UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
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Lazard Ltd
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Notice of Annual Meeting and Proxy Statement |
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20192022 Annual General Meeting of Shareholders
NOTICE OF | ||||||
Date: | May 18, 2022 | |||||
Time: | 9:00 a.m. Eastern Daylight Time | |||||
Place: |
www.meetnow.global/M924R5T |
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the General Information section of this Proxy Statement for additional information regarding voting and attending our Annual General Meeting of Shareholders.
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The Notice of Meeting, Proxy Statement and Annual Report on Form10-K at www.lazard.com/investorrelations/
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Items of Business
1. | Election of three directors to our Board of Directors for a three-year term expiring at the conclusion of the Company’s annual general meeting in |
2. | Consideration of anon-binding advisory vote regarding executive compensation; |
3. | Ratification of the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for |
4. | Consideration of any other matters that may properly be brought before the meeting or any adjournment or postponement thereof. |
Only shareholders of record at the close of business on March 4, 201922, 2022 may vote in personby attending the virtual meeting or by proxy at the meeting or any adjournment or postponement thereof.
Proxy Statement and Other Materials
The Proxy Statement is being mailedfirst sent to shareholders on or about March 19, 2019,April 6, 2022, together with a copy of the Company’s 20182021 Annual Report, which includes financial statements for the period ended December 31, 20182021 and the related independent auditor’s reports. Those financial statements will be presented at the meeting.
Your vote is important. Please exercise your shareholder right to vote.
By order of the Board of Directors, |
Scott D. Hoffman |
Chief Administrative Officer, General Counsel and Secretary |
This summary highlights information contained elsewhere in this Proxy Statement or in our Annual Report on Form10-K for the Fiscal Year Ended December 31, 2018.2021, or the 2021 Annual Report. This summary does not contain all the information you should consider, and you should read the entire Proxy Statement carefully before voting. In this Proxy Statement, the terms “we”, “our”, “us”, the “firm”, “Lazard” or the “Company” refer to Lazard Ltd and its subsidiaries, including Lazard Group LLC.
VOTING MATTERS AND BOARD RECOMMENDATIONSVoting Matters and Board Recommendations
The following table summarizes the matters to be voted upon at our 20192022 Annual General Meeting of Shareholders and the Board of Directors’ voting recommendations with respect to each matter.
Agenda Item | Matter | Board Recommendation | ||
Item 1 | Election of three directors to our Board of Directors for a three-year term expiring at the conclusion of the Company’s annual general meeting in | VOTE FOR | ||
Item 2 | Consideration of anon-binding advisory vote regarding executive compensation | VOTE FOR | ||
Item 3 | Ratification of the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for | VOTE FOR |
2018 FINANCIAL HIGHLIGHTS
OPERATING REVENUE |
| OPERATING MARGIN, AWARDED BASIS | |||
reflects record performance in Financial Advisory and Asset
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Continuing cost discipline with consistent deferral policy | |||||
Consistent focus on our operating margin; 310 bps higher than 2020 | |||||
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RETURN OF CAPITAL | |||||
| ADJUSTED EARNINGS PER SHARE, DILUTED | ||||
$670M
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Demonstrated long-term commitment to shareholder value creation and return of excess capital | $576M 40% higher than 2020 | $5.04 40% higher than 2020 |
For definitions of the financial measures used above, see endnotes to the section titled “Compensation Discussion and Analysis”, which are located on page 6956 of this Proxy Statement.
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CORPORATE GOVERNANCE HIGHLIGHTSProxy Statement Summary | Corporate Governance Highlights
Corporate Governance Highlights
We are committed to the highest standards of corporate governance that serve the best interests of our Company and stakeholders, and to active engagement with our shareholders throughout the year. We believe our ongoing engagement with shareholders helps us achieve balanced and appropriate solutions for the oversight and management of our shareholders.business. The following table summarizes certain highlights of our corporate governance practices and policies.
Independent Board | • • All Committees of the Board | |
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Strong Independent Lead Director | • Active Lead Independent Director with expansive responsibilities • Selected by independent | |
Diverse and Engaged Board | • • Wide array of qualifications, skills and attributes to the Board, supporting its oversight role on behalf of shareholders
• Overall attendance by our • Annual Board and Committee evaluations and self-assessments | |
Executive Sessions | • Independent | |
Succession Planning | • Board takes an active role in succession planning • Succession and executive development are discussed with the Chief Executive Officer, or CEO, as well as without the CEO present in executive sessions • Directors meet with senior managers | |
New Term Limit | • • • Five new independent directors nominated or appointed over the last six years | |
Disciplined | • We pay for performance and we are committed to compensation discipline and governance • We enhanced our compensation programs to encourage investment for the future growth of our business and to include a modifier tied to total shareholder return, further aligning the performance of our NEOs to shareholder success | |
Equity | • Significant portion of senior management’s compensation is paid in deferred equity to continue to incentivize and align interests with the strategic and sustainable goals of the Company • Majority of | |
Accountability | • Majority voting policy for • No shareholder rights plan or poison pill • Shareholders owning 10% or more of our outstanding share capital have the right to convene a special meeting |
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OUR BOARD OF DIRECTORS AND ITS COMMITTEESProxy Statement Summary | Corporate Governance Highlights
Our Board of Directors and Its Committees
Committees of the Board of Directors | ||||||||||||
Board of Directors |
| Compensation | Nominating & Governance | Workplace and | ||||||||
Ann-Kristin Achleitner (Independent) | ||||||||||||
Andrew M. Alper (Independent) | Chair | |||||||||||
Ashish Bhutani (Vice Chairman and CEO of LAM) | ||||||||||||
Richard N. Haass
(Independent) | ||||||||||||
(Chairman and CEO) | ||||||||||||
(Independent) | ||||||||||||
Iris Knobloch (Independent) | ||||||||||||
Philip A. Laskawy (Independent) | ||||||||||||
Jane L. Mendillo (Independent) | ||||||||||||
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Richard D. Parsons (Lead Independent Director) | Chair |
OUR LEADERSHIP STRUCTURE
Our Leadership Structure
Kenneth M. Jacobs serves as Chairman of theour Board of Directors or the Board, and Chief Executive Officer, or CEO. Richard D. Parsons serves as our Board’s Lead Independent Director, or Lead Director. This leadership structure provides:
unified leadership and focused vision;
◾ | unified leadership and focused vision; |
effective leadership in light of the nature of the Company and its experience and history; and
◾ | effective leadership in light of the nature of the Company and its experience and history; and |
fluid communication and coordination between the Board and management.
◾ | fluid communication and coordination between the Board and management. |
Our Lead Director, working with our other independent directors:
provides active oversight of the development and implementation of the Company’s strategy;
◾ | provides active oversight of the development and implementation of the Company’s strategy; |
provides thorough oversight and evaluation of CEO and senior management performance and compensation, and has regular discussions with our CEO about the Company and its strategy; and
◾ | provides thorough oversight and evaluation of CEO and senior management performance and compensation, and has regular discussions with our CEO about the Company and its strategy; and |
◾ | reviews and approves Board meeting schedules and agendas. |
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reviews and approves Board meeting schedules and agendas.
BOARD INDEPENDENCEProxy Statement Summary | Corporate Governance Highlights
Board Independence
Our Board has determined that nineeight of our Board’s eleventen current members (representing over 80% of our Board’s members), including our Lead Director, are independent under the listing standards of the New York Stock Exchange, or the NYSE, and our own Standards of Director Independence.
Each of the Board’s Committees, including the Compensation Committee, which ultimately determines the CEO’s compensation, consists entirely of independent directors, and each Committee has a different chairperson.
Each Committee Chair reviews and approves meeting schedules and agendas for their relevant Committee.
Executive sessions of our Board follow regularly scheduled Board meetings, and our Lead Director presides over executive sessions.
Many meetings of the Board’s Committees also include executive sessions, and the Chair of the applicable Committee presides over those executive sessions.
Our Board, through its Nominating & Governance Committee, evaluates itself annually.annually and feedback is discussed at meetings of the Nominating & Governance Committee and the Board.
RECENT CORPORATE GOVERNANCE DEVELOPMENTS
Workplace and Culture
Iris Knobloch joined the Board in April 2018.Our people are our most important asset and we strive to create a culture that fosters excellence, collaboration, innovation, empowerment, inclusion and engagement.
Richard D. Parsons was elected Lead Director by the independent members of the Board in February 2018.
The BoardIn 2018, we established the Workplace and Culture Committee in February 2018of our Board of Directors to assistprioritize attracting, motivating and advise management in continuingretaining talented people; to cultivate and reinforce a workplace culture that helps attract, motivate and retain talented people, allows them to thrive, fostersfoster productivity and professional and personal development, valuesdevelopment; to value diversity, equity and inclusion and encourages itsto encourage our people to engage with each other and their communities.
The Board filled or rotatedWe support diverse perspectives through employee affinity groups, which provide valuable insight and education programs to strengthen our inclusive culture, support career development and extend networking across the membershipsfirm and professional levels. Resources include:
Asian Alliance Network | Lazard Green | Family Network | ||
LatinX Alliance Network | Lazard Plus | Veteran’s Network | ||
Black & African American Employee Network | Lazard Proud | Lazard Women’s Leadership Network |
In 2022, JUST Capital ranked Lazard #3 in the capital market industry for workplace benefits, and Lazard ranked #5 in the 2022 Vault Banking 25 survey that assesses the best places to work for investment banking professionals in North America.
Our CEO hosted 17 small-group conversations with 350 junior to mid-level employees invited globally, as well as 4 town hall forums during 2021.
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Proxy Statement Summary | Shareholder Engagement and Corporate Sustainability Highlights
Shareholder Engagement and Corporate Sustainability Highlights
Shareholder Engagement
We highly value the perspectives of certain other Committees in early 2018:our stakeholders and proactively engage throughout the year.
In February 2018, Mr. Parsons became Chairman2021, we hosted meetings with approximately 70% of active institutional shareholders, based on reported holdings.
We prioritize long-term value creation and return of excess capital to shareholders through a flexible capital allocation strategy, while retaining sufficient capital for operating needs.
We believe we have a strong pay for performance compensation program with rigorous quantitative metrics and our employees hold a significant portion, approximately 20%, of fully diluted shares outstanding.
We assess feedback from our stakeholders and continually enhance dialogue and reporting of pertinent investor information.
Corporate Sustainability
We believe that the commitment to sustainability starts at the top – our Board has oversight responsibility for our global culture and sustainability efforts, while management provides senior-level input and review and strategic execution of our initiatives.
Our Nominating and Governance Committee has explicit responsibility for evaluating environmental, social and governance factors which arise in the operation of our business and, at its discretion, allocates key priorities to the Audit, Compensation and Workplace and Culture Committee. Richard N. Haass, Michelle Jarrard, Lady Sylvia JayCommittees for collaboration and Jane L. Mendillo also became members of the Workplace and Culture Committee.review.
In February 2018, Mr. Parsons joinedOur annual Corporate Sustainability Report, or CSR, addresses environmental, social and governance (ESG) topics important to our stakeholders and to our business. Key pillars to our CSR include:
◾ | Our People and Culture; |
◾ | Sustainable Investing; |
◾ | Business Ethics; |
◾ | Leadership & Governance; and |
◾ | Environmental Sustainability. |
Additional sustainability initiatives include:
◾ | Voluntary disclosures responding to the Sustainability Accounting Standards Board (SASB) and Task Force on Climate-Related Financial Disclosures (TCFD) frameworks; |
◾ | Our commitment to the Net Zero initiative to work in partnership with asset owner clients in developing decarbonization goals; and |
◾ | Our firm-wide initiative, Lazard Climate Center, which analyzes financial impacts of climate change and the energy transition on companies and markets. |
Enhancing our ESG performance is a part of our long-term strategy, our operations and our values. Our focus on ESG topics includes:
◾ | Evaluating environmental risks and opportunities in our investments and strategic advice; |
◾ | Continuing to foster our culture of excellence, including a rigorous approach to responsible business principles, education and training; |
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Proxy Statement Summary | Shareholder Engagement and Corporate Sustainability Highlights
◾ | Increasing our focus on diversity, inclusion and equality, including targeted metrics to increase our diversity profile firm-wide; and |
◾ | Leading with integrity and engaging with our stakeholders. |
We became a signatory to the Compensation CommitteeUK Stewardship Code, reaffirming our commitment to responsible allocation, management, and Lady Jay’s service on the Compensation Committee ended. Lady Jay remains a memberoversight of the Nominating & Governance Committeecapital to create long-term value for clients and the Workplace and Culture Committee.beneficiaries.
Ms. Knobloch joinedOur pledge to the NominatingCEO Action for Diversity & Governance Committee on April 1, 2018.Inclusion reaffirms our commitment to building a stronger and more diverse workforce, and expanding mentorship and allyship. Our people are instrumental to our ability to achieve sustainable growth.
Our commitment to the United Nations Global Compact, the world’s largest corporate sustainability initiative, solidifies our alignment with the ten principles addressing human rights, labor, environment and anti-corruption.
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EXECUTIVE COMPENSATION HIGHLIGHTSProxy Statement Summary | Executive Compensation Highlights
Executive Compensation Highlights
We encourage our shareholders to review the section titled “Compensation Discussion and Analysis” below for a comprehensive discussion of our executive compensation for 2018.2021.
OUR COMPENSATION PHILOSOPHYOur Compensation Philosophy
✓ | Retain and Attract Talented Individuals |
✓ | Pay for Performance |
✓ |
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| Pay with Long-Term, Forward-Looking Equity Awards |
✓ | Pay with Performance-Based, “At-Risk” Awards |
✓ | Structured Decision-Making Process |
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| Commitment to Compensation Governance |
✓ | Maintain Compensation Discipline |
✓ | Consistency on Deferred Compensation |
OUROur NEO COMPENSATION PROGRAM DESIGNCompensation Program Design
Fixed Compensation | Base Salary | Salary for | ||
Performance-based Compensation | Annual Cash Incentive | Determined | ||
Performance-based Equity Awards | Long-term |
Our CEO’s 2021 Compensation
Fixed Compensation | Base Salary | $ | 900,000 | 7% of Total Compensation | ||||
Performance-based Compensation | Annual Cash Incentive | $ | 3,075,000 | 23% of Total Compensation | ||||
Performance-based Equity Awards | $ | 9,275,000 | 70% of Total Compensation |
Our CEO’s 2021 Compensation Mix
Our CEO’s 2021 total compensation increased 33% compared to 2020, while our adjusted earnings per share, diluted, increased 40% compared to 2020.
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OUR CEO’S 2018 COMPENSATIONProxy Statement Summary | Executive Compensation Highlights
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Compensation Committee Considerations for Our CEO’s 2021 Compensation | ||
Total 2018 compensation awarded to our CEO decreased 8% compared to 2017. Our Compensation Committee considered the following factors in determining our CEO’s total compensation for 2018:2021:
our strongrecord financial performance in 2018,2021, as reflected in the 20182021 financial highlights described above;
above, in the 4% increase in our operating revenue in 2018 compared to 2017;
the 2% increase in our awarded operating income,context of a global pandemic and the 6% increase in our earnings from operations, in 2018 compared to 2017;associated global macroeconomic conditions;
the continued achievement of our financial goals described in this Proxy Statement;
our CEO’s active engagement throughout the pandemic and management of business operations through the global health crisis, including his extraordinary leadership in managing a remote work environment necessary to protect employee health and safety, demonstrating the value of the Company’s significant prior investments in technology infrastructure;
through our CEO’s leadership, the Company’s continued cultivation of a workplace culture that fosters productivity and professional and personal development, and promotes inclusion, diversity, equality and allyship, including the appointment of a firm-wide diversity, equality and inclusion senior manager, a commitment to increase diversity across the firm by 2025, and support of employee resource groups dedicated to enhancing education and community within our firm;
our CEO’s continued conceptualization of Lazard’s plan for growth, and his oversight of progress with regard to that plan;
our CEO’s continued support of expanded ESG efforts through the appointment of our head of corporate sustainability, the expanded oversight of environmental, social and governance priorities through our Nominating and Governance Committee, and the publication of voluntary disclosures in our CSR, SASB and TCFD publications;
our continued active communication with shareholders and the analyst community regarding our strategic plan, initiatives for profitable and sustainable growth and dedication to strengthening our outreach efforts and enhancing investor awareness of the Company’s business model, strategic objectives and accomplishments;
our CEO’s individual contributions toward client relationships and achievementsactivities in support of our Financial Advisory business;
our CEO’s active role in continuing to develop senior leaders and succession planning;
our CEO’s active role in the recruitment of key professionals across our businesses and the development of new investment strategies in our Asset Management business; and
our CEO’s strong desire to maintain compensationleadership in maintaining and fostering a culture of cost discipline throughout the firm, andreaffirming our commitment to take a leadership position in that regard.cost control.
Who Can Vote
Holders of our Class A common stock, as recorded in our share register at the close of business on March 4, 2019, the record date, may vote at the annual general meeting and any adjournment or postponement thereof. As of March 4, 2019, there were 129,766,091 shares of Class A common stock outstanding (including 15,400,593 shares held by our subsidiaries, which shares are not counted for purposes of the voting calculations set forth in this Proxy Statement).
Voting Your Proxy
You may vote in person at the meeting or by proxy. We recommend you vote by proxy even if you plan to attend the meeting. You can always change your vote at the meeting. Most shareholders have a choice of proxy voting by using a toll-free telephone number, voting through the Internet or, if they received their proxy materials by regular mail, completing the proxy card and mailing it in the postage-paid envelope provided. If you received your materials by regular mail, please refer to your proxy card or the information forwarded by your bank, broker or other holder of record to see which options are available to you. Executors, administrators, trustees, guardians, attorneys and other representatives voting on behalf of a shareholder should indicate the capacity in which they are signing, and corporations should vote by an authorized officer whose title should be indicated.
How Proxies Work
Lazard’s Board of Directors is asking for your proxy. Giving us your proxy means you authorize us to vote your shares at the meeting, or at any adjournment or postponement thereof, in the manner you direct. You may vote for all, some or none of our director nominees. You may also vote for or against the other proposals or abstain from voting. If you sign and return a proxy card or otherwise vote by telephone or the Internet but do not specify how to vote, we will vote your shares: FOR each of our director nominees; FOR anon-binding advisory vote regarding executive compensation as described in this Proxy Statement; and FOR ratification of the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for 2019. The enclosed proxy also confers discretionary authority with respect to amendments or variations to the matters identified in the Notice of 2019 Annual General Meeting and with respect to other matters that may be properly brought before the meeting or any adjournment or postponement thereof.
As of the date of this Proxy Statement, we do not know of any other business that will be presented at the meeting. If other business shall properly come before the meeting, the persons named in the proxy will vote according to their best judgment.Page 8
Revoking Your Proxy
You may revoke your proxy before it is voted by submitting a new proxy with a later date, by voting in person at the meeting or by sending written notification addressed to:
Lazard Ltd
30 Rockefeller Plaza
New York, New York 10112
Attn: Scott D. Hoffman
Secretary
Mere attendance at the meeting will not revoke a proxy that was previously submitted to us.
Quorum and Conduct of Meeting
In order to carry on the business of the meeting, we must have a quorum. This means that at least two shareholders must be present at the meeting, either in person or by proxy, and those shareholders must generally hold shares representing more than 50% of the votes that may be cast by all shareholders having the right to attend and vote at the meeting. The chairman of the meeting will have broad authority to conduct the meeting so that the business of the meeting is carried out in an orderly and timely manner. In doing so, the chairman will have broad discretion to establish reasonable rules for discussion, comments and questions during the meeting. The chairman also is entitled to rely upon applicable law regarding disruptions or disorderly conduct to ensure that the meeting is conducted in a manner that is fair to all participants.
Attendance at the Annual General Meeting
Only shareholders, their proxy holders and our guests may attend the meeting. Space is limited and admission to the meeting will be on a first-come, first-served basis. Verification of ownership will be requested at the admissions desk. If you are a holder of record and plan to attend the meeting, please indicate this when you vote. When you arrive at the meeting, you will be asked to present photo identification, such as a driver’s license. If your shares are held in the name of your broker, bank or other nominee, you must bring to the meeting an account statement or letter from the nominee indicating that you were the beneficial owner of the shares on March 4, 2019, the record date for voting. If you want to vote your Class A common stock held in street name in person, you must obtain a written proxy in your name from the broker, bank or other nominee that holds your shares. If you wish to obtain directions to attend the meeting in person, you may send ane-mail to: investorrelations@lazard.com or call (212)632-6886.
