respectively.
Changes in the deferred tax assets valuation allowance for the years ended December 31, 2023, 2022 and 2021
was as follows:
Beginning Balance
Charged (credited) to provision for income taxes
Charged (credited) to other comprehensive income and other
Ending Balance
Year Ended December 31,
2023
2022
2021
$
$
88,239 $
11,354
7
99,600 $
88,953 $
5,220
(5,934)
88,239 $
82,210
8,742
(1,999)
88,953
120
LAZARD LTD
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(dollars in thousands, except for per share data, unless otherwise noted)
The Company had net operating loss and tax credit carryforwards for which related deferred tax assets of
$277,103 were recorded at December 31, 2023 primarily relating to:
(i)
(ii)
indefinite-lived net operating loss carryforwards (subject to various limitations) of approximately
$92,000 in Australia, Germany, Hong Kong, Saudi Arabia, Singapore and the U.S.; and
carryforwards of approximately $156,000 that expire in different periods, including U.S. foreign tax
credits of $5,600 that begin to expire in 2024 and are fully offset by a valuation allowance.
With few exceptions, the Company is no longer subject to income tax examination by foreign tax authorities and
by U.S. federal, state and local tax authorities for years prior to 2017. While the Company is under examination in various
tax jurisdictions with respect to certain open years, the Company does not expect that the result of any final determination
related to these examinations will have a material impact on its financial statements. Developments with respect to such
examinations are monitored on an ongoing basis and adjustments to tax liabilities are made as appropriate.
A reconciliation of the beginning to the ending amount of gross unrecognized tax benefits (excluding interest and
penalties) for the years ended December 31, 2023, 2022 and 2021 is as follows:
Balance, January 1 (excluding interest and penalties of $17,992,
$18,579 and $18,882, respectively)
Increases in gross unrecognized tax benefits relating to tax positions
taken during:
Prior years
Current year
Decreases in gross unrecognized tax benefits relating to:
Tax positions taken during prior years
Settlements with tax authorities
Lapse of the applicable statute of limitations
Year Ended December 31,
2023
2022
2021
$
77,701 $
77,617 $
80,954
615
18,604
341
19,193
273
17,829
(836)
(243)
(2,052)
(43)
(5,774)
(134)
(16,261)
(17,355)
(15,531)
Balance, December 31 (excluding interest and penalties of $18,501,
$17,992 and $18,579, respectively)
$
79,580 $
77,701 $
77,617
Additional information with respect to unrecognized tax benefits is as follows:
Unrecognized tax benefits at the end of the year that, if recognized,
would favorably affect the effective tax rate (includes interest and
penalties of $18,501, $17,992 and $18,579, respectively)
Unrecognized tax benefits that, if recognized, would not affect the
effective tax rate
Interest and penalties recognized in current income tax expense (after
giving effect to the reversal of interest and penalties of $5,528,
$6,344 and $5,210, respectively)
$
$
$
Year Ended December 31,
2023
2022
2021
80,346 $
80,094 $
81,046
17,735 $
15,599 $
15,150
509 $
(587) $
(303)
The Company anticipates that it is reasonably possible that approximately $14,500 of unrecognized tax benefits,
including interest and penalties recorded at December 31, 2023, may be recognized within 12 months as a result of the
lapse of the statute of limitations in various tax jurisdictions.
121
LAZARD LTD
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(dollars in thousands, except for per share data, unless otherwise noted)
20.
NET INCOME (LOSS) PER SHARE OF COMMON STOCK
The Company is required to utilize the “two-class” method of computing basic and diluted net income per share
because the Company issued certain PIPRs, including certain P-PIPRs, which are treated as participating securities.
The Company’s basic and diluted net income (loss) per share calculations using the “two-class” method for the
years ended December 31, 2023, 2022, and 2021 are presented below:
Year Ended December 31,
2023
2022
2021
Net income (loss) attributable to Lazard Ltd
Add - adjustment for earnings attributable to participating securities
$
Net income (loss) attributable to Lazard Ltd - basic
Add - adjustment for earnings attributable to participating securities
(75,479) $
(4,440)
(79,919)
–
357,517 $
(5,732)
351,785
2,641
Net income (loss) attributable to Lazard Ltd - diluted
$
(79,919) $
354,426 $
528,064
(8,647)
519,417
7,068
526,485
Weighted average number of shares of common stock outstanding
86,751,822
93,994,663
104,166,347
Add - adjustment for shares of common stock issuable on a non-
contingent basis
2,242,163
1,669,466
1,869,461
Weighted average number of shares of common stock outstanding -
basic
88,993,985
95,664,129
106,035,808
Add - dilutive effect, as applicable, of:
Weighted average number of incremental shares of common stock
issuable from share-based incentive compensation (a)
Weighted average number of shares of common stock outstanding -
–
5,333,545
7,638,891
diluted
88,993,985
100,997,674
113,674,699
Net income (loss) attributable to Lazard Ltd per share of common
stock:
Basic
Diluted
_____________________
$
$
(0.90) $
(0.90) $
3.68 $
3.51 $
4.90
4.63
(a)
The aggregate weighted average number of incremental shares of common stock issuable from RSUs, PRSUs and
PIPRs for the year ended December 31, 2023 of 4,779,627, that could be potentially dilutive in future periods, have
been excluded from the computation of diluted net loss per share as the effect would be antidilutive in the current
periods.
21.
RELATED PARTIES
Sponsored Funds
The Company serves as an investment advisor for certain affiliated investment companies and fund entities and
receives management fees and, for the alternative investment funds, performance-based incentive fees for providing such
services. Asset management fees relating to such services were $538,457, $592,985 and $708,900 for the years ended
December 31, 2023, 2022 and 2021, respectively, and are included in “asset management fees” on the consolidated
statements of operations. Of such amounts, $67,598 and $57,283 remained as receivables at December 31, 2023 and 2022,
respectively, and are included in “fees receivable” on the consolidated statements of financial condition.
Tax Receivable Agreement
The Second Amended and Restated Tax Receivable Agreement, dated as of October 26, 2015 (the “TRA”),
between Lazard and LTBP Trust, a Delaware statutory trust (the “Trust”), provides for the payment by our subsidiaries to
the Trust of (i) approximately 45% of the amount of cash savings, if any, in U.S. federal, state and local income tax or
122
LAZARD LTD
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(dollars in thousands, except for per share data, unless otherwise noted)
franchise tax that we actually realize as a result of the increases in the tax basis of certain assets and of certain other tax
benefits related to the TRA, and (ii) an amount that we currently expect will equal 85% of the cash tax savings that may
arise from tax basis increases attributable to payments under the TRA. Our subsidiaries expect to benefit from the balance
of cash savings, if any, in income tax that our subsidiaries realize from such tax basis increases. Any amount paid by our
subsidiaries to the Trust will generally be distributed pro rata to the owners of the Trust, who include certain of our
executive officers.
For purposes of the TRA, cash savings in income and franchise tax will be computed by comparing our
subsidiaries’ actual income and franchise tax liability to the amount of such taxes that our subsidiaries would have been
required to pay had there been no increase in the tax basis of certain assets of Lazard Group and had our subsidiaries not
entered into the TRA. The term of the TRA will continue until approximately 2033 or, if earlier, until all relevant tax
benefits have been utilized or expired.
The amount of the TRA liability is an undiscounted amount based upon current tax laws and the structure of the
Company and various assumptions regarding potential future operating profitability. The assumptions reflected in the
estimate involve significant judgment and if our structure or income assumptions were to change, we could be required to
accelerate payments under the TRA. As such, the actual amount and timing of payments under the TRA could differ
materially from our estimates. Any changes in the amount of the estimated liability would be recorded as a non-
compensation expense in the consolidated statements of operations. Adjustments, if necessary, to the related deferred tax
assets would be recorded through the “provision (benefit) for income taxes”.
Pursuant to the periodic revaluation of the TRA liability and the assumptions reflected in the estimate, the
revaluation had the effect in the year ended December, 31 2023 of reducing the estimated liability under the TRA. For the
years ended December 31, 2023, 2022 and 2021, the Company recorded a “provision (benefit) pursuant to tax receivable
agreement” on the consolidated statements of operations of $(43,894), $(1,209) and $2,199, respectively. In addition, the
Company made a payment under the TRA in the year ended December 31, 2023 of $32,208.
The cumulative liability relating to our obligations under the TRA as of December 31, 2023 and 2022 was
$115,087 and $191,189, respectively, and is recorded in “tax receivable agreement obligation” on the consolidated
statements of financial condition.
Other
See Note 15 for information regarding related party transactions pertaining to shares repurchased from certain of
our executive officers.
22.
REGULATORY AUTHORITIES
LFNY is a U.S. registered broker-dealer and is subject to the net capital requirements of Rule 15c3-1 under the
Exchange Act. Under the basic method permitted by this rule, the minimum required net capital, as defined, is a specified
fixed percentage (6 2/3%) of total aggregate indebtedness recorded in LFNY’s Financial and Operational Combined
Uniform Single (“FOCUS”) report filed with the Financial Industry Regulatory Authority (“FINRA”), or $5, whichever is
greater. In addition, the ratio of aggregate indebtedness (as defined) to net capital may not exceed 15:1. At December 31,
2023, LFNY exceeded its minimum requirement for regulatory net capital of $6,529, and was in compliance with its
aggregate indebtedness to net capital ratio requirement.
Certain U.K. subsidiaries of the Company, including LCL, Lazard Fund Managers Limited and Lazard Asset
Management Limited (collectively, the “U.K. Subsidiaries”) are regulated by the Financial Conduct Authority. At
December 31, 2023, the aggregate regulatory net capital of the U.K. Subsidiaries was $220,204, which exceeded the
minimum requirement by $154,383.
CFLF, under which asset management and commercial banking activities are carried out in France, is subject to
regulation by the Autorité de Contrôle Prudentiel et de Résolution (“ACPR”) for its banking activities conducted through
its subsidiary, LFB. LFB, as a registered bank, is engaged primarily in commercial and private banking services for clients
123
LAZARD LTD
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(dollars in thousands, except for per share data, unless otherwise noted)
and funds managed by LFG (asset management) and other clients, and asset-liability management. The investment services
activities exercised through LFB and other subsidiaries of CFLF, primarily LFG, also are subject to regulation and
supervision by the Autorité des Marchés Financiers. At December 31, 2023, the consolidated regulatory net capital of
CFLF was $156,703, which exceeded the minimum requirement set for regulatory capital levels by $62,519. In addition,
pursuant to the consolidated supervision rules in the European Union, LFB, in particular, as a French credit institution, is
required to be supervised by a regulatory body, either in the U.S. or in the European Union. In 2013, the Company and the
ACPR agreed on terms for the consolidated supervision of LFB and certain other non-Financial Advisory European
subsidiaries of the Company (referred to herein, on a combined basis, as the “combined European regulated group”) under
such rules. Under this supervision, the combined European regulated group is required to comply with minimum
requirements for regulatory net capital. At December 31, 2023, the regulatory net capital of the combined European
regulated group was $181,665, which exceeded the minimum requirement set for regulatory capital levels by $78,796.
Additionally, the combined European regulated group, together with our European Financial Advisory entities, is required
to perform an annual risk assessment and provide certain other information on a periodic basis.
Certain other U.S. and non-U.S. subsidiaries are subject to various capital adequacy requirements promulgated by
various regulatory and exchange authorities in the countries in which they operate. At December 31, 2023, for those
subsidiaries with regulatory capital requirements, their aggregate net capital was $143,682, which exceeded the minimum
required capital by $120,239.
At December 31, 2023, each of these subsidiaries individually was in compliance with its regulatory capital
requirements.
23.
SEGMENT INFORMATION
The Company’s reportable segments offer different products and services and are managed separately, as different
levels and types of expertise are required to effectively manage the segments’ transactions. Each segment is reviewed to
determine the allocation of resources and to assess its performance. The Company’s principal operating activities are
included in its Financial Advisory and Asset Management business segments as described in Note 1. In addition, as
described in Note 1, the Company records selected other activities in its Corporate segment.