INFORMATION ABOUT OUR ANNUAL GENERAL MEETING
AND THE SOLICITATION OF PROXIES
Votes Needed
We have adopted a majority vote policy described in additional detail under “Election of Directors—Majority Vote Policy” below, which generally requires that a director receive a majority of the votes cast in order to be elected in an “uncontested election of directors” (as defined below), though ourBye-laws state that directors are elected by a plurality of the votes cast. See “Election of Directors—Majority Vote Policy” below for additional information regarding our majority vote policy. Votes withheld from any director nominee will not be counted in such nominee’s favor. With respect to all other matters to be acted on at the meeting, the affirmative vote of a majority of the combined voting power of all of the shares of our Class A common stock present or represented and entitled to vote at the meeting is required.
As permitted by Bermuda law, we treat abstentions as present and entitled to vote for purposes of determining a quorum, and, in accordance with ourBye-laws, they would be counted in the calculation for determining whether any proposal received a majority vote at the meeting. With regard to “brokernon-votes”, we also treat such shares as present for purposes of determining a quorum, but they would not be counted in the calculation for determining whether the relevant proposal received a majority vote at the meeting. A “brokernon-vote” is a proxy submitted by a broker or other nominee in which the broker or other nominee does not vote on behalf of a client on a particular matter for lack of instruction when such instruction is required by the rules of the New York Stock Exchange, or the NYSE. Brokers may no longer use discretionary authority to vote “brokernon-votes” on matters that are not considered “routine”. The vote in connection with the ratification of the appointment of our independent registered public accounting firm (Item 3) is considered “routine”. The votes in connection with all other matters to be acted on at the meeting are not considered “routine”. If you do not submit voting instructions to your broker or other nominee, we expect that your shares will be treated as brokernon-votes.
Important Notice Regarding the Availability of Proxy Materials for the Annual General Meeting of Shareholders to Be Held on April 23, 2019
This Proxy Statement and the Company’s Annual Report on Form10-K for the fiscal year ended December 31, 2018, or the 2018 Annual Report, can be viewed on our website at www.lazard.com/investorrelations/. Most shareholders may elect to view future proxy statements and annual reports over the Internet instead of receiving paper copies in the mail. If you are a shareholder of record, you may choose this option by following the instructions provided when you vote over the Internet. If you hold your Class A common stock through a bank, broker or other holder of record, please refer to the information provided by that entity for instructions on how to elect to view our future proxy statements and annual reports over the Internet.
Cost of this Proxy Solicitation
We pay the expenses of preparing the proxy materials and soliciting this proxy. We have engaged MacKenzie Partners, Inc. to assist in the solicitation and distribution of proxy materials and we expect to pay MacKenzie Partners, Inc. a fee of approximately $15,000, plus reasonableout-of-pocket costs and expenses, for its services. We also reimburse brokers and other nominees for their expenses in sending these materials to you and obtaining your voting instructions. In addition to this mailing, proxies may be solicited personally, electronically or by telephone by our directors, officers, other employees or our agents. If any of our directors, officers and other employees assist in soliciting proxies, they will not receive additional compensation for those services.
Multiple Shareholders Sharing Same Address
If you and other residents at your mailing address with the same last name own shares of Class A common stock through a bank or broker, your bank or broker may have sent you a notice that your household will receive only one annual report and proxy statement for each company in which the members of your household hold stock through that bank or broker. This practice of sending only one copy of proxy materials to holders residing at a single address is known as “householding”, and was authorized by the SEC to allow multiple investors residing at the same address the convenience of receiving a single copy of annual reports, proxy statements and other disclosure documents if they consent to do so. If you did not respond that you did not want to participate in householding, you were deemed to have consented to the process. If you did not receive a householding notice from your bank or broker, you can request householding by contacting that entity. You also may revoke your consent to householding at any time by contacting your bank or broker.
If you wish to receive a separate paper copy of this Proxy Statement or the 2018 Annual Report, you may call (212)632-6886, visit our website at www.lazard.com/investorrelations/, send ane-mail to: investorrelations@lazard.com or write to:
Lazard Ltd
30 Rockefeller Plaza
New York, New York 10112
Attn: Investor Relations
ELECTION OF DIRECTORS
Our Board of Directors is divided into three classes. Members of each class serve for a three-year term. Shareholders elect one class of directors at each annual general meeting. At this annual general meeting, shareholders will vote on the election of the three nominees described below for a term ending at the 20222025 annual general meeting.
The following section contains information provided by the nominees and continuing directors about their principal occupation, business experience and other matters. Each nominee is aDr. Haass, Ms. Mendillo and Mr. Parsons are current directordirectors of the Company andCompany. Each nominee has indicated to us that he or she will serve if elected. We do not anticipate that any nominee will be unable or unwilling to stand for election, but if that happens, your proxy may be voted for another person nominated by the Board.
Director Attributes Anticipated Following our 2022 Annual General Meeting
BOARD OF DIRECTORS’ RECOMMENDATION
The Board of Directors recommends a vote FOR the election of each nominee listed below. |
Unless otherwise directed in the proxy, the persons named in the proxy will vote FOR each nominee listed below.
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Item 1: Election of Directors | Nominees for Election
NOMINEES FOR ELECTION AS DIRECTORSInformation About the Director Nominees, Continuing Directors and Director Joining the Board
FOR A THREE-YEAR TERM EXPIRING IN 2022Nominees for Election as Directors for a Three-Year Term Expiring in 2025
Age:
Director since April 2016 Committees: • Nominating & Governance • Workplace and Culture | Richard N. Qualifications: Dr. Haass was selected to be a director of Lazard because of his global perspective, fostered over many years at the highest levels of engagement, as well as his background and experience in government service. |
Age:
Director since April 2016 Committees: • Audit • Workplace and Culture | Jane L. Qualifications: Ms. Mendillo was selected to be a director of Lazard because of her unique financial perspective, having successfully stewarded Harvard Management Company through the financial crisis, and her extensive experience in the field of asset management. |
Age:
Director since June 2012 Committees: • Compensation • Nominating & Governance • Workplace and Culture (Chair) | Richard D. Parsons |
Officer of Dime Bancorp, Inc. Among his numerous community and nonprofit activities, Mr. Parsons is Qualifications: Mr. Parsons was selected to be a director of Lazard because of his extensive and diverse leadership experience with both financial services andnon-financial services businesses. |
DIRECTORS CONTINUING IN OFFICE
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Item 1: Election of Directors | Nominees for Election
Directors Continuing in Office
(TERM EXPIRING IN 2020)Term Expiring in 2023)
Age:
Director since November 2009 | Kenneth M. Jacobs has served as Chairman of the Board of Directors and Chief Executive Officer of Lazard Ltd and Lazard Group since November 2009. Mr. Jacobs has served as a Managing Director of Lazard 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 Board of Trustees of the University of Chicago and the Brookings Institution. Mr. Jacobs earned an MBA from the Stanford University Graduate School of Business and a Bachelor’s Degree in Economics at the University of Chicago. Qualifications: Mr. Jacobs was selected to be the Chairman and Chief Executive Officer of Lazard because of his vision, intellect and dynamism, his proven track record of creativity in building new businesses, and his skills as a trusted advisor, collaborator and team leader. |
Age: 54 years Independent Director Director since January 2017 Committees: • • • Workplace and Culture | Michelle |
Qualifications: Ms. Jarrard was selected to be a director of Lazard because of her experience serving in senior leadership positions, including human capital development positions, within a major professional services firm. |
Age: 59 years Independent Director Director since April 2018 Committees: • • | Iris Knobloch is Chairwoman and Chief Executive Officer of I2PO, a special purpose acquisition company dedicated to the entertainment and leisure sector. Ms. Knobloch is also the Vice Chairman and Lead Independent Director of the board of directors of AccorHotels and is a governor of the American Hospital in Paris. Ms. Knobloch was a senior executive with WarnerMedia and its predecessor companies from 1996 to 2021, most recently as President of WarnerMedia in France, Germany, the Benelux, Austria and Switzerland. Before that, Ms. Knobloch was in charge of Time Warner’s International Relations and Strategic Policy for Europe. Previously, Ms. Knobloch was an attorney with Norr, Stiefenhofer & Lutz and with O’Melveny & Myers in Munich, New York and Los Angeles. Ms. Knobloch was a member of the board of directors of LVMH Moët Hennessy Louis Vuitton from April 2019 to July 2021 and a member of the board of directors of Central European Media Enterprises from April 2014 to June 2018. Ms. Knobloch received a J.D. degree from Ludwig-Maximilians-Universitaet and an L.L.M. degree from New York University.
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Item 1: Election of Directors | Nominees for Election
Philip A. Laskawy Age: 80 years Independent Director Director since July Committees: • Audit (Chair) • Compensation | Philip A. Laskawy served as Chairman and Chief Executive Officer of Ernst & Young from 1994 until his retirement in 2001, after 40 years of service with the professional services firm. Mr. Laskawy served as Chairman of the International Accounting Standards Board from 2006 to 2007, and as a member of the 1999 Blue Ribbon Committee on Improving the Effectiveness of Corporate Audit Committees. Mr. Laskawy is chairman of the board of directors of Covetrus, Inc., lead director of Henry Schein, Inc., and a member of the board of directors of Loews Corp. Qualifications: Mr. Laskawy was selected to be a director of Lazard because of his expertise in the areas of auditing and accounting, his qualifications as an “audit committee financial expert” and the unique perspective he brings as a former chief executive of a major professional services firm. |
Directors Continuing in Office
(Term Expiring in 2024)
Age: 56 years
Director since April Committees: • Audit • Nominating and Governance |
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Qualifications: Prof. Achleitner was selected to be a director of Lazard because of her |
DIRECTORS CONTINUING IN OFFICE
(TERM EXPIRING IN 2021)
Age:
Director since October 2012 Committees: • Audit • Compensation (Chair) | Andrew M. Qualifications: Mr. Alper was selected to be a director of Lazard because of his extensive experience with the financial and operational aspects of businesses that are comparable to Lazard, as well as his background and experience in government service. |
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Item 1: Election of Directors | Nominees for Election
Age:
Director since March 2010 | Ashish Qualifications: Mr. Bhutani was selected to be a director of Lazard because of his extensive background, experience and knowledge of the asset management industry, his role within the firm as Chief Executive Officer of LAM and Mr. Jacobs’ and the Board’s desire that Mr. Bhutani become a regular contributor to the Board’s deliberations. |
Director Joining the Board
Age:
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Item 1: Election of Directors | Majority Vote Policy
MAJORITY VOTE POLICYMajority Vote Policy
Our Board has adopted a majority vote policy in connection with the election of directors.
In an uncontested election of directors, any nominee who receives a greater number of votes “withheld” from his or her election than votes “for” his or her election will, within five days following the certification of the shareholder vote, tender his or her written resignation to the Chairman of the Board for consideration by the Nominating & Governance Committee. As used herein, an “uncontested election of directors” is an election in which the number of nominees is not greater than the number of Board seats open for election.
The Nominating & Governance Committee will consider such tendered resignation and, promptly following the date of the shareholders’ meeting at which the election occurred, will make a recommendation to the Board concerning the acceptance or rejection of such resignation. In determining its recommendation to the Board, the Nominating & Governance Committee will consider all factors deemed relevant by the members of the Nominating & Governance Committee including, without limitation, the stated reason or reasons why shareholders who cast “withhold” votes for the director did so, the qualifications of the director (including, for example, the impact the director’s resignation would have on the Company’s compliance with the requirements of the SEC, the NYSE and Bermuda law), and whether the director’s resignation from the Board would be in the best interests of the Company and its shareholders.
The Nominating & Governance Committee also will consider a range of possible alternatives concerning the director’s tendered resignation as members of the Nominating & Governance Committee deem appropriate including, without limitation, acceptance of the resignation, rejection of the resignation, or rejection of the resignation coupled with a commitment to seek to address and cure the underlying reasons reasonably believed by the Nominating & Governance Committee to have substantially resulted in the “withheld” votes.
The Board will take formal action on the Nominating & Governance Committee’s recommendation no later than 90 days following the date of the shareholders’ meeting at which the election occurred. In considering the Nominating & Governance Committee’s recommendation, the Board will consider the information, factors and alternatives considered by the Nominating & Governance Committee and such additional information, factors and alternatives as the Board deems relevant.
Following the Board’s decision on the Nominating & Governance Committee’s recommendation, the Company will promptly disclose, in a Form8-K filed with the Securities and Exchange Commission, the Board’s decision, together with an explanation of the process by which the decision was made. If the Board has not accepted the tendered resignation, it will also disclose the reason or reasons for doing so.
No director who, in accordance with this policy, is required to tender his or her resignation, shall participate in the Nominating & Governance Committee’s deliberations or recommendation, or in the Board’s deliberations or determination, with respect to accepting or rejecting his or her resignation as a director.
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INFORMATION REGARDING THE BOARD OF DIRECTORS
AND CORPORATE GOVERNANCE
Lazard is governed by a Board of Directors and various committees of the Board that meet throughout the year. Our Board has established four standing committees: the Audit Committee, the Compensation Committee, the Nominating & Governance Committee and the Workplace and Culture Committee. Each of the standing committees has adopted and operates under a written charter, all of which are available on our website at www.lazard.com/investorrelations/. Other corporate governance documents also are available on our website, including our Corporate Governance Guidelines and our Code of Business Conduct and Ethics. A copy of each of these documents is available to any shareholder upon request.
LEADERSHIP STRUCTURELeadership Structure
Chairman and Chief Executive Officer
Kenneth M. Jacobs has served as Chairman of the Board and CEO of the Company since November 2009. The Board carefully considered a variety of governance arrangements following the sudden death of the Company’s former Chairman and CEO in October 2009, including separating the roles of Chairman and CEO. The Board appointed Mr. Jacobs as the Company’s Chairman and CEO following this measured and comprehensive review. At the same time, the Board also recognized the need for strong independent perspectives to balance the combined Chairman and CEO positions and to avoid any potential conflicts. The Board created the Lead Director position in November 2009 to provide this balance.
The Board believes that the Company and its shareholders are best served by maintaining the flexibility to have either the same individual serve as Chairman and CEO or to separate those positions based on what is in the best interests of the Company and its shareholders at a given point in time. The Board believes that the members of the Board possess considerable experience, breadth of skills and unique knowledge of the challenges and the opportunities the Company faces and that the Board is best positioned to identify the person who has the skill and commitment to be an effective Chairman.
The Board believes there is no single best organizational model that is the most effective in all circumstances, and the Board retains the right to separate the positions of Chairman and CEO if it deems it appropriate in the future.
Lead Director
Mr. Parsons was originally appointed as the Lead Director for the Board in February 20182018. Mr. Parsons’s appointment was reconfirmed by the independent members of the Board.Board in February 2019, 2020, 2021 and 2022. Mr. Parsons is a strong, independent and active Directordirector with clearly defined leadership authority and responsibilities. In addition to his role as Lead Director, Mr. Parsons serves as Chair of the Workplace and Culture Committee and as a member of the Compensation Committee and the Nominating & Governance Committee.
The responsibilities and duties of the Lead Director include the following:
presiding at meetings of the Board in the absence of the Chairman, including the executive sessions of the independent members of the Board, and providing feedback to the CEO, other senior executives and key managing directors, as appropriate, from such executive sessions of the independent directors;
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Information Regarding the Board of Directors and Corporate Governance | Leadership Structure
for the purpose of facilitating timely communication, serving as a liaison between (1) the independent directors (including committee chairpersons) and (2) the CEO, other senior executives and, in consultation with the CEO, key managing directors regarding significant matters (without impeding or replacing direct communication between the CEO and other directors or between or among other directors);
with input from the other independent directors, (1) reviewing and approving Board meeting schedules, as well as the agendas for such meetings, and (2) calling meetings of the independent directors and setting the agendas in connection with such meetings;
reviewing and approving information to be sent to the Board in advance of Board meetings;
together with the Board, providing oversight and advice to the CEO regarding corporate strategy, direction and implementation of initiatives;
in consultation with the CEO, identifying and supporting talented individuals within the Company;
being available for consultation or direct communication with significant shareholders;
together with the Compensation Committee, conducting periodic performance appraisals of the CEO;
coordinating the activities of the chairpersons of Board committees; and
performing such other duties as the Board may from time to time delegate to the Lead Director.
Our Lead Director also presides at meetings of the Board, or the relevant portions of such meetings, when it would not be appropriate for our Chairman and CEO to preside.
The Board believes Mr. Jacobs serving as Chairman and CEO and Mr. Parsons serving as a separate and independent Lead Director provides the best form ofmost effective leadership for the Company at the present time, offers an appropriate balance between the roles and provides a satisfactory counterbalance to the combined role of Chairman and CEO.
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Information Regarding the Board of Directors and Corporate Governance | Shareholder Engagement
Prepare Our Board monitors and assesses • Performance and outlook • Strategy and growth opportunities • Investment and capital return • Investor ownership trends • Governance best practices | Engage Executive management is proactive • Meets with investment community regularly to discuss market trends, performance and outlook • Provides two-way dialogue to deepen insights and augment perception | |||||||||||
Respond Our Board and executive management identify and implement enhancements • Transparency and disclosure practices • Team and viewpoint refreshment • Long-term focus throughout economic cycles | Evaluate Shareholder perspective • Investment themes, market sentiment, changes in risk profile • Economic and macro background • Fundamental and relative performance • Shareholder voting results | |||||||||||
We highly value engagement with our shareholders and maintain an active dialogue through individual and small-group meetings as well as participation in investment conferences. We engage with our shareholders and potential investors throughout the year on a wide variety of topics, such as business strategy, market conditions, financial performance, competitive landscape, capital allocation, regulatory and governance changes, and environmental and social responsibility. In 2020, our shareholder engagement transitioned to a virtual format, which we continued for the majority of 2021, following the onset of the global COVID-19 pandemic. Despite the restrictions placed on travel and meetings, our engagement with our shareholders continued at a consistent pace, although the ability to meet new investors and build relationships was impacted in some respects by the unprecedented and critical situation. We have seen widespread adoption of virtual meeting formats and believe this method of interaction will become the more normal course of business, facilitating even more extensive engagement, while the eventual easing of travel restrictions should enable us to incorporate more in-person introductory meetings over time. |
We conduct significant outreach each year following the distribution of our annual proxy. We value our shareholders’ opinions and continually take into consideration their feedback as part of our ongoing evaluation of our executive compensation programs. Our strong foundation of shareholder engagement has resulted in a history of implementing changes over the years based on shareholder feedback, such as recently implementing a tenure policy for independent directors that enhances Board refreshment by limiting independent directors to serving four complete terms (in addition to any partial term), and making significant enhancements to the performance metrics applicable to our NEOs in order to better align their compensation with shareholder benefits.
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Information Regarding the Board of Directors and Corporate Governance | Shareholder Feedback on Executive Compensation
Shareholder Feedback on Executive Compensation
We received strong support (96%) at our 2021 Annual General Meeting of Shareholders.
Our Compensation Committee focused on the feedback received from shareholders regarding executive compensation-related matters during our outreach in 2020 and 2021. At our 2021 Annual General Meeting of Shareholders, we received the support of 96% of our shareholders regarding executive compensation-related matters. This compares to our historical trend of over 95% shareholder support for our program for each year since 2015 (other than 2020). Our Compensation Committee and our NEOs view our shareholder advisory votes regarding executive compensation as strong support of our compensation program, our compensation decisions and our commitment to excellence in compensation governance.
During 2021, we reached out to approximately 85%of our institutional shareholders. Shareholder feedback, as well as feedback from other parties, was reviewed by the Compensation Committee in making its pay determinations in respect of 2021 compensation. A summary of the key areas of the feedback we received in recent years and our response is provided in the chart below.