The Company’s segment information for the years ended December 31, 2023, 2022 and 2021 is prepared using
the following methodology:
•
•
•
Revenue and expenses directly associated with each segment are included in determining operating
income.
Expenses not directly associated with specific segments are allocated based on the most relevant
measures applicable, including revenue, headcount, square footage and other factors.
Segment assets are based on those directly associated with each segment, and include an allocation of
certain assets relating to various segments, based on the most relevant measures applicable, including
headcount, square footage and other factors.
The Company records other revenue, interest income and interest expense among the various segments based on
the segment in which the underlying asset or liability is reported.
Each segment’s operating expenses include (i) compensation and benefits expenses incurred directly in support of
the businesses and (ii) other operating expenses, which include directly incurred expenses for occupancy and equipment,
marketing and business development, technology and information services, professional services, fund administration and
outsourced services and indirect support costs (including compensation and other operating expenses related thereto) for
administrative services. Such administrative services include, but are not limited to, accounting, tax, human resources,
legal, information technology, facilities management and senior management activities.
For the years ended December 31, 2023, 2022 and 2021, no individual client constituted more than 10% of the net
revenue of any of the Company’s business segments.
124
LAZARD LTD
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(dollars in thousands, except for per share data, unless otherwise noted)
Management evaluates segment results based on net revenue and operating income (loss) and believes that the
following information provides a reasonable representation of each segment’s contribution with respect to net revenue,
operating income (loss) and total assets:
Financial Advisory
Net Revenue
$
1,385,357 $
1,666,156 $
1,764,509
Year Ended December 31,
2023
2022
2021
Asset Management
Corporate
Total
_____________________
Operating Expenses (a)
Operating Income (Loss)
Net Revenue
Operating Expenses (a)
Operating Income
Net Revenue (Loss)
Operating Expenses (Credit) (a)
Operating Loss
Net Revenue
Operating Expenses (a)
Operating Income (Loss)
1,489,862
(104,505) $
1,304,715
361,441 $
1,151,496 $
1,011,574
1,204,927 $
963,640
139,922 $
(21,364) $
94,010
241,287 $
(97,512) $
(11,632)
1,356,567
407,942
1,424,985
1,032,825
392,160
3,554
79,808
(115,374) $
(85,880) $
(76,254)
2,515,489 $
2,773,571 $
3,193,048
2,595,446
2,256,723
2,469,200
(79,957) $
516,848 $
723,848
$
$
$
$
$
$
$
(a)
Operating expenses include depreciation and amortization of property as set forth in table below.
Financial Advisory
Asset Management
Corporate
Total
Total Assets
Financial Advisory
Asset Management (b)
Corporate (b)
Total
_____________________
Year Ended December 31,
2023
2022
2021
$
8,517 $
8,968 $
6,476
27,860
9,390
23,978
$
42,853 $
42,336 $
8,480
5,618
24,217
38,315
December 31,
2023
2022
$
1,154,483 $
1,099,921
1,232,364
2,248,934
1,786,830
2,965,810
$
4,635,781 $
5,852,561
(b)
Effective December 31, 2023, certain assets, primarily “deposits with banks and short-term investments”, previously
reported in the Corporate segment are reported in the Asset Management segment resulting from a change in the
segment in which such assets are managed. Comparable prior year information has been recast to reflect the updated
presentation.
125
LAZARD LTD
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(dollars in thousands, except for per share data, unless otherwise noted)
Geographic Information
Due to the highly integrated nature of international financial markets, the Company manages its business based on
the profitability of the enterprise as a whole, not by geographic region. The Company’s revenue and total assets are
generally allocated based on the country or domicile of the legal entity providing the service.
The following table sets forth the net revenue from, and total assets for, the Company and its consolidated
subsidiaries by geographic region allocated on the basis described above. In the table below, Americas principally includes
the U.S., EMEA principally includes the U.K. and France, and Asia Pacific principally includes Australia.
Net Revenue:
Americas
EMEA
Asia Pacific
Total
Operating Income:
Americas
EMEA
Asia Pacific
Total
Total Assets:
Americas
EMEA
Asia Pacific
Total
Year Ended December 31,
2023
2022
2021
$
1,193,056 $
1,487,056 $
1,780,815
1,162,052
1,136,636
1,251,058
160,381
149,879
161,175
$
2,515,489 $
2,773,571 $
3,193,048
$
(224,857) $
235,640 $
108,058
248,404
36,842
(79,957) $
32,804
516,848 $
$
399,916
295,991
27,941
723,848
December 31,
2023
2022
$
2,808,962 $
3,458,250
1,679,644
2,218,136
147,175
176,175
$
4,635,781 $
5,852,561
24.
CONSOLIDATED VIEs
The Company’s consolidated VIEs as of December 31, 2022 include LGAC (see Note 1) and as of December 31,
2023 and 2022 include certain funds (“LFI Consolidated Funds”) that were established for the benefit of employees
participating in the Company’s existing LFI deferred compensation arrangement. Lazard invests in these funds and is the
investment manager and is therefore deemed to have both the power to direct the most significant activities of the funds
and the right to receive benefits (or the obligation to absorb losses) that could potentially be significant to these funds. The
assets of LFI Consolidated Funds, except as it relates to $113,174 and $115,666 of LFI held by Lazard Group as of
December 31, 2023 and 2022, respectively, can only be used to settle the obligations of LFI Consolidated Funds. The
126
LAZARD LTD
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(dollars in thousands, except for per share data, unless otherwise noted)
Company’s consolidated VIE assets and liabilities for LFI Consolidated Funds as reflected in the consolidated statements
of financial condition consist of the following at December 31, 2023 and 2022.
ASSETS
Cash and cash equivalents
Customers and other receivables
Investments
Other assets
Total assets
LIABILITIES
Deposits and other customer payables
Other liabilities
Total liabilities
December 31,
2023
2022
$
4,627 $
23,277
196,112
683
224,699 $
23,498 $
353
23,851 $
$
$
$
3,644
240
186,300
622
190,806
528
448
976
127
SUPPLEMENTAL FINANCIAL INFORMATION
Not applicable.