Topic Discussed | Our Response | |
Long-Term Performance Metric Alignment with Shareholder Value | In order to better align NEO compensation with the actual experience of our shareholders, we enhanced the performance metrics applicable to our long-term incentive awards beginning with those granted in February 2021 in respect of 2020 compensation to include a modifier based on our total shareholder return relative to the S&P 1500, or relative TSR. Additionally, beginning with our long-term incentive awards granted in February 2021 in respect of 2020 compensation, we implemented a post-investment operating margin metric, which we refer to as PI-OMM, and post-investment capital return ratio, which we refer to as PI-CRR, which are enhancements to the Capital Return Ratio, or CRR, and Operating Margin Metric, or OMM, to ensure that our metrics support our long-term strategic objectives, which include making investments in our business to drive profitable growth and continuing our focus on returning excess capital to shareholders. In 2021, we also removed volatility adjusted revenue growth ratio (VARGR) as a metric to simplify the program and to recognize that recent M&A activity in our industry has limited the universe of appropriate peers to which we can compare ourselves for the purposes of calculating the VARGR result. | |
Annual Banking of Awards | Historically, 25% of the total target number of shares of Class A common stock subject to the applicable long-term performance-based equity incentive award would no longer be at risk based on achievement of the performance criteria in a given year. Beginning with long-term incentive awards granted in 2021 in respect of 2020 compensation, the Compensation Committee eliminated this feature. As a result of this change, in the case of our long-term incentive awards granted in February 2022 and February 2021 in respect of 2021 and 2020 compensation, respectively, long-term performance-based equity incentive awards remain subject to full risk of forfeiture until the end of the three-year performance period, regardless of the achievement of interim results, further aligning the interests of our NEOs with those of our shareholders. |
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Information Regarding the Board of Directors and Corporate Governance | Shareholder Feedback on Executive Compensation
Topic Discussed | Our Response | |
Peer Benchmarking | Lazard’s selected peer group reflects the competitive market for talent in which we compete, and we aim to align compensation within this group. We believe other peer groups generated by broad industry categorization and market capitalization do not accurately reflect the businesses and competitive market for intellectual talent in which we operate, and the value of our alignment of employee interests with shareholder value through our compensation program. Shareholder feedback on this topic was supportive of our methodology and results, and recognized that our unique combination of business, size and global footprint mean that we have few direct peers. However, we continually assess our peer groups and adapt as companies, markets and other situations evolve. | |
Equity Compensation Dilution | We are committed to buying back shares to offset the potentially dilutive impact of equity compensation each year and have done so each year since 2012. Our fully diluted share count has declined 14% from year-end 2017 and we have a share repurchase authorization to continue our practice of offsetting the potentially dilutive impact of equity compensation, and to purchase shares in excess of the shares granted annually. Shareholder feedback on this topic noted that the burn rate calculated by some methodologies is above a broad sector industry average. We believe this is due to the nature of (1) our cost structure in which our employees are our greatest asset and thus compensation is the largest component of our expenses and (2) our compensation structure which prioritizes shareholder alignment and long-term value creation through the use of equity-based compensation. Our demonstrated history of offsetting the potentially dilutive impact of the equity component of our compensation programs is an important aspect of our equity compensation practices and most shareholders are supportive of maintaining our stock-based compensation program. We believe these practices reflect a responsible approach to equity compensation. | |
Annual Incentive Awards | Our annual incentive compensation reflects the achievement of Company goals and individual contributions of our management team toward these goals as well as our progress with regard to execution of our plan for growth, which are described for each NEO under the section titled “2021 Compensation for Each of Our NEOs—Compensation Decisions”. Consistent with competitive market practice in our industry, the Compensation Committee establishes annual incentive compensation based on a rigorous assessment of performance and, in the case of the CEO, his performance in reference to goals and objectives set during the year. This approach allows us to balance the objective, pre-established elements of our compensation program with the need to tailor overall compensation in a given fiscal year to reflect particular circumstances and appropriately incentivize our NEOs. Shareholder feedback on this topic reflected an understanding of market practice in the financial services industry, our rigorous overall compensation program and the inclusion of qualitative factors on a short-term basis while maintaining discipline in our long-term compensation program overall. |
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Information Regarding the Board of Directors and Corporate Governance | Corporate Sustainability Report
Corporate Sustainability Report
Creating Value Responsibly
Our CSR, SASB and TCFD reports and additional policies, statements and sustainability information are available on our website at www.lazard.com/investorrelations/.
Lazard published its third annual Corporate Sustainability Report in 2021, reporting on fiscal year 2020, which focuses on the core topics prioritized by our stakeholders—employees, clients, shareholders, business partners and communities. This voluntary disclosure provides a summary of the principles, programs and policies that reflect our commitment to a sustainable future. Lazard built upon its annual sustainability reporting and ESG transparency by expanding its voluntary disclosures to include a TCFD report, an updated Environmental Statement and an Information Security and Data Privacy Statement. As a global firm that has advised clients on their most important financial matters during our more than 170-year history, the principles of sustainability are ingrained in Lazard’s culture and operations.
We are committed to serving our clients, developing our people and supporting our communities. Our Board and management are focused on cultivating a workplace environment that attracts and retains exceptional talent and a diversity of perspectives. Encouraging an engaged workplace where employees feel connected allows them to thrive personally and professionally and is instrumental to our ability to achieve sustainable growth and create lasting value. We see the integration of sustainability considerations into our compensation program as an essential part of our commitment to operating reasonably and sustainably.
We recognize our business has an effect beyond the profits we generate. While we seek to generate value for our shareholders, we also seek to create long-term societal value through our contributions to global economies, our reputation for innovation, our culture of quality and prudence, and our belief in generating a sustainable future for the next generation. As a global investor, we see the integration of sustainability considerations as an essential part of any long-term investment process. Companies and sovereign issuers that operate in a sustainable way, with a recognition of how their activities intersect with the environment and society, are likely to represent more attractive long-term investment opportunities. Those that do not, are at risk of structural decline as they become subject to regulatory, commercial, or financial pressure to change.
As a firm, we have developed the Guiding Principles of excellence, empowerment and engagement to help us to achieve the greatest impact for all Lazard stakeholders. These Guiding Principles reflect our distinctive culture and our aspirations for the future. They have shaped our success in the past and point the way forward toward sustainable growth.
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Information Regarding the Board of Directors and Corporate Governance | Board Committees
AUDIT COMMITTEE | COMPENSATION COMMITTEE | |||||||||||||||||||
Members: Philip A. Laskawy (Chair) Ann-Kristin Achleitner Andrew M. Alper Michelle Jarrard Jane L. Mendillo Meetings in 2021: 5 | Members: Andrew M. Alper (Chair) Michelle Jarrard Iris Knobloch Philip A. Laskawy Richard D. Parsons Meetings in 2021: 10 | |||||||||||||||||||
Primary Responsibilities: The Audit Committee assists our Board of Directors in fulfilling its oversight responsibilities with respect to: • monitoring the integrity of our financial statements; • assessing the qualifications, independence and performance of our independent auditor; • evaluating the performance of our internal audit function; • reviewing the Company’s major financial risk exposures and the steps taken to monitor and control such exposures; and • monitoring the Company’s compliance with certain legal and regulatory requirements. The Audit Committee also selects and oversees Lazard’s independent auditor, and pre-approves all services to be performed by the independent auditor pursuant to the Audit Committee pre-approval policy. All members of the Audit Committee are independent as required by Lazard and the listing standards of the NYSE. All members of the Audit Committee are financially literate, as determined by the Board of Directors. The Board of Directors has determined that Mr. Laskawy has the requisite qualifications to satisfy the SEC’s definition of “audit committee financial expert”. | Primary Responsibilities: The Compensation Committee assists the Board of Directors by overseeing our firm-wide compensation plans, policies and programs and has full authority to: • determine and approve the compensation of our CEO; • review and approve the compensation of our other executive officers; • review our compensation programs as they affect all managing directors and employees; and • administer the Lazard Ltd 2018 Incentive Compensation Plan (the “2018 Plan”), the Lazard Ltd 2008 Incentive Compensation Plan (the “2008 Plan”), and any successor plans. All members of the Compensation Committee are independent as required by Lazard and the listing standards of the NYSE. From time to time the Compensation Committee has established special equity award pools pursuant to the 2018 Plan for the express purpose of granting awards to new hires and, under certain circumstances, retention awards to key employees. The Compensation Committee granted to our CEO (or his designee) authority to determine the amount, terms and conditions of all awards made from these pools and required that the Compensation Committee be updated on all such awards at regularly scheduled meetings. The Compensation Committee directly engaged Compensation Advisory Partners, or CAP, an independent compensation consulting firm, to assist it with various compensation analyses, as well as to provide consulting on executive compensation practices and determinations, including information on equity-based award design. CAP generally attends meetings of the Compensation Committee. In addition, Kenneth M. Jacobs, our CEO, generally attends meetings of the Compensation Committee and expresses his views on the Company’s overall compensation philosophy. Following year end, Mr. Jacobs makes recommendations to the Compensation Committee as to the total compensation package (salary, annual cash incentive and long-term incentive compensation awards) to be paid to each of the other executive officers. |
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Information Regarding the Board of Directors and Corporate Governance | Board Committees
NOMINATING & GOVERNANCE COMMITTEE | WORKPLACE AND CULTURE COMMITTEE | |||||||||||||||||||
Members: Iris Knobloch (Chair) Ann-Kristin Achleitner Richard N. Haass Richard D. Parsons Meetings in 2021: 4 | Members: Richard D. Parsons (Chair) Richard N. Haass Michelle Jarrard Jane L. Mendillo Meetings in 2021: 4 | |||||||||||||||||||
Primary Responsibilities: The Nominating & Governance Committee assists our Board of Directors in promoting sound corporate governance principles and practices by: • leading the Board in an annual review of its own performance; • identifying individuals qualified to become Board members, consistent with criteria approved by the Board; • recommending to the Board the director nominees for the next annual general meeting of shareholders; • recommending to the Board director nominees for each committee of the Board; • recommending to the Board compensation of non-executive directors; • reviewing and reassessing the adequacy of the Corporate Governance Guidelines; and • reviewing the Company’s annual corporate sustainability reporting, as well as other sustainability matters, including environmental and social topics, and recommending any related action to the Board. The Nominating & Governance Committee also is responsible for recommending to the Board of Directors standards regarding the independence of non-executive directors and reviewing such standards on a regular basis to confirm that such standards remain consistent with sound corporate governance practices and with any legal, regulatory or NYSE requirements. All members of the Nominating & Governance Committee are independent as required by Lazard and the listing standards of the NYSE. | Primary Responsibilities: The Workplace and Culture Committee assists and advises management in continuing to cultivate and reinforce a workplace culture that helps attract, motivate and retain talented people, allows them to thrive, fosters productivity and professional and personal development, values diversity and inclusion, and encourages its people to engage with each other and their communities by: • overseeing efforts by management to communicate, promote and embed principles integral to a workplace culture that attracts, motivates and retains the best people; • periodically discussing with management the development, implementation and effectiveness of the Company’s policies and strategies relating to workplace culture; and • reviewing efforts by management to enhance diversity and inclusion in the Company’s workforce, including at management levels. All members of the Workplace and Culture Committee are independent. |
ATTENDANCE
The Board held 11 meetings in 2021 and also met informally several times during 2021 to receive updates from our CEO regarding our response to the COVID-19 pandemic and its strategic, financial and employee health and safety implications. In 2021, overall attendance by our directors at meetings of the Board and its Committees averaged over 99%. Each such director attended at least 96% of the meetings of the Board and Committees on which he or she served (and that were held during the period for which he or she had been a director or Committee member, as applicable). In 2021, all of our directors attended the 2021 Annual General Meeting of Shareholders.
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RISK OVERSIGHTInformation Regarding the Board of Directors and Corporate Governance | Risk Oversight, Code of Business Conduct and Ethics, Communications with the Board
Management within each of Lazard’s operating locations is principally responsible for managing the risks within its respective business on aday-to-day basis. The Board, working together with the Audit Committee, undertakes a comprehensive review ofreviews the Company’s risk profile and risk management strategies at regular intervals. Members of the Company’s finance team, led by the Chief Financial Officer and the ChiefHead of Risk Officer,Management, also review with the Audit Committee categories of risk the Company faces, including any risk concentrations, risk interrelationships and financial and cyber risk exposures, as well as the likelihood of occurrence, the potential impact of those risks and the steps management has taken to monitor, mitigate and control such exposures. The Company’s Chief Information Officer and Chief Information Security Officer also frequently participate in these reviews. Updates on risks deemed material to the Company are reviewed at regular meetings of the Audit Committee and reported to the full Board. In addition, the Compensation Committee reviews compensation programs for consistency and alignment with Lazard’s strategic goals, and in connection therewith reviews Lazard’s compensation practices to assess the risk that they will have a material adverse effect on the Company.
Philip A. Laskawy (Chair), Andrew M. Alper, Steven J. HeyerCode of Business Conduct and Jane L. Mendillo
The Audit Committee met five times in 2018. The Audit Committee assists our Board of Directors in fulfilling its oversight responsibilities with respect to:
monitoring the integrity of our financial statements;
assessing the qualifications, independence and performance of our independent auditor;
evaluating the performance of our internal audit function;
reviewing the Company’s major financial risk exposures and the steps taken to monitor and control such exposures; and
monitoring the Company’s compliance with certain legal and regulatory requirements.
A detailed list of the Audit Committee’s functions is included in its charter, which is available on our website at www.lazard.com/investorrelations/.
The Audit Committee also selects and oversees Lazard’s independent auditor, andpre-approvesEthics all services to be performed by the independent auditor pursuant to the Audit Committeepre-approval policy. All members of the Audit Committee are independent as required by Lazard and the listing standards of the NYSE. All members of the Audit Committee are financially literate, as determined by the Board of Directors. The Board of Directors has determined that Mr. Laskawy has the requisite qualifications to satisfy the SEC’s definition of “audit committee financial expert”.
COMPENSATION COMMITTEE
Andrew M. Alper (Chair), Steven J. Heyer, Michelle Jarrard, Philip A. Laskawy and Richard D. Parsons
The Compensation Committee met nine times in 2018. The Compensation Committee assists the Board of Directors by overseeing our firm-wide compensation plans, policies and programs and has full authority to:
determine and approve the compensation of our CEO;
review and approve the compensation of our other executive officers;
review our compensation programs as they affect all managing directors and employees; and
administer the Lazard Ltd 2018 Incentive Compensation Plan, or the 2018 Plan, the Lazard Ltd 2008 Incentive Compensation Plan, or the 2008 Plan, and any successor plans.
A detailed list of the Compensation Committee’s functions is included in its charter, which is available on our website at www.lazard.com/investorrelations/. All members of the Compensation Committee are independent as required by Lazard and the listing standards of the NYSE.
From time to time the Compensation Committee has established special equity award pools pursuant to the 2018 Plan for the express purpose of granting awards to new hires and, under certain circumstances, retention awards to key employees (other than our NEOs). The Compensation Committee granted to our CEO (or his designee) authority to determine the amount, terms and conditions of all awards made from these pools and required that the Compensation Committee be updated on all such awards at regularly scheduled meetings.
The Compensation Committee directly engaged Compensation Advisory Partners, or CAP, an independent compensation consulting firm, to assist it with various compensation analyses, as well as to provide consulting on executive compensation practices and determinations, including information on equity-based award design. CAP generally attends meetings of the Compensation Committee. In addition, Kenneth M. Jacobs, our CEO, generally attends meetings of the Compensation Committee and expresses his views on the Company’s overall compensation philosophy. Following year end, Mr. Jacobs makes recommendations to the Compensation Committee as to the total compensation package (salary, bonus and incentive compensation awards) to be paid to each of the other NEOs.
NOMINATING & GOVERNANCE COMMITTEE
Steven J. Heyer (Chair), Richard N. Haass, Sylvia Jay, Iris Knobloch and Richard D. Parsons
The Nominating & Governance Committee met five times in 2018. The Nominating & Governance Committee assists our Board of Directors in promoting sound corporate governance principles and practices by:
leading the Board in an annual review of its own performance;
identifying individuals qualified to become Board members, consistent with criteria approved by the Board;
recommending to the Board the director nominees for the next annual general meeting of shareholders;
recommending to the Board director nominees for each committee of the Board; and
reviewing and reassessing the adequacy of the Corporate Governance Guidelines.
A detailed list of the Nominating & Governance Committee’s functions is included in its charter, which is available on our website at www.lazard.com/investorrelations/. The Nominating & Governance Committee also is responsible for recommending to the Board of Directors standards regarding the independence ofnon-executive directors and reviewing such standards on a regular basis to confirm that such standards remain consistent with sound corporate governance practices and with any legal, regulatory or NYSE requirements. All members of the Nominating & Governance Committee are independent as required by Lazard and the listing standards of the NYSE.
WORKPLACE AND CULTURE COMMITTEE
Richard D. Parsons (Chair), Richard N. Haass, Michelle Jarrard, Sylvia Jay and Jane L. Mendillo
The Board established the Workplace and Culture Committee in February 2018 to assist and advise management in continuing to cultivate and reinforce a workplace culture that helps attract, motivate and retain talented people, allows them to thrive, fosters productivity and professional and personal development, values diversity and inclusion, and encourages its people to engage with each other and their communities. The Workplace and Culture Committee met three times in 2018.
A detailed list of the Workplace and Culture Committee’s functions is included in its charter, which is available on our website at www.lazard.com/investorrelations/. All members of the Workplace and Culture Committee are independent.
ATTENDANCE
The Board met seven times in 2018. In 2018, overall attendance by our directors at meetings of the Board and its Committees (held during the period for which the applicable director had been a director) averaged over 95%. Each such director attended at least 75% of the meetings of the Board and Committees on which he or she served (and that were held during the period for which he or she had been a director or Committee member, as applicable). In 2018, all of our directors attended the 2018 Annual General Meeting of Shareholders.
CODES OF BUSINESS CONDUCT AND ETHICS
We have adopted a Code of Business Conduct and Ethics that is applicable to all directors, managing directors, officers and employees of Lazard and its subsidiaries and affiliates. We have also adopted a Supplement to the Code of Business Conduct and Ethics for certain other senior officers, including our Chief Executive Officer, Chief Financial Officer and principal accounting officer. Each of these codes is available on our website at www.lazard.com/investorrelations/. A print copy of each of these documents is available to any shareholder upon request. We intend to disclose amendments to, or waivers from, the Code of Business Conduct and Ethics, if any, on our website.
COMMUNICATIONS WITH THE BOARD
Anyone who wishes to send a communication to ournon-executive directors as a group may do so by mail at the address listed below, and by marking the envelope, Attn:Non-Executive Directors of the Lazard Ltd Board of Directors.
Lazard Ltd
30 Rockefeller Plaza
New York, NY 10112
The Lazard Ltd Board of Directors
c/o the Corporate Secretary
These procedures are also posted on our website at www.lazard.com/investorrelations/.
Information Regarding the Board of Directors and Corporate Governance | Board Evaluation Process
Our Board is committed to continually improving all aspects of corporate governance and our Board and the individual directors regularly evaluate their own effectiveness and the effectiveness of the Board process. As part of that review, the Nominating & Governance Committee conducts an annual review in which each director completes a self-evaluation questionnaire to assess overall effectiveness, including with respect to strategic oversight, interactions with and evaluations of management, board culture, board structure and operation, governance policies and committee structure and composition. The results of these evaluations are aggregated and shared on an anonymous basis with the Nominating & Governance Committee, which then reviews and presents its findings to the full Board for discussion and feedback. Through this regular self-assessment, the Board identifies areas for further reflection and improvement and, as appropriate, updates or changes our existing practices. The Nominating & Governance Committee annually reviews, updates and approves the evaluation framework, including the director evaluation questionnaires, in light of changing conditions and shareholder interests.
Annual Process is Initiated | » | The Nominating & Governance Committee initiates the annual evaluation process by reviewing and updating the self-assessment process and approving the director self-evaluation questionnaires. | ||
Individual Director Evaluations & Self-Assessments | » | Each director completes an annual self-evaluation questionnaire to help evaluate whether the Board and each director are functioning effectively, including with respect to its interaction with management, and to provide an opportunity to reflect upon and improve the Board’s policies, procedures and structure. | ||
One-On-One Director Interviews | » | At the direction of the Nominating & Governance Committee, private interviews are periodically conducted with individual directors to discuss feedback. | ||
Review by Nominating & Governance Committee | » | The results of the director self-evaluation questionnaires are compiled and anonymized, then shared with the Nominating & Governance committee, which reviews and discusses the evaluations and highlights key areas for further discussion, reflection and improvement. | ||
Presentation of Findings | » | The Nominating & Governance Committee presents its findings to the full Board for discussion and feedback. Based on these findings, the Board assesses the overall effectiveness of the Board and identifies possible areas for further consideration and improvement. | ||
Feedback Incorporated | » | In response to feedback solicited from the Board, the Nominating & Governance Committee discusses areas of focus for improvement and works with management and the Board committees to develop appropriate action plans. Recent areas identified for continued consideration include instituting a new term limit policy for independent directors, refreshing required director qualifications, reassessing the board structure and enhancing the focus of materials presented to the Board and its Committees. |
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Information Regarding the Board of Directors and Corporate Governance | Policy on Director Qualifications and Nomination Process
Policy on Director Qualifications and Nomination Process
The Board’s Nominating & Governance Committee is responsible for evaluating and recommending to the Board proposed nominees for election to the Board of Directors. As part of its process, the Nominating & Governance Committee will consider director candidates recommended for consideration by members of the Board, by management and by shareholders. It is the policy of the Nominating & Governance Committee to consider candidates recommended by shareholders in the same manner as other candidates. Candidates for the Board of Directors must be experienced, dedicated and meet the highest standards of ethics and integrity. All directors represent the interests of all shareholders, not just the interests of any particular shareholder, shareholder group or other constituency. The Nominating & Governance Committee periodically reviews with the Board the requisite skills and characteristics for new directors, taking into account the needs of Lazard and the composition of the Board as a whole. A majority of our directors must satisfy the independence requirements of both Lazard and the NYSE. Likewise, each member of the Audit Committee must be financially literate and at least one member must possess the requisite qualifications to satisfy the SEC’s definition of “audit committee financial expert”. Once a candidate is identified, the Nominating & Governance Committee will consider the candidate’s mix of skills and experience with businesses and other organizations of comparable size, as well as his or her reputation, background and time availability (in light of anticipated needs). The Nominating & Governance Committee also will consider the interplay of the candidate’s experience with the experience of other Board members, the extent to which the candidate would be a desirable addition to the Board and any committees of the Board and any other factors it deems appropriate, including, among other things, diversity and inclusion. The Nominating & Governance Committee views diversity and inclusion broadly, encompassing differing viewpoints, professional experience, industry background, education, geographical orientation and particular skill sets, as well as race and gender.
Candidate Recommendation | Nominating & Governance Committee | Board of Directors | Shareholders | |||||||||||||||
As part of its regular review and recommendation process, the Nominating & Governance Committee will consider candidates recommended by the Board, by management and by shareholders. | The Nominating & Governance Committee evaluates candidates to ensure requisite experience, dedication, and integrity. The committee also considers the interplay of a candidate’s experience with that of other Board members, the needs of the Company, as well as other factors it deems appropriate, including, among other things, diversity and inclusion. | After candidates are recommended by the Nominating & Governance Committee, the Board evaluates each candidate, taking into consideration the needs of the Board, including independence requirements. | Our Board is committed to nominating the best candidates for election by our shareholders, who have the opportunity to elect three candidates to serve as directors at the 2022 Annual General Meetings of Shareholders. | |||||||||||||||
The Company continuously seeks to bring fresh perspectives to the board, demonstrated by the implementation of a new term limit policy for independent directors and nominating five new independent directors over the last six years. |
Shareholders wishing to recommend to the Nominating & Governance Committee a candidate for director at our 20202023 Annual General Meeting of Shareholders may do so by submitting in writing such candidate’s name, in compliance with the procedures of ourBye-laws, and along with the other information required by ourBye-laws, to the Secretary of our Board of Directors at: Lazard Ltd, Office of the Secretary, 30 Rockefeller Plaza, New York, New York 10112 between December 25, 2019January 18, 2023 and January 24, 2020.
Information Regarding the Board of Directors and Corporate Governance | Director Independence, Director Compensation for 2021
Pursuant to the corporate governance listing standards of the NYSE, the Board of Directors has adopted standards for determining whether directors have material relationships with Lazard. The standards are set forth on Annex A to this Proxy Statement. Under these standards, a director employed by Lazard cannot be deemed to be an “independent director”, and consequently Messrs. Jacobs and Bhutani are not independent directors of Lazard.
The Board of Directors has determined that none of our other directors haveor director nominees has a material relationship with Lazard under the NYSE corporate governance listing standards and the Board of Directors’ standards for director independence and, accordingly, that each of our directors and director nominees (other than Messrs. Jacobs and Bhutani) is independent under the NYSE corporate governance listing standards.
In making its determination, the Board of Directors carefully considered the engagement of Lazard’s Financial Advisory business by Haymaker Acquisition Corp., of which Mr. Heyer is the Chairman and Chief Executive Officer, in 2018. Pursuant to the engagement, Lazard provided financial advisory services to Haymaker Acquisition Corp. and may receive aggregate fees of approximately $3 million following consummation of a business combination transaction involving Haymaker Acquisition Corp. The Board of Directors noted that (i) the engagement terms were negotiated in the ordinary course of business on an arms-length basis, (ii) the potential revenue relating to the engagement is expected to be less than 1% of the gross revenue of both Lazard and Haymaker Acquisition Corp.’s successor in respect of any yearDirector Compensation for which payments would be made, and (iii) the engagement waspre-approved2021 by the Nominating & Governance Committee.
DIRECTOR COMPENSATION FOR 2018
Directors who are officers of the Company do not receive any fees for their service as directors. In 2018,2021, our directors’ compensation program provided that each of ournon-employeenon-executive directors would receive an annual cash retainer of $119,250$126,000 and an annual award of deferred stock units, or DSUs, with a grant date value of $145,750.$154,000. An additional annual retainer was paid to the Lead Director and the chairs of each committee of the Board of Directors as follows: the Lead Director, $50,000; the chair of the Audit Committee, $30,000; the chair of the Nominating & Governance Committee, $20,000; the chair of the Compensation Committee, $20,000; and the chair of the Workplace and Culture Committee, $20,000. The other members of the Audit Committee were paid an additional annual retainer of $20,000, and the other members of the Nominating & Governance Committee, the Compensation Committee and the Workplace and Culture Committee were paid an additional annual retainer of $15,000, in respect of each applicable committee. All additional annual retainers were payable 45% in cash and 55% in DSUs.
Cash compensation is paid out on a quarterly basis (on February 15, May 15, August 15 and November 15, or, in each case, the first business day thereafter), and the DSU awards described above are granted on an annual basis on June 1st of each year, or the first business day thereafter, except for initialpro-rated grants made to new directors upon their election or appointment to the Board of Directors, and to continuing directors upon their appointment to new Board Committees or positions. The number of DSUs granted is determined based on the NYSE closing price of our Class A common stock on the trading day immediately preceding the date of grant.
Non-employeeNon-executive directors may elect to receive additional DSUs in lieu of some or all of their cash compensation pursuant to the Directors’Directors Fee Deferral Unit Plan. DSUs awarded under this plan are granted on the same quarterly payment dates as cash compensation would have been received, and the number of DSUs is determined based on the NYSE closing price of our Class A common stock on the trading day immediately preceding the date of grant. Messrs. Alper, Haass Heyer and Parsons and Ms. Mendillo elected to participate in this plan during 20182021 and they have each elected to continue to participate in this plan during 2019.2022. Prior to his resignation from the Board of Directors in 2021, Mr. Heyer also participated in such program.
All DSUs awarded under these arrangements are converted to shares of our Class A common stock on aone-for-one basis and distributed to a director only after he or she resigns from, or otherwise ceases to be a member of, the Board of Directors. Dividend equivalent payments are made in respect of DSUs, which are paid in cash at the same rate and time that dividends are paid on shares of our Class A common stock.
The Nominating & Governance Committee regularly reviews our director compensation program. In 2018,
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Information Regarding the Nominating &Board of Directors and Corporate Governance Committee determined to increase base director compensation payable under the program by $15,000, effective January 1, 2019, representing the first raise in base director compensation since 2011.| Director Compensation for 2021
The table below sets forth the compensation paid to ournon-employeenon-executive directors during 2018.2021.
Directors | Fees Earned or Paid in Cash | Stock Awards (1) | Total | Fees Earned or Paid in Cash | Stock Awards (1) | Total | ||||||||||||
Ann-Kristin Achleitner | $ | 77,175 | $ | 188,696 | $ | 265,871 | ||||||||||||
Andrew M. Alper (2) | $137,336 | $167,797 | $305,133 | $ | 144,081 | $ | 176,029 | $ | 320,110 | |||||||||
Richard N. Haass (2) | $131,058 | $164,527 | $295,585 | $ | 139,563 | $ | 170,509 | $ | 310,072 | |||||||||
Steven J. Heyer (2) | $150,159 | $176,028 | $326,187 | |||||||||||||||
Steven J. Heyer (2) (3) | $ | 68,311 | $ | — | $ | 68,311 | ||||||||||||
Michelle Jarrard | $130,931 | $164,527 | $295,458 | $ | 148,500 | $ | 181,501 | $ | 330,001 | |||||||||
Sylvia Jay | $132,750 | $164,527 | $297,277 | |||||||||||||||
Sylvia Jay (4) | $ | 63,171 | $ | — | $ | 63,171 | ||||||||||||
Iris Knobloch | $78,750 | $179,713 | $258,463 | $ | 140,725 | $ | 173,292 | $ | 314,017 | |||||||||
Philip A. Laskawy | $139,500 | $170,524 | $310,024 | $ | 146,250 | $ | 178,765 | $ | 325,015 | |||||||||
Jane L. Mendillo (2) | $133,277 | $167,253 | $300,530 | $ | 141,819 | $ | 173,292 | $ | 315,111 | |||||||||
Richard D. Parsons (2) | $154,062 | $213,374 | $367,436 | $ | 171,051 | $ | 209,007 | $ | 380,058 |
(1) | The value of the DSUs reported in the table above is based on the grant date fair value of awards computed in accordance with FASB ASC Topic 718. See Note |
$181,501; Ms. |
(2) | Each of Messrs. Alper, Haass, Heyer and Parsons and Ms. Mendillo elected to defer all or a portion of their quarterly cash compensation into additional DSUs pursuant to the terms of the Directors Fee Deferral Unit Plan during |
(3) | Mr. Heyer, who served on our Board of Directors since June 2005, retired from the Board of Directors following the expiration of his term at the 2021 Annual General Meeting of Shareholders. |
(4) | Lady Jay, who served on our Board of Directors since March 2006, retired from the Board of Directors following the expiration of her term at the 2021 Annual General Meeting of Shareholders. |
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Information Regarding the Board of Directors and Corporate Governance | Beneficial Ownership
BENEFICIAL OWNERS OF MORE THANBeneficial Owners of More Than 5% OF OUR COMMON STOCKof Our Common Stock
Based on filings made under Section 13(d) and Section 13(g) of the Exchange Act, as of March 4, 2019,22, 2022, the only persons known by us to be beneficial owners of more than 5% of our Class A common stock were as follows:
Name and Address of Beneficial Owner | Number of Shares of Class A Common Stock Beneficially Owned (1) | Percentage of Shares of Class A Common Stock Beneficially Owned | Percentage of Voting Power (2) | Number of Shares of Class A Common Stock Beneficially | Percentage of of Class A Common Stock Beneficially | Percentage of Voting Power (1) | ||||||||||||||||||
The Vanguard Group | 11,484,712 | 8.85% | 10.04% | |||||||||||||||||||||
FMR LLC (2) | 11,171,120 | 9.91% | 10.98% | |||||||||||||||||||||
245 Summer Street Boston, MA 02210 | ||||||||||||||||||||||||
The Vanguard Group (3) | 9,730,707 | 8.63% | 9.56% | |||||||||||||||||||||
100 Vanguard Blvd. Malvern, PA 19355 | ||||||||||||||||||||||||
Ariel Investments, LLC (4) | 8,120,571 | 7.20% | 7.98% | |||||||||||||||||||||
200 East Randolph Street, Ste. 2900 Chicago, IL 60601 | ||||||||||||||||||||||||
Southeastern Asset Management, Inc. (5) | 5,779,872 | 5.13% | 5.68% | |||||||||||||||||||||
6410 Poplar Ave., Suite 900 Memphis, TN 38119 |
(1) | For purposes of this calculation, the voting power of our Class A common stock excludes 10,996,148 shares held by the Company’s subsidiaries as of March 22, 2022. |
(2) | Shares of our Class A common stock beneficially owned by FMR LLC are based on a Schedule 13G that was filed on February 9, 2022. |
(3) | Shares of our Class A common stock beneficially owned by The Vanguard Group are based on a Schedule 13G that was filed on February |
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(5) | Shares of our Class A common stock beneficially owned by Southeastern Asset Management, Inc. are based on a Schedule 13G that was filed on February 14, 2022. |
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Information Regarding the Board of Directors and Corporate Governance | Beneficial Ownership
BENEFICIAL OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERSBeneficial Ownership of Directors and Executive Officers
The following table shows the number of shares of our Class A common stock that each director, each NEO, and all directors and NEOsexecutive officers as a group have reported as owning beneficially, or otherwise having a pecuniary interest in, as of March 4, 201922, 2022 (including any equity awards which are scheduled to vest within 60 days of that date). To our knowledge, except as indicated in the footnotes to this table and pursuant to applicable community property laws, the persons named in the table have sole voting and investment power with respect to all shares of common stock beneficially owned by them. The address for each listed person is c/o Lazard Ltd, 30 Rockefeller Plaza, New York, New York 10112.
Name of Beneficial Owner | Shares of Class A Common Stock (assuming conversion of applicable equity awards) (1) (2) | Percentage of Class A Common Stock | Percentage of Voting Power (3) | Shares of Class A Common Stock (assuming conversion of applicable equity awards) (1) (2) | Percentage of Class A Stock | Percentage of Voting Power (3) | |||||||||||||||||||||
Kenneth M. Jacobs (4) | 1,988,779 | 1.53 | % | 1.74 | % | 2,375,938 | 2.11 | % | 2.33 | % | |||||||||||||||||
Ann-Kristin Achleitner | 4,007 | * | * | ||||||||||||||||||||||||
Andrew M. Alper | 37,442 | * | * | 64,942 | * | * | |||||||||||||||||||||
Ashish Bhutani (5) | 795,641 | * | * | ||||||||||||||||||||||||
Ashish Bhutani | 834,911 | * | * | ||||||||||||||||||||||||
Richard N. Haass | 18,145 | * | * | 44,785 | * | * | |||||||||||||||||||||
Steven J. Heyer | 101,348 | * | * | ||||||||||||||||||||||||
Michelle Jarrard | 8,209 | * | * | 24,205 | * | * | |||||||||||||||||||||
Sylvia Jay | 50,309 | * | * | ||||||||||||||||||||||||
Iris Knobloch | 3,483 | * | * | 18,898 | * | * | |||||||||||||||||||||
Philip A. Laskawy | 46,437 | * | * | 65,618 | * | * | |||||||||||||||||||||
Jane L. Mendillo | 21,670 | * | * | 48,741 | * | * | |||||||||||||||||||||
Richard D. Parsons | 44,086 | * | * | 76,740 | * | * | |||||||||||||||||||||
Scott D. Hoffman (6) | 207,620 | * | * | ||||||||||||||||||||||||
Evan L. Russo | 86,634 | * | * | ||||||||||||||||||||||||
Alexander F. Stern (7) | 409,297 | * | * | ||||||||||||||||||||||||
All directors and executive officers as a group (14 persons) | 3,819,100 | 2.94 | % | 3.34 | % | ||||||||||||||||||||||
Peter R. Orszag | 65,687 | * | * | ||||||||||||||||||||||||
Evan L. Russo (5) | 223,466 | * | * | ||||||||||||||||||||||||
Alexander F. Stern | 279,258 | * | * | ||||||||||||||||||||||||
All directors and executive officers as a group (15 persons) (6) | 4,355,939 | 3.86 | % | 4.28 | % |
* | Less than 1% beneficially owned. |
(1) | Performance-based restricted stock units, or PRSUs, performance-based profits interest participation rights, which we refer to as performance-based restricted participation units, or PRPUs, which, together with PRSUs, we refer to as Performance Restricted Units, or PRUs, restricted stock units, or RSUs, and other equity incentive awards granted to our executive officers that vest more than 60 days after March |
(2) | This column also includes shares of our Class A common stock that are subject to issuance in the future with respect to the DSUs issued to ournon-executive directors in the following aggregate amounts: Prof. Dr. Dr. Achleitner, 4,007 shares; Mr. Alper, |
(3) | For purposes of this calculation, the voting power of our Class A common stock excludes |
(4) | Includes |
(5) | Includes 83,493 shares of our Class A common stock |
(6) | Our executive officers also hold interests in LGACo 1 LLC, a Delaware series limited liability company, which is the sponsor and holder of certain equity interests in Lazard Growth Acquisition Corp. I (Nasdaq: LGACU), a blank check company, incorporated as a Cayman Islands exempted company. In addition, one of our non-executive directors has an |
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AN ADVISORY VOTE REGARDING EXECUTIVE COMPENSATION
The Board is committed to compensation governance and recognizes the significant interest of shareholders in executive compensation matters. WeAs a result of that commitment and in accordance with the requirements of Section 14A of the Exchange Act, we provide our shareholders annually with an opportunity to cast an advisory vote regarding the compensation of our Named Executive Officers, or NEOs as disclosed in this Proxy Statement.
As further discussed under “Compensation Discussion and Analysis” below, our Company performed well in 20182021 and delivered strong results.results in the context of global macroeconomic conditions. We believe that our compensation philosophy and discipline, as successfully implemented on a firm-wide basis by our NEOs during 2018,2021, contributed to our strong performance.
As this is an advisory vote, the result will not be binding on the Board, although our Compensation Committee, which is comprised solely of independent directors, will carefully consider the outcome of the vote when evaluating the effectiveness of our compensation policies and practices.
BOARD OF DIRECTORS’ RECOMMENDATION
The Board recommends that you vote FOR the following resolution:
The Board recommends that you vote FOR the following resolution: |
RESOLVED, that the shareholders of the Company vote on anon-binding, advisory basis FOR the compensation paid to the Company’s named executive officers, as disclosed pursuant to Item 402 of RegulationS-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion.
Unless otherwise directed in the proxy, the persons named in the proxy will vote FOR the foregoing resolution.
COMPENSATION DISCUSSION AND ANALYSISCompensation Discussion and Analysis
In addition to performing the roles and responsibilities described under “Information Regarding the Board of Directors and Corporate Governance—CompensationGovernance-Compensation Committee” above, our Compensation Committee, which is comprised entirely of independent directors, determined the 20182021 compensation of our NEOs: Kenneth M. Jacobs, Chairman and CEO; Evan L. Russo, Chief Financial Officer; Ashish Bhutani, CEO of LAM; Scott D. Hoffman, Chief Administrative Officer and General Counsel;Peter R. Orszag, CEO of Financial Advisory; and Alexander F. Stern, Chief Operating Officer and CEO of Financial Advisory.
2018 BUSINESS PERFORMANCE HIGHLIGHTSPresident.(1)
(1) | On March 31, 2022, each of Mr. Bhutani and Mr. Stern notified the Company that he would retire from Lazard later in 2022. See “Compensation of Executive Officers—Retention Agreements” below. |
2021 Business Strategy and Performance Highlights
We seek to make investments in our business to drive profitable growth and we are continuing our focus on returning excess capital to shareholders. As further discussed under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s Annual Report on Form10-K for the fiscal year ended December 31, 2018,2021, our Company performed well in 20182021 and delivered strong results.results in the context of a global pandemic and associated global macroeconomic conditions. We believe that our compensation philosophy and discipline, as successfully implemented on a firm-wide basis by our NEOs during 2018,2021, contributed to our strong performance.
Our Compensation Committee focused, among other things, on the following selected consolidated financial information in evaluating the performance of our NEOs and setting their performance-based compensation—that is, all compensation beyond their base salaries—for 2018.2021.