Item 9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosures
There were no changes in or disagreements with accountants on accounting and financial disclosure during the last
two fiscal years.
Item 9A.
Controls and Procedures
Our management, including our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness
of our disclosure controls and procedures pursuant to Rule 13a-15 under the Exchange Act as of the end of the period
covered by this Annual Report on Form 10-K. Based on that evaluation, our Chief Executive Officer and Chief Financial
Officer have concluded that, as of the end of the period covered by this Annual Report on Form 10-K, our disclosure
controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) are effective to ensure that information we
are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and
reported within the time periods specified in Securities and Exchange Commission rules and forms, and that such
information is accumulated and communicated to our management, including our Chief Executive Officer and Chief
Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
In addition, no change in our internal control over financial reporting (as defined in Rule 13a-15(f) under the
Exchange Act) occurred during our most recent fiscal quarter that has materially affected, or is likely to materially affect,
our internal control over financial reporting.
Management’s Report on Internal Control Over Financial Reporting (as defined in Rules 13a-15(f) and 15d-15(f)
of the Exchange Act), and the related report of our independent registered public accounting firm, are set forth in Part II,
Item 8 of this Annual Report on Form 10-K and are incorporated herein by reference.
Item 9B.
Other Information
During the three months ended December 31, 2023, no director or officer of the Company adopted or terminated a
“Rule 10b5-1 trading arrangement” or “Non-Rule 10b5-1 trading arrangement” as each term is defined in Item 408 of
Regulation S-K.
Item 9C.
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.
128
PART III
Item 10.
Directors, Executive Officers and Corporate Governance
Information regarding members of the Board of Directors, including its audit committee and audit committee
financial expert, as well as information regarding our Code of Business Conduct and Ethics that applies to our Chief
Executive Officer and senior financial officers, will be presented in Lazard, Inc.’s definitive proxy statement for its 2024
annual general meeting of shareholders, which will be held in Spring 2024, and is incorporated herein by reference.
Information regarding our executive officers is included in Part I of this Annual Report on Form 10-K under the caption
“Executive Officers of the Registrant”.
The information required to be furnished pursuant to this item with respect to compliance with Section 16(a) of
the Exchange Act will be set forth under the caption “Section 16(a) Beneficial Ownership Reporting and Compliance” in
Lazard, Inc.’s definitive proxy statement for its 2024 annual general meeting of shareholders, and is incorporated herein by
reference.
Item 11.
Executive Compensation
Information regarding executive officer and director compensation will be presented in Lazard, Inc.’s definitive
proxy statement for its 2024 annual general meeting of shareholders, which will be held in Spring 2024, and is incorporated
herein by reference.
Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
Information regarding security ownership of certain beneficial owners and management and related shareholder
matters will be presented in Lazard, Inc.’s definitive proxy statement for its 2024 annual general meeting of shareholders,
which will be held in Spring 2024, and is incorporated herein by reference.
Equity Compensation Plan Information
The following table provides information as of December 31, 2023 regarding securities issued under our 2018
Incentive Compensation Plan and 2008 Incentive Compensation Plan.
Plan
Category
2018 Incentive
Compensation
Plan(1)
2008 Incentive
Compensation
Plan(2)
Equity compensation plans
approved by security holders
Equity compensation plans
approved by security holders
Total
_____________________
Number of Securities
to be Issued Upon
Exercise of
Outstanding Options,
Warrants and Rights
Weighted-Average
Exercise Price of
Outstanding
Options,
Warrants and Rights
19,519,298
88,792 (3)
19,608,090 (3)
Number of Securities
Remaining Available
for Future Issuance
Under Equity
Compensation Plans
(Excluding Securities
Reflected in the
Second Column)
(4)
(4)
16,125,103
–
16,125,103
(1)
(2)
Our 2018 Incentive Compensation Plan was approved by the stockholders of Lazard on April 24, 2018 and was
amended on April 29, 2021 to increase the aggregate number of shares authorized for issuance under the 2018
Plan. The aggregate number of shares authorized for issuance under the 2018 Plan is 50 million.The 2018 Plan
replaced the 2008 Incentive Compensation Plan, which was terminated on April 24, 2018.
Our 2008 Incentive Compensation Plan was approved by the stockholders of Lazard on May 6, 2008. The 2008
Incentive Compensation Plan was terminated on April 24, 2018, although awards granted under the 2008
Incentive Compensation Plan remain outstanding and continue to be subject to its terms.
129
(3)
(4)
Represents outstanding stock unit awards and PIPRs, after giving effect to forfeitures, as of December 31, 2023.
As of that date, the only grants made under the 2018 Incentive Compensation Plan have been in the form of stock
unit awards, restricted stock awards and profits interest participation rights. See Note 16 of Notes to Consolidated
Financial Statements for a description of the plans.
Each restricted stock unit awarded under our 2018 Incentive Compensation Plan and 2008 Incentive
Compensation Plan was granted at no cost to the persons receiving them and represents the contingent right to
receive the equivalent number of shares of common stock. Performance-based units awarded represent the
contingent right to receive common stock based on the achievement of both performance-based and market-based
criteria, the number of shares of common stock that ultimately may be received generally will range from zero to
2.4 times the target number. Profits interest participation rights, including P-PIPRs and excluding SP-PIPRs,
represent the contingent right to receive the equivalent number of shares of common stock in exchange for such
rights, subject to the satisfaction of certain vesting criteria and the Minimum Value Condition, and, in the case of
P-PIPRs, certain performance-based criteria and beginning with P-PIPRs granted in 2021, incremental market-
based conditions. For P-PIPRs granted prior to February 2021, the number of shares of common stock that
ultimately may be received generally will range from zero to two times the target number. For P-PIPRs awards
granted beginning in February 2021, subject to both performance-based and incremental market-based criteria, the
number of shares that may be received will range from zero to 2.4 times the target number. SP-PIPRs are eligible
to vest in three tranches based on the achievement of service conditions and Tranche-specific common stock
milestones. See Note 16 of Notes to Consolidated Financial Statements.
Item 13.