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Item 2: An Advisory Vote Regarding Executive Compensation | Compensation Discussion and Analysis
Selected Consolidated Financial Information
($ in millions, unlessother than per share information and as otherwise noted)
2018 | 2017 | |||||||
Operating Revenue(1) | $ | 2,755 | $ | 2,655 | ||||
% Growth | 4% | |||||||
Awarded Compensation Expense(1) | $ | 1,537 | $ | 1,476 | ||||
% of Operating Revenue | 55.8% | 55.6% | ||||||
AdjustedNon-Compensation Expense(1) | $ | 484 | $ | 461 | ||||
% of Operating Revenue | 17.6% | 17.4% | ||||||
Operating Income (based on Awarded Compensation Expense)(2) | $ | 734 | $ | 718 | ||||
% Growth | 2% | |||||||
Operating Margin (based on Awarded Compensation Expense)(3) | 26.6% | 27.0% | ||||||
Earnings from Operations(1) | $ | 754 | $ | 713 | ||||
% Growth | 6% | |||||||
Operating Margin (based on Earnings from Operations)(4) | 27.4% | 26.8% | ||||||
Return of Capital(5) | $ | 1,023 | $ | 716 | ||||
Ending Assets under Management ($ in billions) | $ | 215 | $ | 249 | ||||
% Growth | (14)% | |||||||
Total Shareholder Return (CAGR)(1-Year)(6) | (25)% | 36% | ||||||
Total Shareholder Return (CAGR)(3-Year)(6) | 0% | 8% |
2021 | 2020 | |||||||
Operating Revenue (1) | $ | 3,139 | $ | 2,524 | ||||
% Growth | 24% | (1)% | ||||||
Awarded Compensation Expense (1) | $ | 1,846 | $ | 1,510 | ||||
% of Operating Revenue | 58.8% | 59.8% | ||||||
Adjusted Non-Compensation Expense (1) | $ | 472 | $ | 432 | ||||
% of Operating Revenue | 15% | 17.1% | ||||||
Operating Income (based on Awarded Compensation Expense) (2) | $ | 821 | $ | 582 | ||||
% Growth | 41% | 1% | ||||||
Operating Margin (based on Awarded Compensation Expense) (3) | 26.2% | 23.1% | ||||||
Earnings from Operations (1) | $ | 831 | $ | 590 | ||||
% Growth | 41% | 1% | ||||||
Operating Margin (based on Earnings from Operations) (4) | 26.5% | 23.4% | ||||||
Return of Capital (5) | $ | 670 | $ | 365 | ||||
Net Income, as adjusted (6) | $ | 576 | $ | 410 | ||||
% Growth | 40% | 7% | ||||||
Per Share, diluted (6) | $ | 5.04 | $ | 3.60 | ||||
Ending Assets under Management ($ in billions) | $ | 274 | $ | 259 | ||||
% Growth | 6% | 4% | ||||||
Total Shareholder Return (CAGR) (1-Year) (7) | 7% | 12% | ||||||
Total Shareholder Return (CAGR) (3-Year) (7) | 12% | (1)% |
Endnotes to this Compensation Discussion and Analysis are located on page 69.
SELECTED 2018 BUSINESS PERFORMANCE HIGHLIGHTS56.
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Item 2: An Advisory Vote Regarding Executive Compensation | Compensation Discussion and Analysis
Our Response to COVID-19
Our CEO and senior management team took and continue to take preventative and protective actions to support our employees and enable us to continue to serve our clients at the highest level, while also continuing to execute on our business strategy. Our people were able to adapt quickly to the situation at the outset of the pandemic, reflecting the strength of the business and our management team, as well as the value of our investments in technology. Our 2021 results underscore the strong performance by both our businesses across our global franchise.
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✓ | Heightened caregiver support and wellness communications in light of the pandemic with a focus on mental health | ✓ | Encouraged continued community engagement among our employees, including through virtual events with local organizations and donation matching campaigns | |||
✓ | Implemented active global Work to Wellness programs and offerings, activities and resources to support total well-being | |||||
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SELECTED 2018 COMPENSATION HIGHLIGHTS
Selected 2021 Compensation Highlights
Our operating revenue in 2018 increased 4% compared to 2017, and we held our 2018 awarded compensation ratio essentially flat with 2017.
Total 2018 compensation awarded to our CEO decreased 8% compared to 2017. Our Compensation Committee considered the following factors in determining our CEO’s total compensation for 2018;2021:
our strong financial performance in 2018, as reflected in the 2018 financial highlights described above;
◾ | our record financial performance in 2021, as reflected in the 2021 financial highlights described above, in the context of a global pandemic and associated global macroeconomic conditions; |
the 4% increase in our operating revenue in 2018 compared to 2017;
◾ | the continued achievement of our financial goals described in this Proxy Statement; |
the 2% increase in our awarded operating income, and the 6% increase in our earnings from operations, in 2018 compared to 2017;
◾ | our CEO’s active engagement throughout the pandemic and management of business operations through the global health crisis, including his extraordinary leadership in managing a remote work environment necessary to protect employee health and safety, demonstrating the value of the Company’s significant prior investments in technology infrastructure; |
the continued achievement of our financial goals described in this Proxy Statement;
◾ | through our CEO’s leadership, the Company’s continued cultivation of a workplace culture that fosters productivity and professional and personal development, and promotes inclusion, diversity, equality and allyship, including the appointment of a firm-wide diversity, equality and inclusion senior manager, a commitment to increase diversity across the firm by 2025, and support of employee resource groups dedicated to enhancing education and community within our firm; |
our CEO’s individual contributions and achievements in support of our Financial Advisory business; and
◾ | our CEO’s continued conceptualization of Lazard’s plan for growth, and his oversight of progress with regard to that plan; |
◾ | our CEO’s continued support of expanded ESG efforts through the appointment of our head of corporate sustainability, the expanded oversight of environmental, social and governance priorities through our Nominating and Governance Committee, and the publication of voluntary disclosures in our CSR, SASB and TCFD publications; |
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our CEO’s strong desire to maintain compensation discipline throughout the firm,Item 2: An Advisory Vote Regarding Executive Compensation | Compensation Discussion and to take a leadership position in that regard.Analysis
◾ | our continued active communication with shareholders and the analyst community regarding our strategic plan, initiatives for profitable and sustainable growth and dedication to strengthening our outreach efforts and enhancing investor awareness of the Company’s business model, strategic objectives and accomplishments; |
◾ | our CEO’s individual contributions toward client relationships and activities in support of our Financial Advisory business; |
◾ | our CEO’s active role in continuing to develop senior leaders and succession planning; |
◾ | our CEO’s active role in the recruitment of key professionals across our businesses and the development of new investment strategies in our Asset Management business; and |
◾ | our CEO’s leadership in maintaining and fostering a culture of cost discipline throughout the firm, reaffirming our commitment to cost control. |
Approximately 81%89% to 92%93% of the total 2021 compensation of each NEO’s total 2018 compensationNEO was awarded in the form of performance-based compensation. As further discussed under “2018“2021 Compensation for Each of Our NEOs” below, our Compensation Committee granted this compensation after evaluating each such NEO’s performance in light of our financial results, including our achievement of the goals described above and each such NEO’s individual contributions to our achievementstrong performance during 2021, and, in the case of otherpre-determinedour CEO, his performance in reference to goals and objectives set in 2018.by the Compensation Committee during the year.
Approximately 65%70% of total 20182021 compensation awarded to Mr. Jacobs, and at least 50%49% of total 20182021 compensation awarded to Messrs. Russo, Bhutani, HoffmanOrszag and Stern, was awarded in the form ofat-risk performance-based profits interest participation rights, which we refer to as performance-based restricted participation units, or PRPUs, which were granted in February 2019.2022. PRPUs vest three years after the grant date contingent upon the achievement of three-year forward-looking performance goals, the satisfaction of service and other vesting conditions, and the achievement of a minimum value condition, which we refer to as the Minimum Value Condition, based on an amount of economic appreciation in the valueassets of our Class A common stock.Lazard Group.
As further discussed under “Design of Our Compensation Programs—Performance-Based Compensation—Refinement of Our Performance-based Equity Award Performance Metrics and Scoring Systems” below, for performance-based equity awards granted to our NEOs since 2017, the Compensation Committee has introduced new performance metrics, and modified certain scoring requirements, in light of the evolving macroeconomic environment and the Company’s goals and objectives, and limited certain
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As demonstrated by our compensation practices in 2018,2021, we remain committed to our goals regarding firm-wide awarded compensation expense. We have maintained control ondiscipline in respect of compensation costs and applied a consistent compensation deferral policy for our NEOs and other employees.
Key Enhancements and Refinements to Our Compensation Program
WeSince the distribution of our 2021 Proxy Statement, we have continued to applydiscuss our discipline on compensation expenseprograms with shareholders and other parties to our NEOs, even during periodskeep us informed of outstanding performance.current and evolving viewpoints.
OUR SHAREHOLDER ADVISORY VOTES REGARDING EXECUTIVE COMPENSATION
We Are CommittedSay on Pay Support. Our shareholders have expressed strong support for our compensation programs, and we received over 96% approval for our shareholder advisory vote regarding executive compensation in 2021, and from 2015 through 2019 we received over 95% approval. In 2020, 78.9% of our shareholders voted in favor of our shareholder advisory vote. In response to Ourshareholder feedback, our Compensation Programs
OurCommittee reassessed and enhanced our compensation programs accordingly and our Compensation Committee and our NEOs have viewedview the results of our recent shareholder advisory votes regarding executive compensationvote in 2021 as strong support in favor of our compensation programs and the responsive changes we made, our compensation decisions and our commitment to excellence in compensation governance.
We discussed our compensation programs with many of our shareholders and other parties during recent years in order to better understand their views regarding our compensation programs. Those views have informed our decisions regarding our compensation programs.
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Item 2: An Advisory Vote Regarding Executive Compensation | Compensation Discussion and Analysis
TSR. Additionally, we have continued to implement a post-investment operating margin metric, which we refer to as PI-OMM, and post-investment capital return ratio, which we refer to as PI-CRR, which are refinements to the Capital Return Ratio, or CRR, and Operating Margin Metric, or OMM, to ensure that our metrics support our long-term strategic objectives, which include making investments in our business to drive profitable growth and continuing our focus on returning excess capital to shareholders. In 2021, we removed volatility adjusted revenue growth ratio (VARGR) as a metric to simplify the program and to recognize that recent M&A activity in our industry has | business over time and improves their alignment with shareholder interests. |
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◾ | Corporate Governance Improvements—Board Refreshment. In 2021, we introduced a new board tenure policy for non-executive directors to ensure differing skills and perspectives are represented on the Board. |
Our Compensation Philosophy and Objectives
OUR COMPENSATION PHILOSOPHY AND OBJECTIVES
We Strive to Retain and Attract Talented Individuals. Our people are our most important asset. Itasset and are instrumental to our ability to achieve sustainable growth. We operate in a human capital intensive industry and it is imperative to continue to retain, attract and motivate executives and professionals of the highest quality and effectiveness.effectiveness, taking into account the cyclical nature of our businesses. Our employees’ 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 to our shareholders in the future.
We prudently invest in human capital, throughout the cycle. Our compensation programs focus on retaining and attracting proven senior professionals who have strong client relationships, valuable industry expertise and demonstrated money management skills, and who understand our culture and the needs of our business. Our Compensation Committee is committed to awarding these individuals levels of compensation that are commensurate with the value that they bring to the Company and appropriate in light of competitive compensation considerations.
Our compensation programs help to effectively retain our human capital. We believe our overall levels of compensation, as well as the structure of our long-term incentive awards, have helped us successfully retain and motivate our NEOs and other key employees. We believe our compensation policy has been effective, enabling us to retain and attract key people and resulting in low voluntary attrition.
Our compensation decisions are a reflection of employee performance aligned with our strategic and operational performance. In general, we compensate employees with competitive salaries and discretionary bonus structures, which are determined quantitatively and qualitatively.
We strive to create a culture that fosters excellence, collaboration, innovation, empowerment, inclusion and engagement. We have clear policies and procedures that enforce our commitment to diversity, equal pay for equal work, and a safe, inclusive workplace. Our policies prohibit discrimination
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Item 2: An Advisory Vote Regarding Executive Compensation | Compensation Discussion and Analysis
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We Pay for Performance.Performance. We firmly believe that pay should be tied to performance. Superior performance enhances shareholder value and is a fundamental objective of our compensation programs.
Most of the compensation we pay is based on performance. Compensation for each of our NEOs, managing directors and other senior professionals is viewed on a total compensation basis and then subdivided into two primary categories: base salary and incentive compensation dependent upon performance. Our performance-based incentive compensation awards, which we award annually, generally include cash incentives, Performance Restricted Units, or PRUs, profits interest participation rights, restricted stock units, or RSUs, restricted shares of our Class A common stock, or restricted stock, and Lazard Fund Interests, or LFIs. In February 2022, as in prior years, we applied a progressive formula based on total compensation for all of our NEOs, managing directors and senior professionals. Pursuant to this formula, as a recipient’s total compensation (salary, annual cash incentives and long-term incentive compensation) increases, a greater percentage of his or her total compensation is composed of long-term incentive awards. This formula is based on a sliding scale that effectively begins at 4% for some of our vice presidents and directors and generally reaches 70% (or 50% in our Asset Management business) for our highest paid managing directors. Incentive compensation can be highly variable from year to year. Incentive compensation is awarded based on our financial results in the immediately preceding fiscal year, as well as each individual’s contribution to those results and to the Company’s development, including business segment performance. We also consider competitive compensation practices in the financial services industry, as well as the views of our shareholders. We grant at-risk, forward-looking, performance-based long-term incentive awards. The Compensation Committee has adopted a long-term incentive program under which it grants at-risk performance-based awards to our NEOs that are based on three-year forward-looking performance metrics and that could involve potential payouts equal to zero. We grant long-term awards with multi-year vesting horizons. By subjecting our long-term equity awards to service-based and other vesting conditions, they help to retain our NEOs and employees, giving shareholders the stability of highly productive, experienced management and employees who help to perpetuate our strong firm culture. Additionally, PRUs, RSUs, profits interest participation rights, restricted stock and LFIs awarded to our NEOs, as applicable, and employees align the interests of our NEOs and employees with the interests of our shareholders—and link the value of these awards to performance—as the value that each individual realizes upon vesting depends:
for PRUs, on the performance of our business as measured against specific performance goals; and
Executive Compensation Practices:
X No Banking of Awards. In the case of awards granted in 2022 and 2021 in respect of 2021 and 2020 performance, respectively, all awards remain subject to full risk of forfeiture until the end of the applicable three-year performance period, regardless of the achievement of interim results.
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Compensation Program Design The key elements of our compensation program consist of base salaries, annual performance-based incentive compensation and long-term incentive compensation. We also have retention agreements with our NEOs that include severance protections. The following is a description of our compensation elements and the purposes each is designed to support: Overview of Our 2021 NEO Compensation Program
Page 37 Item 2: An Advisory Vote Regarding Executive Compensation | Other Compensation Matters Compensation Program Design-Base Salary Base
Base salaries are approved by our Compensation Committee and have remained unchanged for over ten years. During 2021, each of our NEOs was a party to a retention agreement or employment agreement with the Company that provided for a minimum annual base salary during the term of the agreement. Base salaries for our NEOs and any subsequent adjustments thereto are reviewed and approved by the Compensation Committee annually, after consultation with its independent compensation consultant. For 2021, the Compensation Committee once again determined to maintain base salaries at the minimum level set forth in the retention agreements.
Base salaries are the only component of our NEOs’ compensation that is not tied to performance.
Cash Profits Interest Participation Rights
PRPU Awards—General Terms
PRPU awards are performance-based awards that support the generation of shareholder value by aligning the long-term interests of our NEOs with those of our shareholders. Because the amount an individual realizes upon the vesting of PRPUs directly depends on the performance of our Page 38 Item 2: An Advisory Vote Regarding Executive Compensation | Other Compensation Matters
PRPU awards subject the NEOs to risk of total loss of a critical component of annual compensation. PRPU awards enhance our risk-based long-term incentive compensation programs by subjecting a substantial proportion of the total compensation payable to each of the NEOs who served as executive officers of the Company throughout the relevant fiscal year (approximately 70% of the 2021 compensation for our CEO and 49%-70% of the 2021 compensation for our other NEOs) to full risk of loss based upon the long-term future financial performance of our business, measured against objective, pre-established performance goals, as well as the achievement of the Minimum Value Condition. PRPU awards advance our goal of implementing transparent compensation practices. The performance metrics that must be satisfied in order for PRPUs to vest are tied to factors that we consider to be critical measures of our success and our ability to build value for our shareholders. Importantly, virtually all of the financial information regarding the Company that is used in measuring the Company’s performance with respect to these metrics is available to shareholders, including through our year-end earnings releases. PRPUs allow our shareholders to know, in advance, how this substantial component of compensation for the NEOs will be measured and paid. PRPU awards look to pre-established metrics of the Company’s performance and link payout directly to scores awarded for such metrics. The number of shares of our Class A common stock that a recipient will realize upon vesting of a PRPU award will be calculated by reference to metrics that were chosen because they are indicative of the Company’s overall performance, rather than individual performance, both on an absolute and relative basis. These metrics rely on criteria such as returns to shareholders, operating margin and, with respect to awards granted in 2020, revenue growth. At the measurement times, each of the metrics is assigned a score based on our performance. Such scores are generally weighted evenly over the performance period, with the ultimate level of payout for the awards determined by reference to the weighted numeric score, subject in the case of a total score above 2.0 to downward adjustments, as described below (and, in respect of PRPUs granted in 2022 and 2021, subject to further upward or downward adjustment after applying the relative TSR modifier). Payouts under PRPU awards will depend on long-term performance and could be equal to zero. The target number of shares of our Class A common stock subject to each PRPU is one. Based on the achievement of performance criteria, as determined by the Compensation Committee, the number of shares of our Class A common stock that may be received in connection with each PRPU award will range from zero to two times the target number (or, after applying a relative TSR modifier in the case of PRPUs granted in 2022 and 2021, such PRPUs will be subject to further upward or downward adjustment). Payouts under historical PRPU awards are determined, in part, by reference to the performance of our peers. As further discussed below, the financial metrics used to calculate payouts under PRPU awards granted prior to 2021 include a measure that evaluates our performance relative to our peers. By including this measure, our Compensation Committee intended that our performance be judged, in part, against what our competitor companies were able to accomplish under the same general market conditions during the performance period. The addition of a relative TSR modifier ensures that the PRPUs granted in 2022 and 2021 in respect of 2021 and 2020 performance, respectively, continue to have a relative performance component, and one that we believe more appropriately incentivizes our NEOs to invest in our business over time. PRPU awards also include restrictive covenants and other terms and conditions. In February 2020, 2021 and 2022, PRPUs were granted to each of our NEOs who served as executive officers of the Company throughout the relevant fiscal year. The number of shares of our Class A common stock that are subject to these PRPU awards was determined in the same way that the number was derived for all of our employees, by dividing the dollar amount allocated to be granted to the NEO as a PRPU Page 39 Item 2: An Advisory Vote Regarding Executive Compensation | Other Compensation Matters
PRPUs are allocated income, subject to vesting, in respect of dividends on our Class A common stock. In the event we declare cash dividends on our Class A common stock during the performance period for PRPUs, subject to satisfying the performance conditions and other relevant vesting criteria, our NEOs will be allocated income in respect of such dividends on a pro rata basis as if the PRPUs were exchanged for our Class A common stock, based on the extent to which performance conditions are actually achieved. In addition, from the date that the applicable dividend is paid to holders of our Class A common stock until the time of payment to the PRPU holder, unpaid distributions are credited with interest. The holder of PRPUs will receive distributions necessary to pay related taxes on the income allocations, but otherwise is not entitled to any amounts in respect of such allocations until applicable vesting conditions in respect of such PRPUs have been satisfied.
Awards granted in 2020 in respect of 2019 compensation continue to be subject to the previous CRR and OMM metrics, as well as a third ratio known as the Volatility Adjusted Revenue Growth Ratio, or VARGR. We removed VARGR as a metric beginning with awards granted in 2021 in respect of 2020 compensation in order to simplify the program and to recognize that recent M&A activity in our industry has limited the universe of appropriate peers to which we can compare ourselves for the purposes of calculating the VARGR result. The addition of a relative TSR modifier ensures that the 2022 PRPUs and 2021 PRPUs granted in respect of 2021 and 2020 performance, respectively, continue to have a relative performance component, and one that we believe more appropriately incentivizes our NEOs to invest in our business over time. These performance metrics also reflect, among other things, the manner in which the Compensation Committee measures the success that the relevant NEOs can achieve in executing our long-term strategy and managing our business for the benefit of our shareholders. Page 40 Item 2: An Advisory Vote Regarding Executive Compensation | Other Compensation Matters An explanation of each
Post-Investment Capital Return We endeavor to return capital to our shareholders, including by paying dividends to our shareholders and repurchasing equity,
We then determine our PI-CRR score based on the table set forth below. |
Lazard | |||||
PI-CRR < 65% | 0.00 | ||||
| 0.50 | ||||
| 1.00 | ||||
| 1.60 | ||||
| 2.25 |
If our PI-CRR is between levels set forth in the table above, we will use linear interpolation to determine our PI-CRR score based on the scores provided for the closest levels.