Certain Relationships and Related Transactions, and Director Independence
Information regarding certain relationships and related transactions, and director independence, will be presented
in Lazard, Inc.’s definitive proxy statement for its 2024 annual general meeting of shareholders, which will be held in
Spring 2024, and is incorporated herein by reference.
Item 14.
Principal Accounting Fees and Services
Information regarding principal accountant fees and services will be presented in Lazard, Inc.’s definitive proxy
statement for its 2024 annual general meeting of shareholders, which will be held in Spring 2024, and is incorporated
herein by reference.
130
PART IV
Item 15.
Exhibits and Financial Statement Schedules
(a)
Documents filed as part of this Report:
1.
Consolidated Financial Statements
The consolidated financial statements required to be filed in the Annual Report on Form 10-K are listed
on page F-1 hereof and in Part II, Item 8 hereof.
2.
Financial Statement Schedule
The financial statement schedule required in the Annual Report on Form 10-K is listed on page F-1
hereof. The required schedule appears on pages F-2 through F-6 hereof. All other schedules have been
omitted because they are not applicable, not required or the information required is included in the
Company’s consolidated financial statements or notes thereto.
3.
Exhibits
3.1
3.2
4.1
4.2
4.3
4.4
4.5
4.6
4.7
4.8
10.1
Certificate of Incorporation of the Registrant (incorporated by reference to Exhibit 3.1 to the Registrant’s
Current Report (File No. 001-32492) on Form 8-K filed on January 2, 2024).
By-laws of the Registrant (incorporated by reference to Exhibit 3.2 to the Registrant’s Current Report
(File No. 001-32492) on Form 8-K filed on January 2, 2024).
Form of Stock Certificate for Common Stock (incorporated by reference to Exhibit 4.1 to the Registrant’s
Current Report (File No. 001-32492) on Form 8-K filed on January 2, 2024).
Indenture, dated as of May 10, 2005, by and between Lazard Group LLC and The Bank of New York, as
Trustee (incorporated by reference to Exhibit 4.1 to Lazard Group LLC’s Registration Statement (File No.
333-126751) on Form S-4 filed on July 21, 2005).
Sixth Supplemental Indenture, dated as of February 13, 2015, between Lazard Group LLC and The Bank
of New York Mellon, as trustee (incorporated by reference to Exhibit 4.1 of the Registrant’s Current
Report on Form 8-K (File No. 001-32492) filed on February 13, 2015).
Seventh Supplemental Indenture, dated as of November 4, 2016, between Lazard Group LLC and The
Bank of New York Mellon, as trustee (incorporated by reference to Exhibit 4.1 of the Registrant’s Current
Report on Form 8-K (File No. 001-32492) filed on November 7, 2016).
Eighth Supplemental Indenture, dated as of September 19, 2018, between Lazard Group LLC and the
Bank of New York Mellon, as trustee (incorporated by reference to Exhibit 4.1 to the Registrant’s Current
Report on Form 8-K (File No. 001-32492) filed on September 19, 2018).
Ninth Supplemental Indenture, dated as of March 11, 2019, between Lazard Group LLC and The Bank of
New York Mellon, as trustee (incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report
on Form 8-K (File No. 001-32492) filed on March 11, 2019).
Form of Senior Note (included in Exhibits 4.3, 4.4, 4.5, and 4.6).
Description of Registrant’s Common Stock.
Third Amended and Restated Operating Agreement of Lazard Group LLC, dated as of March 31, 2023
(incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report (File No. 001-32492) on
Form 10-Q filed on May 2, 2023).
131
10.2
10.3
10.4
10.5*
10.6*
10.7*
10.8*
10.9*
10.10*
10.11*
10.12*
10.13*
Second Amended and Restated Tax Receivable Agreement, dated as of October 26, 2015, by and among
Ltd Sub A, Ltd Sub B and LTBP Trust (incorporated by reference to Exhibit 10.2 to the Registrant’s
Quarterly Report (File No. 001-32492) on Form 10-Q filed on October 28, 2015).
Lease, dated as of January 27, 1994, by and between Rockefeller Center Properties and Lazard Frères &
Co. LLC (incorporated by reference to Exhibit 10.19 to the Registrant’s Registration Statement (File No.
333-121407) on Form S-1/A filed on February 11, 2005).
Fourth Amendment dated as of February 16, 2011, by and among RCPI Landmark Properties, L.L.C. (as
the successor in interest to Rockefeller Center Properties), RCPI 30 Rock 22234849, L.L.C. and Lazard
Group LLC (as the successor in interest to Lazard Frères & Co. LLC), to the Lease dated as of January 27,
1994, by and among Rockefeller Center Properties and Lazard Frères & Co. LLC (incorporated by
reference to Exhibit 10.16 to the Registrant’s Quarterly Report (File No. 001-32492) on Form 10-Q filed
on April 29, 2011).
Lazard Ltd 2008 Incentive Compensation Plan (as amended, Lazard, Inc. 2008 Incentive Compensation
Plan) (incorporated by reference to Annex B to the Registrant’s Definitive Proxy Statement on Schedule
14A (File No. 001-32492) filed on March 24, 2008).
Lazard Ltd 2018 Incentive Compensation Plan (as amended, Lazard, Inc. 2018 Incentive Compensation
Plan) (incorporated by reference to Annex B to the Registrant’s Definitive Proxy Statement on Schedule
14A (File No. 001-32492) filed on March 15, 2018).
First Amendment to the Lazard Ltd 2018 Incentive Compensation Plan (incorporated by reference to
Annex B to the Registrant’s Definitive Proxy Statement on Schedule 14A (File No. 001-32492) filed on
March 16, 2021).
Second Amendment to the Lazard Ltd 2018 Incentive Compensation Plan (incorporated by reference to
Exhibit 10.2 to the Registrant's Post-Effective Amendment No. 1 to Registration Statements on Form S-8
(File Nos. 333-154977, 333-193845, 333-217597, 333-224552 and 333-269977) filed on February 2,
2024.
First Amendment to the Lazard Ltd 2008 Incentive Compensation Plan (incorporated by reference to
Exhibit 10.1 to the Registrant's Post-Effective Amendment No. 1 to Registration Statements on Form S-8
(File Nos. 333-154977, 333-193845, 333-217597, 333-224552 and 333-269977) filed on February 2,
2024.