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Item 2: An Advisory Vote Regarding Executive Compensation | Other Compensation Matters
Post-Investment Operating Margin Metric – Absolute Performance MeasureMetric—Managing our Operating Costs
We aim to effectively manage our operating costs, which we broadly consider in the form of compensation andnon-compensation costs, and we regularly communicate our goals with respect to our management of these costs to our shareholders. By managing these costs over time, we seek to advance our ultimate objective of delivering a stable and successful operating margin. We also seek to retain the ability and appropriate incentives necessary to invest in our business over time for future profitable growth. In 2019, we implemented a new performancegrowth and not to discourage our NEOs from doing so. Pursuant to the PI-OMM metric, which we refer to as Operating Margin Metric, or OMM, pursuant to which our NEOs are incentivized to pursue these goals, including investments for profitable growth, and help us achieve our OMMPI-OMM objective over time. An explanation of the OMMPI-OMM metric is set forth below.
Step 1: | For each year during the performance period, we first calculate our awarded operating income for the year, net of certain items, which for this purpose is calculated as (A) our operating revenue for the year, minus (B) our awarded compensation expense and our adjustednon-compensation expense for the year, in each case adjusted to |
Step 2: | We divide the value obtained in Step 1 above by our operating revenue for the relevant year. The result is our |
Step 3: | We establish our |
period by (B) the sum of our operating revenue for each year in the performance period. We |
We then determine our PI-OMM score based on the table set forth below.
Lazard | |||||
| 0.00 | ||||
| 0.50 | ||||
| 0.75 | ||||
| 1.00 | ||||
| 1.75 | ||||
| 2.00 | ||||
| 2.25 |
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REFINEMENT OF OUR PERFORMANCE-BASED EQUITY AWARD
PERFORMANCE METRICS AND SCORING SYSTEMS
The Compensation Committee and our NEOs believe that our performance-based equity award program is an important system that supports the generation of shareholder value over time. In light of this important purpose of the program, as well as the fact that macroeconomic conditions and the Company’s goals and objectives evolve over time, the Compensation Committee and our NEOs reassess the program at regular intervals. We believe that, since our introduction of the program in 2012, this continual process has enhanced the link between the performance metrics, scoring system and other elements of the program that have applied to new awards and the Company’s performance over the subsequent three-year performance period to which those awards relate.Page 42
Since 2017, the Compensation Committee, its independent compensation consultant, CAP, and our NEOs have reviewed the program and implemented the following program refinements – all of which are consistent with the objectives of the program described under “Design of Our Compensation Programs–Performance-Based Compensation” above – in light of the Company’s evolving goals and objectives and to support the generation of shareholder value over time. We believe that the aggregate effect of these refinements has been to further increase the overall rigor of the program to better reflect the current environment and the Company’s goals and objectives, including the pursuit of investment opportunities that can drive the Company’s profitable growth.
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PERFORMANCE-BASED EQUITY AWARD SCORINGItem 2: An Advisory Vote Regarding Executive Compensation | Other Compensation Matters
Relative Total Shareholder Return—Addition of a Modifier to Further Align our NEOs with Shareholders
We implemented a new modifier to the scoring of the PRPUs that we granted in February 2022 and 2021 in respect of 2021 and 2020 compensation, respectively, based on our TSR relative to the S&P 1500 in order to establish a further link between the creation of value for our shareholders and the level of payout pursuant to our PRPUs. Relative TSR is calculated by comparing the change in the price of our Class A common stock (including reinvestment of dividends) over the performance period against the same metric for the S&P 1500. The share price at the grant date is used as the starting point for the calculation, and a trailing average share price is used to calculate share price at the end of the performance period. The award modifier will be based on our relative TSR for the entire three-year period.
The number of PRPUs earned over the three-year performance cycle will decrease or increase by up to 20% based on our TSR relative to the S&P 1500 as set forth in the table below.
Company’s TSR Relative to the S&P 1500 | Award Modifier | ||||
< 20th Percentile | 0.8x | ||||
= 20th Percentile ≤ 60th Percentile | 1.0x | ||||
≥ 80th Percentile | 1.2x |
If our relative TSR is between the 60th percentile and the 80th percentile, we will use linear interpolation to determine our award modifier based on the scores provided for the closest levels.
Scoring of Our Performance-Based Equity Awards
Generally, in respect of our PRPU grants made in February 2022, each of the threetwo performance metrics (VARGR, CRR(PI-CRR and OMM)PI-OMM) is weighted equally.equally to determine an initial score. The determinationscore in respect of PI-CRR and PI-OMM for the number of units that may ultimately vest under each award generallythree-year performance period will be based on the Company’s cumulative performance over the three-year performance period. The scoring corresponds directly to the level of achievement of performance goalsthe PI-CRR and PI-OMM metrics (taking into account any applicable interpolation)., provided that an overall score above 2.0 would automatically be reduced to 2.0.
The score resulting from achievement of the PI-CRR and PI-OMM metrics would then be modified by multiplying the score by the relative TSR modifier. For example, the achievement of a score of 1.501.5 for the PI-CRR and PI-OMM metrics for the cumulative three-year performance period and a relative TSR modifier of 1.2 would translate into payout of the award at 1.501.8 times the target level (subject to achievement of the service-based vesting condition and in the case of PRPUs, the Minimum Value Condition), but an overall score above 2.0 would automatically be reduced to 2.0, thereby capping payout of the award at two times the target level.. Similarly, the achievement of a score of 0.500.5 for the cumulative three-year performance period and a relative TSR modifier of 0.8 would translate into payout of the award at 0.500.4 times the target level (subject to achievement of the service-based vesting condition and in the case of PRPUs, the Minimum Value Condition).
Evaluation of Performance Results for Certain Outstanding PRPUs
EachEvaluation of Fiscal Year 2021 Performance for PRPUs Granted in 2020 with Respect to 2019 Compensation. In early 2022, the threeCompensation Committee evaluated the Company’s performance for 2021 with respect to VARGR, CRR and AOM with respect to the PRPUs awarded in 2020 with respect to 2019 compensation. The Compensation Committee determined that the Company’s performance on the applicable metrics will also be evaluated on an annual basis at the end of each fiscal year during the performance period. For this purpose, the same scoring ranges, weighting system and reference points will be used, but the evaluation will be based solely on performance during that fiscal year. If the Company achievesexceeded an aggregate score of at least 1.0 for 2021 for the PRPUs awarded with respect to such fiscal year, as confirmed2019 compensation. Accordingly, pursuant to the banking feature eliminated by the Compensation Committee thenbeginning with awards granted in 2021, 25% of the total target number of shares of our Class A common stock subjectunderlying the PRPUs awarded to the applicable award will no longer be at risk based on achievement of the performance criteria. Any such units will remain subject to the service-based vesting criteria described herein (and the total payoutNEOs with respect to such units could increase based on2019 compensation are not subject to further achievement of performance goals. A similar determination was made by the Compensation Committee in early 2021 in respect of the Company’s performance overfor 2020 on the performance period). The Compensation Committee retains full discretionthree applicable metrics and, in early 2021, 25% of the total target number of shares of our Class A common stock underlying the PRPUs awarded in 2020 with respect to the interpretation and application of the scoring systems described above.2019 compensation
Additional information regarding the scoring of outstanding performance-based equity awards is set forth below. The PRSUs granted in 2016 in respect of 2015 compensation are based on the Company’s performance with respect to VARGR, CRR and OLR. For a more detailed description of the OLR metric and the scoring applicable to VARGR, CRR and OLR metrics for the PRSUs granted in 2016, see the discussion under “Compensation Discussion and Analysis—PRSU Financial Metrics” in our annual proxy statement filed with the SEC on March 10, 2016. In addition, as described under “Refinement of Our Performance-based Equity Award Performance Metrics and Scoring Systems” above, the PRSUs granted in 2018 in respect of 2017 compensation, and in 2017 in respect of 2016 compensation, are based on the Company’s performance with respect to VARGR, CRR and AOM. For a more detailed description of the AOM metric and the scoring applicable to VARGR, CRR and AOM metrics for the PRSUs granted in 2018 and 2017, see the discussions under “Compensation Discussion and Analysis—PRSU Financial Metrics” in our annual proxy statements filed with the SEC on March 15, 2018 and March 14, 2017, respectively.
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Item 2: An Advisory Vote Regarding Executive Compensation | Other Compensation Matters
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determinations described above remain subject to performance-based vesting criteria and to full risk of forfeiture if the applicable performance goals are not achieved. |
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DESIGN OF OUR COMPENSATION PROGRAMS—OTHER FEATURES
Long-Term Incentive Awards AreEvaluation of Three-Year Performance for PRPUs Granted in 2019 with Respect to 2018 Compensation. In addition, in early 2022, the Primary ComponentCompensation Committee evaluated the Company’s performance during the period from January 1, 2019 to December 31, 2021 with respect to the PRPUs awarded in 2019 in respect of 2018 compensation. The Compensation Committee determined by formula that an aggregate score of 1.78, which is less than the maximum potential score of 2.00, applied to the PRPUs awarded to the NEOs for Our Most Senior Professionals. In February 2019, we applied a progressive formula based on total2018 compensation for alland, accordingly, the corresponding number of our NEOs, managing directors and senior professionals. Pursuant to this formula, as a recipient’s total compensation (cash salary, cash bonus and long-term incentive compensation) increases, a greater percentage of his or her total compensation is composed of long-term incentive awards. This formula is based on a sliding scale that effectively begins at 5% for some of our vice presidents and directors and generally reaches 65% (or 50% in our Asset Management business) for our highest paid managing directors.
Stock Ownership Guidelines. We have stock ownership guidelines for our NEOs, which require our CEO and the other NEOs to own shares of our Class A common stock or equitysubject to such awards were no longer subject to such performance goals. All of these PRPUs awarded in 2019 with respect to 2018 compensation vested on March 1, 2022.
Adjustments Related to COVID-19. In early 2021, the Compensation Committee evaluated the Company’s performance during 2020 in light of the COVID-19 pandemic. The Compensation Committee determined to make an adjustment to the OMM scoring for 2020 to neutralize the unanticipated impact of COVID-19 on our financial results. Specifically, the Committee determined to normalize revenue and expenses in light of the COVID-19 pandemic, including by using average 2017-2019 revenue, adding back expenses that ultimately will vest into shares (including restricted stock, PRUs (each considered atwould typically be incurred but were not due to the target payout level)pandemic such as travel and RSUs), equalentertainment expenses, and excluding additional COVID-19 related expenses (in each case, based on average 2017-2019 expenses). This approach is intended to use operating revenue that is reflective of a more typical operating environment, recognizing that the impact of COVID-19 on the Company’s operating revenue was outside of our officers’ control and that, in consultation with us, our officers avoided taking near-term cost-cutting actions that might have improved operating margin for 2020 but may have been detrimental to long-term shareholder value. See footnote (1) to the Summary Compensation Table for the value of such adjustments.
Other Long-Term Incentive Compensation
While PRPUs (and, historically, PRSUs) are the primary form of long-term incentive compensation for our NEOs who served as such throughout the fiscal year, in the case of our CEO, six times his base salary,other senior Managing Directors, a substantial portion of each individual’s long-term incentive compensation is generally granted in the form of RSUs or profits interest participation rights and the remaining portion generally may be granted in restricted stock, LFIs or a combination of both at the individual’s election, and generally includes vesting terms that are different from those applicable to our NEOs. For example, such awards generally vest one-third on or around the second anniversary of grant and two-thirds on or around the third anniversary of grant, or, in the case of each other NEO, three times his base salary. Each NEO has five years fromprofits interest participation rights, entirely on or around the date that the guidelines beganthird anniversary of grant, and until 2019, such awards were subject to apply to the NEO to attain the required ownership levels. All of our NEOs currently exceed the required ownership levels. In addition, ournon-employee directors receive a majority of their compensationsingle-trigger vesting in the formevent of DSUs that remain investeda change in the Company until they leave the Board of Directors.
Compensation Clawback Policy. We have a compensation clawback policy for our NEOs. Pursuant to our clawback policy, if the Board of Directors determines that any bonus, incentive payment, equity award or other compensation awarded to or received by an NEO was based on any financial results or operating metrics that were achieved as a result of that NEO’s intentional fraudulent or illegal conduct, we will seek to recover from the NEO such compensation (in whole or in part) as the Board of Directors deems appropriate under the circumstances and as permitted by law.
Anti-Hedging Policy. We have an anti-hedging policy for our NEOs that restricts them from engaging in hedging transactions with respect to our Class A common stock.
Double-Trigger Vesting. We apply “double-trigger” vesting for long-term incentive awards to our NEOs in respect of their service as NEOs. In addition, beginning in February 2019, long-
term incentivecontrol. Such awards granted to all of our employeesin 2019 and later will generally be subject to double-trigger vesting. Any such awards will not immediately accelerate uponvesting in the event of a change in control, but instead will require bothcontrol. Prior to becoming our Chief Financial Officer, Mr. Russo served as Managing Director and Co-Head of the Company’s Capital Markets and Capital Structure Advisory practice. In connection with his service in a changenon-NEO role prior to 2018, Mr. Russo participated in control and another customary triggering event, such as a qualifying termination, to vest.
No Enhanced Change in Control Severance. We do not provide enhanced severanceour long-term incentive compensation program that was applicable to our NEOs if they are terminatedother senior professionals. Pursuant to his grants in February 2017 (made in respect of his performance during 2016) and February 2018 (made in respect of his performance during the portion of 2017 in which he did not serve as our
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Item 2: An Advisory Vote Regarding Executive Compensation | Other Compensation Matters
Chief Financial Officer), Mr. Russo received RSUs and LFIs. In addition, in connection with his service as a changenon-NEO prior to 2021, Mr. Orszag participated in control.
No 280G Excise TaxGross-Ups. Ourour long-term incentive compensation arrangements for eachprogram that was applicable to our other senior professionals. Pursuant to his grants in February 2021 (made in respect of our NEOs do not provide for excise taxgross-up provisions with respect to Section 280Ghis performance during 2020, in which he became an executive officer toward the end of the Internal Revenue Code, reflecting feedback from our shareholders, evolving best practices and our commitment to excellence in compensation governance.year), Mr. Orszag received profits interest participation rights.
2018 COMPENSATION FOR EACH OF OUR NEOS—COMPENSATION PROCESS
2021 Compensation for Each of Our NEOs—Compensation Process
Decisions with regard to incentive compensation are generally made in the first quarter of each year and are based on Company and individual performance in the prior fiscal year.
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Our Compensation Committee Approves NEO Compensation Utilizing a Structured Decision-Making Process. Our Compensation Committee reviews compensation programs for consistency and alignment with our strategic goals, and has full authority to determine and approve the compensation of our CEO, Mr. Jacobs, and our other NEOs. The Compensation Committee determines the total compensation package to be awarded to Mr. Jacobs and Mr. Jacobs makes recommendations to the Compensation Committee as to the total compensation package to be awarded to our other NEOs. The Compensation Committee reviews and approves the total compensation package to be paid to our other NEOs and considers Mr. Jacobs’ recommendations in its review, employing a structured evaluation and decision-making process, which involves a focus on the Company’s financial results and progress regarding key strategic metrics (and, in the case of the CEOs of LAM and Financial Advisory, the financial results and progress regarding key strategic metrics of the applicable business segment) as well as each NEO’s individual contributions to our performance during the fiscal year. In addition, in the case of Mr. Jacobs, the Compensation Committee also considers his performance in reference to goals and objectives set during the year. Mr. Jacobs reviewed with the Compensation Committee the performance of each of the other NEOs individually and their overall contribution to the Company in 2021. Mr. Jacobs does not participate in sessions of the Compensation Committee at which his own compensation is determined; however, he does participate in sessions at which the compensation of the other NEOs is discussed.
An illustration of the process used by the Compensation Committee for 2021 compensation decisions is set forth on the following page. Page 45 |
Item 2: An Advisory Vote Regarding Executive Compensation | Other Compensation Matters
Structure of 20182021 NEO Compensation Decision-Making Process
Review Business Performance | Key Metrics | |||||
• Achievement of Pre-Defined Goals, including Long-Term Financial Goals and Key Metrics Selected by Compensation Committee | Operating Revenue
| Earnings Growth Operating Margin Return of Capital / Capital Management Cost Discipline and Initiatives | ||||
• Corporate and Business Segment Performance and Economic Conditions | See “Selected Consolidated Financial Information’’ above |
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Rate Overall Business Performance
Below Par | Par | Above Par | ||
Consider Reference Pay Ranges for Each Position
• Review competitive pay ranges, considering median peer data and market outlook |
• Consider market conditions |
• Review recent trends |
• Consider pay mix for each position |
• Develop reference pay ranges for each position and compare to the overall performance result (Below ParIParIAbove Par) |
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Determine Compensation for Each NEO
• Determine compensation for each NEO, considering position-specific reference pay range based on Company and individual results, and progress against Company and business |
• Determine performance-based compensation mix (cash |
Our Compensation Committee Considers a Variety of Available Information.Information. Before anyyear-end compensation decisions are made, the Compensation Committee reviews information from a variety of available sources.
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Business Performance. In evaluating the total compensation packages awarded to our NEOs, the Compensation Committee considered the factors described under “2021 Business Strategy and Performance Highlights” above, as well as each NEO’s individual contributions to the Company, the leadership, guidance, and other individual qualities that they bring to the Company, their desire to advance the implementation of compensation discipline throughout the firm including with respect to NEO compensation.
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Item 2: An Advisory Vote Regarding Executive Compensation | Other Compensation Matters Achievement of Financial Goals. We have articulated financial goals to our shareholders, including goals regarding our awarded compensation ratio, our adjusted non-compensation ratio and our return of capital strategy. We remained focused on these goals throughout 2021 and, in 2021, we achieved these goals. Since 2012, the Compensation Committee has reviewed the Company’s progress with respect to these and other goals in determining the total compensation packages awarded to our NEOs and has considered that progress in connection with compensation decisions. Financial Metrics. The Compensation Committee reviewed a variety of metrics relating to the Company’s financial performance in evaluating the total compensation packages to be awarded to our NEOs. The Compensation Committee considered the Company’s results and progress during 2021 regarding key strategic metrics, including operating revenue, awarded compensation, operating margin, cost savings and return of capital. The Compensation Committee also considered the Company’s relative TSR. Tally Sheets. The Compensation Committee reviewed a comprehensive tally sheet of all elements of each NEO’s compensation. The tally sheets included information on cash and non-cash compensation for the past three fiscal years (including current and prior year base salaries, annual cash incentives, deferred cash awards, special awards (if any), PRPUs, PRSUs, profits interest participation rights, RSUs, restricted stock and LFIs, if any), and the value of benefits and other perquisites paid to our NEOs, as well as potential amounts to be delivered under post-employment scenarios. Competitive Compensation Considerations. The competition to attract and retain high-performing executives and professionals in the financial services industry is especially intense at this time, and the amount and composition of total compensation paid to our executives must be considered in light of competitive compensation levels. In this regard, for our NEOs, the Compensation Committee reviewed an analysis prepared by CAP regarding compensation levels for 2020 (the most recent year for which comprehensive data for our peers was available), and indicative trends for 2021 year-end compensation decisions, for comparable positions at the following financial services firms: Affiliated Managers Group Inc., Blackstone Group LP, Evercore Partners Inc., Greenhill & Co., Inc., Invesco Ltd, Raymond James, Stifel Financial and T. Rowe Price. Eaton Vance and Legg Mason were both removed as comparators for 2021 given each has been acquired. We chose this comparator group because we compete in the same marketplace with these companies, among other, larger financial services firms, for highly qualified and talented financial service professionals. Though none of these firms serve as comparators for both of Lazard’s businesses, CAP believes this comparator group is appropriate in terms of size and represents a reasonable mix of firms in each of Lazard’s businesses. Additional details regarding the composition of our peer group recommended by CAP, based on Global Classification Standard (GICS) Sub-Industry classification, revenue and market capitalization, is set forth in the following tables: Page 47 Item 2: An Advisory Vote Regarding Executive Compensation | Other Compensation Matters Due to the limited universe of standalone public company comparators, for 2021, the analysis that CAP prepared for the Compensation Committee put more emphasis compared to prior years on survey data that includes compensation information for private companies, subsidiary businesses of larger financial services firms, and cross-industry organizations that are similar to Lazard in terms of complexity to get a more complete picture of the competitive market for Lazard’s NEOs. The Compensation Committee also reviewed data with respect to certain other companies with which we compete for financial service professionals, but that substantially exceed our market capitalization; however, this review was for informational purposes only and these companies served only as reference points to provide a broader perspective on competitive pay levels and practices. Such data included compensation expense and revenue changes for such companies over 2021. |
CAP’s analysis compared the total direct compensation for our NEOs (calculated with respect to 20172020 base salary and actualannual cash bonuses,incentives, deferred cash awards and PRSUsPRPUs (valued at the target payout level and awarded in February 20182021 in respect of 20172020 compensation)) to the total direct compensation for the appropriate named executive officers in the comparator group described above, or an appropriate subset of that comparator group, calculated based on compensation levels for 20172020 (as reported in 2018)2021). Peer data for 20182021 was not fully available at the time of CAP’s analysis.analysis, but the pay ranges do consider expectations for market compensation levels in 2021. CAP constructed a compensation reference range for each of our NEOs based on the comparator data as follows: for Mr. Jacobs, $10.5$12.5 million to $13.5$17.5 million; for Mr. Russo, $3.5$4.5 million to $5.5$7.0 million; for Mr. Bhutani, $9.0$8.5 million to $12.0$12.5 million; for Mr. Hoffman, $4.0Orszag, $8.5 million to $6.0$12.5 million; and for Mr. Stern, $5.5$7.0 million to $8.5$9.0 million. See “Awarded Compensation Table” below for a table describing the compensation paid to each of our NEOs for 2018,2021, presented in the manner that it was considered by the Compensation Committee (which was similar to the methodology used by CAP in calculating total direct compensation paid by the firms in the comparator group).