Amended and Restated Agreement relating to Retention and Noncompetition and Other Covenants, dated
as of March 31, 2022, by and among the Registrant, Lazard Group LLC and Kenneth M. Jacobs
(incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K (File No.
001-32492) filed on April 6, 2022).
Amendment to Amended and Restated Agreement Relating to Retention and Noncompetition and Other
Covenants, dated as of May 25, 2023, by and among the Registrant, Lazard Group LLC and Kenneth M.
Jacobs (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K (File
No. 001-32492) filed on May 26, 2023).
Amended and Restated Agreement relating to Retention and Noncompetition and Other Covenants, dated
as of March 31, 2022, by and among the Registrant, Lazard Group LLC and Evan L. Russo (incorporated
by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K (File No. 001-32492) filed on
April 6, 2022).
Amendment to Amended and Restated Agreement Relating to Retention and Noncompetition and Other
Covenants, dated as of May 25, 2023, by and among the Registrant, Lazard Group LLC and Evan L.
Russo (incorporated by reference to Exhibit 10.3 to the Registrant’s Current Report on Form 8-K (File No.
001-32492) filed on May 26, 2023).
132
10.14*
10.15*
10.16*
10.17*
10.18*
10.19*
10.20*
10.21*
10.22*
10.23*
10.24*
10.25*
Amended and Restated Agreement relating to Retention and Noncompetition and Other Covenants, dated
as of March 31, 2022, by and among the Registrant, Lazard Group LLC and Peter R. Orszag (incorporated
by reference to Exhibit 10.3 to the Registrant’s Current Report on Form 8-K (File No. 001-32492) filed on
April 6, 2022).
Amendment to Amended and Restated Agreement Relating to Retention and Noncompetition and Other
Covenants, dated as of May 25, 2023, by and among the Registrant, Lazard Group LLC and Peter R.
Orszag (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K (File
No. 001-32492) filed on May 26, 2023).
Amended and Restated Agreement relating to Retention and Noncompetition and Other Covenants, dated
as of March 29, 2019, by and among the Registrant, Lazard Group LLC and Ashish Bhutani (incorporated
by reference to Exhibit 10.3 to the Registrant’s Current Report on Form 8-K (File No. 001-32492) filed on
April 3, 2019).
Resignation Letter Agreement, dated as of March 31, 2022, by and between the Registrant and Ashish
Bhutani (incorporated by reference to Exhibit 10.4 to the Registrant’s Current Report on Form 8-K (File
No. 001-32492) filed on April 6, 2022).
Letter Agreement, dated as of January 1, 2023, by and between Lazard Asset Management LLC and
Ashish Bhutani (incorporated by reference to Exhibit 10.13 to the Registrant’s Quarterly Report (File No.
001-32492) on Form 10-Q filed on May 2, 2023).
Amended and Restated Agreement relating to Retention and Noncompetition and Other Covenants, dated
as of March 29, 2019, by and among the Registrant, Lazard Group LLC and Alexander F. Stern
(incorporated by reference to Exhibit 10.5 to the Registrant’s Current Report on Form 8-K (File No.
001-32492) filed on April 3, 2019).
Resignation Letter Agreement, dated as of March 31, 2022, by and between the Registrant and Alexander
F. Stern (incorporated by reference to Exhibit 10.5 to the Registrant’s Current Report on Form 8-K (File
No. 001-32492) filed on April 6, 2022).
Letter Agreement, dated as of January 1, 2023, by and between Lazard Frères & Co. LLC and Alexander
F. Stern (incorporated by reference to Exhibit 10.16 to the Registrant’s Quarterly Report (File No.
001-32492) on Form 10-Q filed on May 2, 2023).
Letter Agreement, dated as of July 23, 2022, by and between Lazard Group LLC and Mary Ann Betsch
(incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K (File No.
001-32492) filed on July 28, 2022).
Agreement relating to Retention and Noncompetition and Other Covenants, dated as of August 23, 2023,
by and between the Registrant, Lazard Group LLC and Mary Ann Betsch (incorporated by reference to
Exhibit 10.2 to the Registrant’s Current Report on Form 8-K (File No. 001-32492) filed on August 25,
2023).
Letter Agreement, dated as of June 29, 2023, by and between Lazard Frères & Co. LLC and Michael
Gathy (incorporated by reference to Exhibit 10.22 to the Registrant's Quarterly Report (File No.
001-32492) on Form 10-Q filed on October 27, 2023).
Form of Award Letter for Annual Grant of Deferred Stock Units to Non-Executive Directors (incorporated
by reference to Exhibit 99.1 to the Registrant’s Current Report on Form 8-K (File No. 001-32492) filed on
September 8, 2005).
10.26*
Directors’ Fee Deferral Unit Plan (incorporated by reference to Exhibit 10.39 to the Registrant’s Quarterly
Report on Form 10-Q (File No. 001-32492) filed on May 11, 2006).
133
10.27
10.28*
10.29 *
10.30*
10.31*
10.32*
10.33*
10.34*
21.1
23.1
31.1
31.2
32.1
32.2
97.1
Second Amended and Restated Credit Agreement, dated as of June 6, 2023, among Lazard Group LLC,
the Banks from time to time parties thereto, and Citibank, N.A., as Administrative Agent (incorporated by
reference to Exhibit 10.23 to the Registrant’s Quarterly Report on Form 10-Q (File No. 001-32492) filed
on July 31, 2023).
Form of Agreement for Performance-Based Profits Interest Participation Right Units under the 2018
Incentive Compensation Plan (incorporated by reference to Exhibit 10.24 to the Registrant’s Quarterly
Report on Form 10-Q (File No. 001-32492) filed on April 30, 2019).
Form of Agreement evidencing grant of Performance-Based Restricted Participation Units under the 2018
Incentive Compensation Plan (incorporated by reference to Exhibit 10.19 to the Registrant’s Quarterly
Report on Form 10-Q (File No. 001-32492) filed on May 4, 2021).