While the Compensation Committee considered the level of compensation paid by the firms in the comparator group in connection with its compensation decisions, in order to maintain competivenesscompetitiveness and flexibility, the Compensation Committee did not target compensation at a particular level relative to the comparator group (or relevant subset of the group). This information was only one of several data points that the Compensation Committee considered in evaluating compensation for our NEOs.
2018 COMPENSATION FOR EACH OF OUR NEOS—COMPENSATION DECISIONS2021 Compensation for Each of Our NEOs—Compensation Decisions
20182021 Base Salaries. We haveDuring 2021, we had retention agreements with each of our NEOs that establish their respective minimum annual base salaries. These amountsThe base salaries for our NEOs were negotiated and
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were meant to ensure that the Company would have the services of each of the NEOs during the term of their respective agreements. See “Compensation of Executive Officers—Grants of Plan-BasedPlan Based Awards—Retention Agreements with ourOur NEOs” below. The base salary paid in 20182021 to Mr. Jacobs was $900,000 and to each other NEO was $750,000, which, in each case, is the minimum base salary set forth in the respective retention agreement. The minimum annual base salaries of ourfor NEOs have remained unchanged for over seventen years.
20182021 Incentive Compensation.Compensation. As a general matter, the Compensation Committee noted that it was mindful of the compensation discipline that has been applied throughout the Company, and the ongoing leadership and support of each NEO in connection with that initiative.
In addition to the matters considered by the Compensation Committee with respect to each NEO, which are described in detail below, the Compensation Committee considered each
NEO’s positioning on an internal pay scalevis-à-vis relative to managing directors within the Company and competitive compensation practices at other firms.
Mr.Kenneth M. Jacobs,. Chairman and CEO
2021 Individual Performance Considerations
The Compensation Committee noted that our Company performed welldelivered record results in 2018 and delivered strong results.2021, especially in the context of the global COVID-19 pandemic. The Company continued to adhere to the financial goals setlong-term objectives laid out in 2012, which it successfully achieved in 20182021 once again. The Company achieved recordhad annual operating revenue of $2,755$3,139 million in 2018, up 4% from 2017. The Company’s 2018 awarded operating income of $734 million increased 2% compared to 2017, and the Company’s 2018 earnings from operations of $754 million increased 6% compared to 2017. The Company’s Financial Advisory business and Asset Management business each achieved a record level of2021, 24% higher than annual operating revenue in 2018.2020 and adjusted net income of $576 million and adjusted earnings per share, diluted, of $5.04, each 40% higher than adjusted net income and adjusted earnings per share, diluted, in 2020, respectively. The Company also returned over $1 billion$670 million of capital to its shareholders in 2018, reflecting an increase2021, maintaining the Company’s consistent practice of 43% overrepurchasing at least as many shares as we expect to ultimately issue as a result of deferred year-end equity incentive compensation granted in respect of the record level previously set byprior year while ensuring the Company was able to successfully navigate the uncertain, and often volatile, markets in 2017.2021.
In evaluating incentive compensation for Mr. Jacobs, the Compensation Committee considered these important achievements, the other information regarding our Company’s performance described under “2018“2021 Business Strategy and Performance Highlights” above, and Mr. Jacobs’ extensive individual accomplishments. The Compensation Committee also considered the Company’s total shareholder return (TSR).relative TSR.
In addition, the Compensation Committee considered the goals and objectives established for Mr. Jacobs by the Compensation Committee throughout 2018.2021. These goals and objectives provided the Compensation Committee with a set of criteria that assisted the Compensation Committee in its evaluation of Mr. Jacobs’ performance in 2018.
The Compensation Committee also considered Mr. Jacobs’ strong desire to maintain compensation discipline throughout the firm, and to take a leadership position in that regard, as well as the success of his efforts to strengthen leadership and coordination throughout the Company and his strategic vision.2021.
The Compensation Committee specifically noted the following accomplishments as a result of Mr. Jacobs’ initiative, ongoing leadership and dedication during 2018:2021:
our record financial performance in 2021, as reflected in the Company continued to successfully invest2021 financial highlights described above, in technology infrastructurethe context of a global pandemic and data science capabilities to enhance its businesses;associated global macroeconomic conditions;
the Company’s senior leadership team continued to be united under Mr. Jacobs’ leadership and guidance;achievement of our financial goals described in this Proxy Statement;
the Company maintained and continued to foster its culture of cost disciplineour CEO’s active engagement throughout the firm, once again proving its commitmentpandemic and management of business operations through the global health crisis, including his extraordinary leadership in managing a remote work environment necessary to compensation cost control;protect employee health and safety, demonstrating the value of the Company’s significant prior investments in technology infrastructure;
through our CEO’s leadership, the CompanyCompany’s continued cultivation of a workplace culture that fosters productivity and professional and personal development, and promotes inclusion, diversity, equality and
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allyship, including the appointment of a firm-wide diversity, equality and inclusion senior manager, a commitment to increase diversity across the firm by 2025, and support of employee resource groups dedicated to enhancing education and community within our firm; |
our CEO’s continued conceptualization of Lazard’s plan for growth, and his oversight of progress with regard to actively communicatethat plan;
our CEO’s continued support of expanded ESG efforts through the appointment of our head of corporate sustainability, the expanded oversight of environmental, social and governance priorities through our Nominating and Governance Committee, and the publication of voluntary disclosures in our CSR, SASB and TCFD publications;
our continued active communication with shareholders and the analyst community regarding itsour strategic plan, and initiatives for profitable and sustainable growth building out its investor relations capabilities,and dedication to strengthening itsour outreach efforts and enhancing investor awareness of the Company’s business model, strategic objectives and accomplishments;
our CEO’s active role in continuing to develop senior leaders and succession planning;
our CEO’s active role in the Company continued to cultivaterecruitment of key professionals across our businesses and reinforce a workplace culture that fosters productivity and professional and personalthe development and values diversity and inclusion;
the Company continued to successfully integrate itsof new investment strategies in our Asset Management operations in North America and Europe;business; and
our CEO’s leadership in maintaining and fostering a culture of cost discipline throughout the Company continuedfirm, reaffirming our commitment to successfully retain, motivate and attract valuable professionals.cost control.
In addition, the Compensation Committee considered Mr. Jacobs’ individual contributions to the Company’s Financial Advisory business, which have generated and are expected to continue to generate significant revenue for the Company, and have enhanced Lazard’s valuable reputation as a preeminent financial advisory and asset management firm. Throughout 2021, Mr. Jacobs led, and continues to lead, teams within our Financial Advisory business that advised and continue to adviseadvising clients on significant merger and acquisition transactions during 2018 and 2019.transactions.
Together with CAP, its independent compensation consultant, the Compensation Committee thoroughly reviewed the Company’s past compensation practices and the competitive compensation practices at other firms.
2021 Total Incentive Compensation
Based on its review, the Compensation Committee decided to grant Mr. Jacobs an incentive compensation award of $10.6$12.35 million, payable as follows: a PRPU award valued at $7.475$9.275 million (based on the achievement of performance goals at the target level) and a $3.125$3.075 million annual cash bonus.incentive. The PRPUs awarded to Mr. Jacobs constituted approximately 65%70% of Mr. Jacobs’ total compensation for 2018.2021. The total performance-based compensation awarded to Mr. Jacobs constituted approximately 92%93% of his total compensation for 2018.2021.
The following charts showchart shows Mr. Jacobs’ mix of fixed versus performance-based compensation, and cash incentive versus long-term incentive compensation, for 20182021 (based on the achievement of performance goals with respect to the PRPUs at the target level).
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By linking 65%70% of Mr. Jacobs’ total compensation for 20182021 directly to the future performance of our business through PRPUs, the substantial majority of Mr. Jacobs’ compensation for 20182021 will be at risk based on our ability to achieve growth and produce value for our shareholders over the next three years, notwithstanding his accomplishments in 2018.2021. Given the combination of base salary, annual cash bonusincentive and PRPUs awarded to Mr. Jacobs for 2018,2021, the Compensation Committee believes it has struck the right balance between paying for current performance, on the one hand, and the desire to keep Mr. Jacobs focused on the Company’s long-term performance and continued growth, on the other hand.
Ashish Bhutani, CEO of LAM and Chairman of our Asset Management business
Mr. Bhutani. In evaluating incentive compensation for Mr. Bhutani, the Compensation Committee and Mr. Jacobs considered his leadership and level of performance as the CEO of LAM and his commitment toChairman of our Asset Management business. As the development and performanceCEO of LAM, as well asone of our two principal business segments, Mr. Bhutani has direct responsibility for the strong overall performanceoperating revenue of our Asset Management business, which was $1,329 million for 2021, as well as its assets under management, which achieved a year-end record of $274 billion in 2018, including2021 despite uncertainty and volatility in the financial measures described under “2018 Business Performance Highlights” above. In a continuing difficultmarket and the environment for active asset managers, our Asset Management business’s operating revenue in 2018 was a record $1,242 million, slightly higher than 2017.managers. The Compensation Committee and Mr. Jacobs also considered the performance of various investment products and strategies managed by LAM.our Asset Management business, including the launch of seven new investment strategies, four of which resulted from the recruitment of independent teams, continued conceptualization of Assets Management’s plan for growth and his oversight of progress with regard to that plan and continued focus on and investment in ESG matters. In addition, the Compensation Committee and Mr. Jacobs considered Mr. Bhutani’s significant efforts to further integrate the Company’s Asset Management operations in North America and Europe. enhance global distribution.
2021 Total Incentive Compensation
The Compensation Committee approved the followingan incentive compensation award of $9.55 million for Mr. Bhutani for his performance in 2018: Mr. Bhutani received a2021, payable as follows: an annual cash bonusincentive of $3.198$2.34 million, a PRPU award valued at $4.775$5.15 million (based on the achievement of performance goals at the target level) and a deferred cash award of $0.827 million.$2.06 million, which is a cash award to be paid at a subsequent date, subject to continued employment through the relevant date. As the CEO of LAM, Mr. Bhutani was awarded an additional performance-based cash component of his compensation, consistent with market practice for his position. The PRPUs awarded to Mr. Bhutani constituted approximately 50% of his total compensation for 2018.2021. The total performance-based compensation awarded to Mr. Bhutani constituted approximately 92%93% of his total compensation for 2018.2021.
Mr. Hoffman. Peter R. Orszag, CEO of Financial Advisory
2021 Individual Performance Considerations
In evaluating incentive compensation for Mr. Hoffman,Orszag, the Compensation Committee and Mr. Jacobs considered the significant leadership that Mr. Hoffman providesOrszag’s successful and seamless transition to the Company. In hisleadership position within the Financial Advisory business, success in hiring new roletalent as Chief Administrative Officer, Mr. Hoffman drivespart of Financial Advisory’s plan for growth, as well as the execution and coordination of initiatives and internal policies in supportoverall performance of the firm’s overall strategic objectivesFinancial Advisory business, despite the ongoing COVID-19 pandemic. As the CEO of one of our two principal business segments, Mr. Orszag has direct responsibility for the operating revenue of our Financial Advisory business, which was a record $1,778 million for 2021, 27% higher than 2020. In addition, throughout 2021, Mr. Orszag led, and provides inputhe continues to lead, teams within our Financial Advisory business advising clients on significant merger and guidance in, business planning.acquisition transactions. The Compensation Committee and Mr. Jacobs noted Mr. Hoffman’s strong performance in his new role. Mr. Hoffman also maintains his role as General Counsel and his wide-ranging responsibility for overseeing worldwide legal and compliance operations at the Company, as well as his diverse responsibilities for overseeing internal audit, global communications, legislative and regulatory affairs and other areas. The Compensation Committee and Mr. Jacobs considered Mr. Hoffman’s responsibility for establishing and implementing uniform internal policies within the Company, hisOrszag’s important contribution to the overall strengthglobal positioning of the Company, and his contribution toward the achievement of the Company’s financial goals. In that regard, theLazard’s Financial Advisory business.
2021 Total Incentive Compensation Committee and Mr. Jacobs considered the information regarding our Company’s performance described under “2018 Business Performance Highlights” above, including the Company’s total shareholder return (TSR). Mr. Jacobs noted that Mr. Hoffman was a key contributor to the collective management team, providing leadership, advice and guidance to him, as CEO, and further noted that Mr. Hoffman also provides such advice and guidance to the Board of Directors and its Committees.
The Compensation Committee approved the followingan incentive compensation award of $9.25 million for Mr. HoffmanOrszag for his performance in 2018: Mr. Hoffman received2021, payable as follows: a cash bonusincentive of $0.923$4.35 million, consisting of an annual
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cash incentive for 2021 of $1.35 million and a special cash retention award of $3 million, and a PRPU award valued at $2.528$4.9 million (based on the achievement of performance goals at the target level). The PRPUs awarded to Mr. HoffmanOrszag constituted approximately 60%70% of his total compensation for 2018.2021 (excluding special cash retention awards). The total performance-based compensation awarded to Mr. HoffmanOrszag constituted approximately 82%89% of his total compensation for 2018.2021 (excluding special cash retention awards).
Mr.Evan L. Russo,. Chief Financial Officer
2021 Individual Performance Considerations
In evaluating incentive compensation for Mr. Russo, the Compensation Committee and Mr. Jacobs considered the significant leadership that Mr. Russo now provides to the Company in his role as Chief Financial Officer, and his successful and efficient assumption of his new responsibilities, including worldwide responsibility for corporate
finance, accounting, investor relations and tax matters at the Company. The Compensation Committee and Mr. Jacobs noted Mr. Russo’s successful leadership of the Company’s capital management programs, which resulted in a record level of return of capital to the Company’s shareholders in 2018, as well as his development of the Company’s investor relations function. The Compensation Committee and Mr. Jacobs also considered Mr. Russo’s role and performance in connection with the development and implementation of the Company’s new enterprise resource planning system, and hiscontinued efforts to effectively manage and develop senior employees within the Company’s Corporate segment. The Compensation Committee and Mr. Jacobs also noted that Mr. Russo’s compensation for 2017 reflectedRusso continued to expand his role and performance as a Managing Director andCo-Head ofresponsibilities in 2021, especially with regard to the Company’s Capital Markets and Capital Structure Advisory practice from January 1, 2017 until October 1, 2017, and only reflected his wide-ranging responsibilities as Chief Financial Officer for the last quarter of 2017. strategic positioning.
2021 Total Incentive Compensation
The Compensation Committee approved the followingan incentive compensation award of $6.15 million for Mr. Russo for his performance in 2018: Mr. Russo received a2021, payable as follows: an annual cash bonusincentive of $0.863$1.32 million and a PRPU award valued at $2.388$4.83 million (based on the achievement of performance goals at the target level). The PRPUs awarded to Mr. Russo constituted approximately 60%70% of his total compensation for 2018.2021. The total performance-based compensation awarded to Mr. Russo constituted approximately 81%89% of his total compensation for 2018.2021.
Mr.Alexander F. Stern,. President
2021 Individual Performance Considerations
In evaluating incentive compensation for Mr. Stern, the Compensation Committee and Mr. Jacobs considered several factors, including his performance as Chief Operating Officer of the Company and CEOMr. Stern’s enhancement of the Company’s Financial Advisory business. The Compensation Committee and Mr. Jacobs noted the outstanding performance of the Financial Advisory business in 2018, which achievedfocus on growth initiatives during a record level of operating revenue in 2018 and reflected strength across regions and business sectors. The Compensation Committee and Mr. Jacobs further considered Mr. Stern’s overall contribution to the financial strength of the Company as Chief Operating Officer. Mr. Stern maintains a balance betweenchallenging time, including his leadership and operating responsibilities within the firm, while continuing to cultivate important client relationships. The Compensation Committee and Mr. Jacobs considered Mr. Stern’s effective oversight, in his capacityof LGAC as CEO of the Company’s Financial Advisory business, of managing directors and senior professionals overseeing various regions and business sectors on a global basis, as well as Mr. Stern’s key investments in the business during 2018 and his involvement in the continuing use and improvement of the Company’s firm-wide performance assessment systems.Executive Chairman. The Compensation Committee and Mr. Jacobs further focused on Mr. Stern’s key role in the successful perpetuation of the Company’s culture of cost discipline, which has continued to enable the Company to achieve its financial goals. TheIn addition, throughout 2021, Mr. Stern led, and he continues to lead, teams within our Financial Advisory business advising clients on significant merger and acquisition transactions.
2021 Total Incentive Compensation Committee and Mr. Jacobs also considered the information regarding our Company’s performance described under “2018 Business Performance Highlights” above, including the Company’s total shareholder return (TSR).
The Compensation Committee approved the followingan incentive compensation award of $7 million for Mr. Stern for his performance in 2018: Mr. Stern received a2021, payable as follows: an annual cash bonusincentive of $1.913$1.575 million and a PRPU award valued at $4.838$5.425 million (based on the achievement of performance goals at the target level). The PRPUs awarded to Mr. Stern constituted approximately 65%70% of Mr. Stern’s total compensation for 2018.2021. The total performance-based compensation awarded to Mr. Stern constituted approximately 90% of his total compensation for 2018.2021.
Awarded Compensation
The following table, which we refer to as the Awarded Compensation Table, shows the base salary and incentive compensation awarded to our NEOs for their performance in 20182021 in the
manner it was considered by the Compensation Committee. This presentation differs from that contained in the Summary Compensation Table for 20182021 in the following respects:
by showing the notional value of the PRPUs (assuming payout at the target level) granted in February 2019,2022, which related to 20182021 performance but are not reflected in the Summary Compensation Table for 20182021 because they were granted after the end of our 20182021 fiscal year;
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by excluding the grant date fair value, as determined for accounting purposes, of the PRSUsPRPUs (assuming payout at the target level) and, in the case of Mr. Russo, RSUs and LFIs, granted in February 2018, which related to 20172020 performance and are included in the Summary Compensation Table for 2018;2021 because they were granted after the end of our 2020 fiscal year;
by excluding the values reported in the “Change in Pension Value” and “All Other Compensation” columns, because they are not tied to the NEO’s performance for the applicable year; and
by distinguishing deferred cash awards paid to Mr. Bhutani and special cash retention awards paid to Mr. Orszag from annual bonuscash incentive amounts, as these awards were not paid at the same time as our regular bonusesannual cash incentives but rather were deferred until June of the year of grant,paid at a later date, subject to Mr. Bhutani’s continued employment through the paymentrelevant date.
A similar methodology has been applied to reflect 20172020 and 20162019 compensation for each of our NEOs who served as an executive officer of the Company in respect of such year, which is included for each NEO (other than Mr. Russo, who was not an NEO in respect of 2016) in order to provide a basis for comparison. For these prior years, the value of PRSUs,PRUs, profits interest participation rights, RSUs, restricted stock and LFIs is also reflected based on the fiscal year to which they relate, rather than the fiscal year in which they were granted, and based on notional value rather than on the grant date fair value as determined for accounting purposes.