Form of Agreement evidencing grant of Lazard Fund Interests to Named Executive Officers under the
2018 Incentive Compensation Plan (incorporated by reference to Exhibit 10.20 to the Registrant’s
Quarterly Report on Form 10-Q (File No. 001-32492) filed on May 4, 2021).
Form of Agreement for Profits Interest Participation Right Units under the 2018 Compensation Plan
(incorporated by reference to Exhibit 10.21 to the Registrant’s Quarterly Report on Form 10-Q (File No.
001-32492) filed on May 4, 2021).
Form of Agreement for Profits Interest Participation Right Units under the 2018 Incentive Compensation
Plan (incorporated by reference to Exhibit 10.26 to the Registrant’s Quarterly Report (File No. 001-32492)
on Form 10-Q filed on May 2, 2023).
Form of Agreement evidencing grant of Restricted Stock Units under the 2018 Incentive Compensation
Plan (incorporated by reference to Exhibit 10.27 to the Registrant’s Quarterly Report (File No. 001-32492)
on Form 10-Q filed on May 2, 2023).
Form of Agreement evidencing grant of Stock Performance Profits Interest Participation Rights Units
under the 2018 Incentive Compensation Plan (incorporated by reference to Exhibit 10.1 to the Registrant’s
Current Report on Form 8-K (File No. 001-32492) filed on August 25, 2023).
Subsidiaries of the Registrant
Consent of Independent Registered Public Accounting Firm.
Rule 13a-14(a) Certification of Peter R. Orszag.
Rule 13a-14(a) Certification of Mary Ann Betsch.
Section 1350 Certification for Peter R. Orszag.
Section 1350 Certification for Mary Ann Betsch.
Incentive Compensation Recovery Policy.
101.INS
Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File
because iXBRL tags are embedded within the Inline XBRL document.
101.SCH
Inline XBRL Taxonomy Extension Schema
101.CAL
Inline XBRL Taxonomy Extension Calculation Linkbase
101.DEF
Inline XBRL Taxonomy Extension Definition Linkbase
134
101.LAB
Inline XBRL Taxonomy Extension Label Linkbase
101.PRE
Inline XBRL Taxonomy Extension Presentation Linkbase
104
Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)
_____________________
*
Management contract or compensatory plan or arrangement.
135
LAZARD LTD
INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE
ITEMS 15(a)(1) AND 15(a)(2)
Management’s Report on Internal Control Over Financial Reporting
Reports of Independent Registered Public Accounting Firm
Consolidated Financial Statements
Consolidated Statements of Financial Condition as of December 31, 2023 and 2022
Consolidated Statements of Operations for the years ended December 31, 2023, 2022 and 2021
Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2023, 2022 and
2021
Consolidated Statements of Cash Flows for the years ended December 31, 2023, 2022 and 2021
Consolidated Statements of Changes in Stockholders’ Equity and Redeemable Noncontrolling Interests for the
years ended December 31, 2023, 2022 and 2021
Notes to Consolidated Financial Statements
Supplemental Financial Information
Financial Statement Schedules
Schedule I—Condensed Financial Information of Registrant (Parent Company Only)
Condensed Statements of Financial Condition as of December 31, 2023 and 2022
Condensed Statements of Operations for the years ended December 31, 2023, 2022 and 2021
Condensed Statements of Comprehensive Income (Loss) for the years ended December 31, 2023, 2022
and 2021
Condensed Statements of Cash Flows for the years ended December 31, 2023, 2022 and 2021
Notes to Condensed Financial Statements
Page No.
67
68
71
73
74
75
77
80
128
F-2
F-3
F-4
F-5
F-6
Schedules not listed above have been omitted because the information required to be set forth therein is not
applicable or is shown in the consolidated financial statements or notes thereto.
F-1
LAZARD LTD
(parent company only)
CONDENSED STATEMENTS OF FINANCIAL CONDITION
DECEMBER 31, 2023 AND 2022
(dollars in thousands, except per share data)
ASSETS
Cash and cash equivalents
Investments in subsidiaries, equity method
Due from subsidiaries
Other assets
Total assets
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities:
Due to subsidiaries
Other liabilities
Total liabilities
Commitments and contingencies
STOCKHOLDERS’ EQUITY
Preferred stock, par value $.01 per share; 15,000,000 shares authorized:
Series A—no shares issued and outstanding
Series B—no shares issued and outstanding
Common stock:
Class A, par value $.01 per share (500,000,000 shares authorized; 112,766,091
shares issued at December 31, 2023 and 2022, including shares held by
subsidiaries)
Additional paid-in-capital
Retained earnings
Accumulated other comprehensive loss, net of tax
Class A common stock held by subsidiaries, at cost (25,340,287 and 26,814,213
shares at December 31, 2023 and 2022, respectively)
Total stockholders’ equity
Total liabilities and stockholders’ equity
December 31,
2023
2022
$
1,901 $
709
(1,402,500)
1,824,782
(1,293,966)
1,861,792
–
$
424,183 $
17
568,552
$
– $
424
424
–
–
11,903
186
12,089
–
–
1,128
247,204
1,128
167,890
1,402,636
1,676,713
(289,950)
(295,854)
1,361,018
1,549,877
(937,259)
423,759
424,183 $
(993,414)
556,463
568,552
$
See notes to condensed financial statements.
F-2
LAZARD LTD
(parent company only)
CONDENSED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 2023, 2022 AND 2021
(dollars in thousands)
Year Ended December 31,
2023
2022
2021
REVENUE
Equity in earnings (losses) of subsidiaries
$
(181,720) $
238,987 $
Interest and other income
Total revenue (loss)
OPERATING EXPENSES
Professional services
Other
Total operating expenses
NET INCOME (LOSS)
112,418
(69,302)
120,733
359,720
5,974
203
6,177
2,083
120
2,203
410,550
119,412
529,962
1,792
106
1,898
$
(75,479) $
357,517 $
528,064
See notes to condensed financial statements.
F-3
LAZARD LTD
(parent company only)
CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
FOR THE YEARS ENDED DECEMBER 31, 2023, 2022 AND 2021
(dollars in thousands)
NET INCOME (LOSS)
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX:
Currency translation adjustments:
Year Ended December 31,
2023
2022
2021
$
(75,479) $
357,517 $
528,064
Currency translation adjustments before reclassification
Adjustment for items reclassified to earnings
31,106
1,826
(64,778)
32
(48,099)
23,645
Employee benefit plans:
Actuarial gain (loss) (net of tax expense (benefit) of $(7,606),
$(5,978) and $13,263 for the years ended December 31, 2023,
2022 and 2021, respectively)
Prior service cost (net of tax benefit of $2,567 for the year ended
December 31, 2023)
Adjustments for items reclassified to earnings (net of tax
expense of $1,521, $994 and $1,609 for the years ended
December 31, 2023, 2022 and 2021, respectively)
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX
(24,510)
(11,413)
33,315
(7,751)
–
–
5,233
5,904
4,152
(72,007)
5,660
14,521
COMPREHENSIVE INCOME (LOSS)
$
(69,575) $
285,510 $
542,585
See notes to condensed financial statements.
F-4
LAZARD LTD
(parent company only)
CONDENSED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2023, 2022 AND 2021
(dollars in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)
Adjustments to reconcile net income (loss) to net cash provided by
operating activities:
Equity in (earnings) losses of subsidiaries
Dividends received from subsidiaries
Changes in due to/from subsidiaries
Changes in other operating assets and liabilities
Net cash provided by operating activities
CASH FLOWS FROM FINANCING ACTIVITIES:
Class A common stock dividends
Net cash used in financing activities
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents, January 1
Cash and cash equivalents, December 31
Year Ended December 31,
2023
2022
2021
$
(75,479) $
357,517 $
528,064
181,720
(238,987)
(410,550)
25,000
42,772
254
174,267
79,500
(16,663)
14
181,381
69,500
9,655
30
196,699
(173,075)
(181,880)
(195,944)
(173,075)
(181,880)
(195,944)
1,192
709
(499)
1,208
755
453
$
1,901 $
709 $
1,208
See notes to condensed financial statements.
F-5
LAZARD LTD
(parent company only)
NOTES TO CONDENSED FINANCIAL STATEMENTS
1.
BASIS OF PRESENTATION
The accompanying Lazard Ltd condensed financial statements (the “Parent Company Financial Statements”),
including the notes thereto, should be read in conjunction with the consolidated financial statements of Lazard Ltd and its
subsidiaries (the “Company”) and the notes thereto.
The Parent Company Financial Statements as of December 31, 2023 and 2022, and for each of the three years in
the period ended December 31, 2023, are prepared in conformity with accounting principles generally accepted in the
United States of America (“U.S. GAAP”), which require management to make estimates and assumptions that affect the
reported amounts of assets and liabilities, revenue and expenses, and the disclosures in the condensed financial statements.
Management believes that the estimates utilized in the preparation of the condensed financial statements are reasonable.
Actual results could differ materially from these estimates.
The Parent Company Financial Statements include investments in subsidiaries, accounted for under the equity
method.
F-6
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the
Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.
SIGNATURES
Dated: February 23, 2024
LAZARD, INC.
By:
/s/ Peter R. Orszag
Peter R. Orszag
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this Report has been signed
below by the following persons on behalf of the Registrant in the capacities and on the dates indicated.
Signature
Capacity
Date
/s/ Kenneth M. Jacobs
Executive Chairman and Director
February 23, 2024
Kenneth M. Jacobs
/s/ Peter R. Orszag
Chief Executive Officer and Director
February 23, 2024
Peter R. Orszag
(Principal Executive Officer)
/s/ Mary Ann Betsch
Chief Financial Officer
Mary Ann Betsch
(Principal Financial Officer)
February 23, 2024
/s/ Michael Gathy
Chief Accounting Officer
February 23, 2024
Michael Gathy
/s/ Ann-Kristin Achleitner
Director
Ann-Kristin Achleitner
/s/ Andrew M. Alper
Andrew M. Alper
/s/ Michelle Jarrard
Michelle Jarrard
/s/ Iris Knobloch
Iris Knobloch
/s/ Jane L. Mendillo
Jane L. Mendillo
/s/ Richard D. Parsons
Richard D. Parsons
Director
Director
Director
Director
Director
February 23, 2024
February 23, 2024
February 23, 2024
February 23, 2024
February 23, 2024
February 23, 2024
II-1
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PRINCIPAL
OFFICES
U.S.
30 Rockefeller Plaza
New York, NY 10112
FRANCE
175, Boulevard Haussmann
75008 Paris
U.K.
50 Stratton Street
London W1J 8LL
CORPORATE
INFORMATION
EXECUTIVE OFFICERS
AND SENIOR LEADERS
BOARD OF
DIRECTORS
Peter R. Orszag
Chief Executive Officer
Mary Ann Betsch
Chief Financial Officer
Raymond J. McGuire
President
Evan L. Russo
Chief Executive Officer of
Asset Management
Alexandra Soto
Chief Operating Officer
Chris Weideman
General Counsel
Kenneth M. Jacobs
Executive Chairman
Richard D. Parsons
Lead Independent Director
Ann-Kristin Achleitner
Andrew M. Alper
Stephen R. Howe Jr.
Michelle Jarrard
Iris Knobloch
Jane L. Mendillo
Peter R. Orszag
Dan Schulman
TRANSFER AGENT AND REGISTRAR
Computershare
P.O. Box 505000, Louisville, KY 40233
(800) 368-5948 U.S. | +1 (201) 680-6578 International
www-us.computershare.com/Investor/#Home
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Deloitte & Touche LLP
30 Rockefeller Plaza, New York, NY 10112
+1 (212) 492-4000
SHAREHOLDER INQUIRIES
Lazard, Inc.
Alexandra Deignan
30 Rockefeller Plaza, New York, NY 10112
+1 (212) 632-6886 | investorrelations@lazard.com
www.lazard.com
Photography Credit: Jonathan Pallett (Financial Advisory, London).
Lazard’s Annual Photography Challenge celebrates the creativity of
our employees across the world.
www.lazard.com