AWARDED COMPENSATION TABLEAwarded Compensation Table
Year | Salary | Annual Cash Incentive | Deferred Cash Awards | Special Cash Retention Award | Profits Interest Participation Rights | Performance Based-Equity Awards | Total Compensation | |||||||||||||||||||||||||||||||||
Kenneth M. Jacobs | 2021 | $ | 900,000 | $ | 3,075,000 | — | — | — | $ | 9,275,000 | $ | 13,250,000 | ||||||||||||||||||||||||||||
2020 | $ | 900,000 | $ | 2,100,000 | — | — | — | $ | 7,000,000 | $ | 10,000,000 | |||||||||||||||||||||||||||||
2019 | $ | 900,000 | $ | 2,100,000 | — | — | — | $ | 7,000,000 | $ | 10,000,000 | |||||||||||||||||||||||||||||
Evan L. Russo | 2021 | $ | 750,000 | $ | 1,320,000 | — | — | — | $ | 4,830,000 | $ | 6,900,000 | ||||||||||||||||||||||||||||
2020 | $ | 750,000 | $ | 825,000 | — | — | — | $ | 3,675,000 | $ | 5,250,000 | |||||||||||||||||||||||||||||
2019 | $ | 750,000 | $ | 732,500 | — | — | — | $ | 2,917,500 | $ | 4,400,000 | |||||||||||||||||||||||||||||
Ashish Bhutani | 2021 | $ | 750,000 | $ | 2,340,000 | $ | 2,060,000 | — | — | $ | 5,150,000 | $ | 10,300,000 | |||||||||||||||||||||||||||
2020 | $ | 750,000 | $ | 1,740,000 | $ | 1,660,000 | — | — | $ | 4,150,000 | $ | 8,300,000 | ||||||||||||||||||||||||||||
2019 | $ | 750,000 | $ | 1,815,000 | $ | 1,710,000 | — | — | $ | 4,275,000 | $ | 8,550,000 | ||||||||||||||||||||||||||||
Peter R. Orszag | 2021 | $ | 750,000 | $ | 1,350,000 | — | $ | 3,000,000 | $ | — | $ | 4,900,000 | $ | 10,000,000 | (1) | |||||||||||||||||||||||||
2020 | $ | 750,000 | $ | 692,750 | — | $ | 3,345,564 | $ | 3,307,250 | — | $ | 8,095,564 | ||||||||||||||||||||||||||||
Alexander F. Stern | 2021 | $ | 750,000 | $ | 1,575,000 | — | — | — | $ | 5,425,000 | $ | 7,750,000 | ||||||||||||||||||||||||||||
2020 | $ | 750,000 | $ | 1,125,000 | — | — | — | $ | 4,375,000 | $ | 6,250,000 | |||||||||||||||||||||||||||||
2019 | $ | 750,000 | $ | 1,200,000 | — | — | — | $ | 4,550,000 | $ | 6,500,000 |
(1) | Mr. Orszag’s retention agreement includes grants of special retention awards in the future. For a description of the terms of Mr. Orszag’s retention agreement, see “Compensation of Executive Officers—Retention Agreements” below. |
Year | Salary | Annual Cash Bonus | Deferred Cash Awards | RSU Awards | Target PRU Awards | Lazard Fund Interest Awards | Total Compensation | |||||||||||||||||||||||||
Kenneth M. Jacobs | 2018 | $ | 900,000 | $ | 3,125,000 | — | — | $ | 7,475,000 | — | $ | 11,500,000 | ||||||||||||||||||||
2017 | $ | 900,000 | $ | 4,100,000 | — | — | $ | 7,500,000 | — | $ | 12,500,000 | |||||||||||||||||||||
2016 | $ | 900,000 | $ | 3,500,000 | — | — | $ | 6,600,000 | — | $ | 11,000,000 | |||||||||||||||||||||
Evan L. Russo | 2018 | $ | 750,000 | $ | 862,500 | — | — | $ | 2,387,500 | — | $ | 4,000,000 | ||||||||||||||||||||
2017 | $ | 562,500 | $ | 952,500 | — | $ | 471,250 | $ | 942,500 | $ | 471,250 | $ | 3,400,000 | |||||||||||||||||||
Ashish Bhutani | 2018 | $ | 750,000 | $ | 3,198,055 | $ | 826,945 | — | $ | 4,775,000 | — | $ | 9,550,000 | |||||||||||||||||||
2017 | $ | 750,000 | $ | 3,445,000 | $ | 1,205,000 | — | $ | 5,400,000 | — | $ | 10,800,000 | ||||||||||||||||||||
2016 | $ | 750,000 | $ | 2,950,000 | $ | 925,000 | — | $ | 4,625,000 | — | $ | 9,250,000 | ||||||||||||||||||||
Scott D. Hoffman | 2018 | $ | 750,000 | $ | 922,500 | — | — | $ | 2,527,500 | — | $ | 4,200,000 | ||||||||||||||||||||
2017 | $ | 750,000 | $ | 1,065,000 | — | — | $ | 2,585,000 | — | $ | 4,400,000 | |||||||||||||||||||||
2016 | $ | 750,000 | $ | 912,500 | — | — | $ | 2,337,500 | — | $ | 4,000,000 | |||||||||||||||||||||
Alexander F. Stern | 2018 | $ | 750,000 | $ | 1,912,500 | — | — | $ | 4,837,500 | — | $ | 7,500,000 | ||||||||||||||||||||
2017 | $ | 750,000 | $ | 2,250,000 | — | — | $ | 4,500,000 | — | $ | 7,500,000 | |||||||||||||||||||||
2016 | $ | 750,000 | $ | 2,050,000 | — | — | $ | 4,200,000 | — | $ | 7,000,000 |
Perquisites. In 2018,2021, each of our NEOs received less than $55,000$100,000 in perquisite compensation. Our NEOs are entitled to receive the same perquisite compensation, provided to all of our U.S. managing directors as a group, includingwhich included (i) the payment by the Company of a portion of the health insurance premiums for each of our U.S. managing directors on the same basis that it does for all U.S. employees and payment of other health related benefits, (ii) the payment by the Company of certain matching contributions on their personal contributions to the Company’s 401(k) plan on the same basis that it does for all U.S. employees, and (iii) being the named beneficiaries of a Company-provided life insurance and long-term disability insurance policy.policy on the same basis that it does for all U.S. employees. In addition, Messrs. Jacobs, Russo, HoffmanOrszag and Stern each have access to an executive dining room that is available to certain of our managing directors in the New York City area. Each of our U.S. managing directors is entitled to have his or heryear-end personal tax returns prepared by our tax department. Messrs. Jacobs, Hoffman
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Russo and Stern have availed themselves of this benefit. This perquisite has been a historical practice of the firm, and is provided due to the complexity involved in preparing such tax returns as the Company continues to be viewed as a partnership for U.S. tax purposes.
Pension Benefits. Each of Messrs. Jacobs Hoffman and Stern has an accrued benefit under the Lazard Frères & Co. LLC Employees’ Pension Plan, a qualified defined-benefit pension plan, and Messrs. Hoffman andMr. Stern havehas accrued additional benefits under a related supplemental defined-benefit pension plan. In each case, these benefits accrued prior to the applicable NEO becoming a managing director of the Company. Benefit accruals under both of these plans were frozen for all participants effective January 31, 2005, and our NEOs will not accrue any additional benefits. For additional information regarding benefits accrued by or payable to Messrs. Jacobs Hoffman and Stern under these plans as of December 31, 2018,2021, see “Compensation of Executive Officers—Pension Benefits” below.
NEO Retention Agreements. In anticipation of the expiration of the prior retention agreements with our NEOs, which was scheduled to occur on March 31, 2016,2019, on March 9, 2016,29, 2019, we entered into amended retention agreements with each of our NEOs at that time. In addition,Effective February 25, 2021, in connection with Mr. Russo’shis appointment effective October 1, 2017, as Chief Financial Officeran executive officer of the Company, we entered into a retention agreement with Mr. Russo on terms substantially similar to the amended retention agreements with our other NEOs.Orszag. For a
description of the terms of the NEOs’ retention agreements, see “Compensation of Executive Officers–Officers—Retention Agreements with Our NEOs” and “Compensation of Executive Officers—Potential Payments uponUpon Termination or Change in Control” below.
Vesting of PRUs, RSUs and LFIs. In general, unvested PRUs, RSUs, LFIs and similar awards are forfeited by our NEOs upon termination of employment, except in cases such as death, disability, a termination by the Company other than for “cause” (which, for purposes of these awards, includes a resignation for “good reason”) or a qualifying retirement pursuant to our RSU Retirement Policy. See “Compensation of Executive Officers—RSU Retirement Policy” below. As described under “Compensation Discussion and Analysis—Design of Our Compensation Programs—Other Features” above, the Company has adopted “double-trigger” vesting for NEO incentive awards, including PRUs granted to our NEOs in respect of their service as NEOs.
Risks Related to Compensation Policies. In keeping with our risk management framework, we consider risks not only in the abstract, but also risks that might hinder the achievement of a particular objective. We have identified two primary risks relating to compensation: that compensation will be insufficient to retain talented individuals and that compensation strategies might result in unintended incentives. To combat the first risk, as noted above, the compensation of employees throughout the Company is reviewed against comparative compensation data, permitting us to set compensation levels that we believe contribute to low rates of voluntary employee attrition. Further, long-term incentive compensation (including PRUs, profits interest participation rights, RSUs, restricted stock and LFIs) awarded to our NEOs, managing directors and other senior professionals are generally subject to long-term vesting periods. We believe both the levels of compensation and the structure of the PRUs, profits interest participation rights, RSUs, LFIs and similar awards have had the effect of aiding our retention of our NEOs and other key employees.
With respect to the second risk, our Company-wideyear-end discretionary compensation program is designed to reflect the performance of the Company, the performance of the business in which the employee works and the performance of the individual employee, and is designed to discourage excessive risk-taking. For example, paying a significant portion of ouryear-end compensation in the form of long-term incentive compensation (including PRUs, profits interest participation rights, RSUs, restricted stock and LFIs) with long-term vesting periods makes or should make each of our NEOs, managing directors and other senior professionals sensitive to long-term risk outcomes, as the value of their awards increases or decreases with the performance of the Company, in the case of PRUs and profits interest participation rights, the price of our Class A common stock, in the case of PRUs, profits interest participation rights, RSUs and restricted stock, and the performance of specified investment portfolios managed by LAM, in the case of our LFIs. In addition, PRU performance criteria include adjustments for revenue volatility in recognitionOur relative TSR modifier establishes an even more direct link between the returns to our shareholders and the compensation of our belief that more volatile growth is less valuable to our shareholders.NEOs. We believe these criteria will provide our employees additional incentives to prudently manage the wide range of risks inherent in the Company’s business. We are not aware of any employee behavior motivated by our compensation policies and practices that creates increased risks for shareholders or our clients.
Based on the foregoing, we do not believe that our compensation policies and practices create risks that are reasonably likely to have a material adverse effect on the Company.
COMPENSATION COMMITTEE REPORTStock Ownership Guidelines. We have stock ownership guidelines for our NEOs, which require our CEO and the other NEOs to own shares of our Class A common stock, or equity awards that ultimately could vest into shares (including restricted stock, PRUs (each considered at the target payout level),
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Item 2: An Advisory Vote Regarding Executive Compensation | Other Compensation Matters
profits interest participation rights and RSUs), equal to, in the case of our CEO, six times his base salary, and in the case of each other NEO, three times his base salary. Each NEO has five years from the date that the guidelines began to apply to the NEO to attain the required ownership levels. All of our NEOs currently exceed the required ownership levels. In addition, our non-executive directors receive a majority of their compensation in the form of DSUs that remain invested in the Company until they leave the Board of Directors.
Compensation Clawback Policy. We have a compensation clawback policy for our executive officers. Pursuant to our clawback policy, if the Board of Directors determines that any bonus, incentive payment, equity award or other compensation awarded to or received by an executive officer was based on any financial results or operating metrics that were achieved as a result of that executive officer’s intentional fraudulent or illegal conduct, we will seek to recover from the executive officer such compensation (in whole or in part) as the Board of Directors deems appropriate under the circumstances and as permitted by law.
Anti-Hedging Policy. We have an anti-hedging policy that prohibits our employees (including our executive officers), our directors and their respective designees from short-selling Company securities or entering into a transaction involving a put, call or other derivative or hedge on Company securities, in each case without the prior approval of our General Counsel; provided that our General Counsel may not give such approval to our executive officers and directors.
Certain Tax Considerations. Profits interest participation rights and PRPUs are designed to qualify as “profits interests” for U.S. federal income tax purposes and are intended to offer recipients a long-term incentive compensation award comparable to PRSUs or RSUs, as applicable, while allowing them potentially more favorable income tax treatment in return for incurring additional risk. Neither the grant nor vesting of profits interest participation rights will be deductible by the Company as compensation expense for tax purposes. Even if such a compensation deduction were available to the Company, the Company may not, in any event, be able to promptly use the deduction. It is anticipated, however, that the future exchange of vested profits interest participation rights and PRPUs for shares of our Class A common stock will increase the amortizable tax basis of certain assets of Lazard Group and its subsidiaries. These increases in tax basis may reduce the amount of tax that the Company’s subsidiaries would otherwise be required to pay in the future. In addition, if the Internal Revenue Service were to successfully challenge the tax characterization of profits interest participation rights as profits interests, the holder would be responsible for the incremental taxes, and the Company would indemnify the holder against any taxes pursuant to Section 409A of the Internal Revenue Code.
Compensation Committee Report
The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of RegulationS-K with management and, based on such review and discussions, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement.
Compensation Committee
Andrew M. Alper (Chair), Steven J. Heyer, Michelle Jarrard, Iris Knobloch, Philip A. Laskawy and Richard D. Parsons
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Compensation Discussion and Analysis Endnotes
(1) | Operating revenue, awarded compensation expense, awarded compensation ratio, adjustednon-compensation expense, adjustednon-compensation ratio and earnings from operations arenon-GAAP measures. For a description of how to calculate each of them and a reconciliation between each of them and the respective comparable GAAP financial measure, see Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of |
(2) | Operating income based on awarded compensation expense, or our awarded operating income, is anon-GAAP measure and is defined as operating revenue ($ |
(3) | Operating margin based on awarded compensation expense, or our awarded operating margin, is anon-GAAP measure and is defined as operating income based on awarded compensation expense ($ |
(4) | Operating margin based on earnings from operations is anon-GAAP measure and is defined as earnings from operations ($ |
(5) | We calculate our return of capital during |
(6) | Full-year 2021 adjusted results exclude losses of $23.6 million associated with restructuring and closing of certain offices, pre-tax charges of $4.6 million relating to office space reorganization, $16.5 million relating to expenses associated with restructuring and closing of certain offices and $2.2 million relating to our Tax Receivable Agreement (“TRA”) obligation. On a U.S. GAAP basis, these resulted in a net charge of $47.6 million or $0.42 (diluted) per share for the full year 2021. Full-year 2020 adjusted results exclude pretax charges of $12.6 million of costs relating to office space reorganization and $0.4 million relating to the reduction of our TRA. On a U.S.GAAP basis, these charges resulted in a net charge of $7.8 million, or $0.07 (diluted) per share for the full year 2020. |
(7) | We calculate TSR for purposes other than with respect to our performance-based equity award program by measuring the closing price of our Class A common stock as of December 31 of the final year of the measurement period against the closing price of our Class A common stock as of December 31 of the year preceding the measurement period, plus the amount of dividends paid on our Class A common stock during the measurement period (assuming the reinvestment of such dividends when they are paid). |
COMPENSATION OF EXECUTIVE OFFICERS
Compensation of Executive Officers
The following table contains information with respect to our NEOs in the manner required by SEC rules. We believe that the better way to view this information is as set forth in the Awarded Compensation Table under “Compensation Discussion and Analysis—20182021 Compensation for Each of Our NEOs—CompensationNEOs-Compensation Decisions” above, as the information set forth below:
includes in 20182021 compensation the grant date fair value of PRSUsPRPUs (which, as of the grant date, were deemed probable of vesting in accordance with applicable accounting rules) and, in the case of Mr. Russo, RSUs and LFIs, that relate to 20172020 performance and were awarded in February 2018;2021; and
does not include in 20182021 compensation the grant date fairnotional value of PRPUs that relate to 20182021 performance, which were awarded in February 2019.2022.
Similarly, the information with respect to 20172020 and 20162019 compensation includes PRSUs,PRUs, profits interest participation rights, RSUs and LFIs, as applicable, granted in the relevant calendar year, which related to the previous year’s performance, and does not include PRSUs,PRUs, profits interest participation rights, RSUs and LFIs, as applicable, granted with respect to the relevant calendar year’s performance.
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Summary Compensation Table
Name and Principal | Year | Salary | Bonus | Stock Awards (1) | Change in Pension Value and Nonqualified Deferred Compensation Earnings (2) | All Other Compensation (3) | Total | |||||||||||||||||||||
Kenneth M. Jacobs | 2018 | $ | 900,000 | $ | 3,125,000 | $ | 7,376,616 | $ | — | $ | 54,225 | $ | 11,455,841 | |||||||||||||||
Chairman and Chief | 2017 | $ | 900,000 | $ | 4,100,000 | $ | 6,628,765 | $ | 8,921 | $ | 53,511 | $ | 11,691,197 | |||||||||||||||
Executive Officer | 2016 | $ | 900,000 | $ | 3,500,000 | $ | 7,184,714 | $ | 4,699 | $ | 51,657 | $ | 11,641,069 | |||||||||||||||
Evan L. Russo | 2018 | $ | 750,000 | $ | 862,500 | $ | 1,861,714 | $ | — | $ | 44,749 | $ | 3,518,963 | |||||||||||||||
Chief Financial Officer | 2017 | $ | 562,500 | $ | 952,500 | $ | 1,650,665 | $ | — | $ | 41,344 | $ | 3,207,009 | |||||||||||||||
(effective October 1, 2017) | ||||||||||||||||||||||||||||
Ashish Bhutani | 2018 | $ | 750,000 | $ | 4,025,000 | (4) | $ | 5,311,141 | $ | — | $ | 35,180 | $ | 10,121,320 | ||||||||||||||
Chief Executive Officer | 2017 | $ | 750,000 | $ | 4,650,000 | (4) | $ | 4,645,168 | $ | — | $ | 31,380 | $ | 10,076,548 | ||||||||||||||
of Lazard Asset | 2016 | $ | 750,000 | $ | 3,875,000 | (4) | $ | 4,889,603 | $ | — | $ | 28,912 | $ | 9,543,515 | ||||||||||||||
Management | ||||||||||||||||||||||||||||
Scott D. Hoffman | 2018 | $ | 750,000 | $ | 922,500 | $ | 2,542,482 | $ | — | $ | 49,285 | $ | 4,264,266 | |||||||||||||||
Chief Administrative Officer | 2017 | $ | 750,000 | $ | 1,065,000 | $ | 2,347,680 | $ | 28,606 | $ | 45,549 | $ | 4,236,835 | |||||||||||||||
and General Counsel | 2016 | $ | 750,000 | $ | 912,500 | $ | 2,297,612 | $ | 14,275 | $ | 43,240 | $ | 4,017,627 | |||||||||||||||
Alexander F. Stern | 2018 | $ | 750,000 | $ | 1,912,500 | $ | 4,425,970 | $ | — | $ | 36,613 | $ | 7,125,082 | |||||||||||||||
Chief Operating Officer | 2017 | $ | 750,000 | $ | 2,250,000 | $ | 4,218,333 | $ | 18,815 | $ | 36,737 | $ | 7,273,885 | |||||||||||||||
and Chief Executive | 2016 | $ | 750,000 | $ | 2,050,000 | $ | 4,101,277 | $ | 8,346 | $ | 35,810 | $ | 6,945,433 | |||||||||||||||
Officer, Financial Advisory |
Name and Principal Position | Year | Salary | Bonus | Stock Awards (1) | Change in Pension Value and Nonqualified Deferred Compensation Earnings (2) | All Other Compensation (3) | Total | |||||||||||||||||||||
Kenneth M. Jacobs | 2021 | $ | 900,000 | $ | 3,075,000 | $ | 7,676,604 | $ | — | $ | 125,708 | $ | 11,777,331 | |||||||||||||||
Chairman and Chief | 2020 | $ | 900,000 | $ | 2,100,000 | $ | 6,930,509 | $ | 10,755 | $ | 97,061 | $ | 10,038,325 | |||||||||||||||
Executive Officer | 2019 | $ | 900,000 | $ | 2,100,000 | $ | 7,407,930 | $ | 13,697 | $ | 87,960 | $ | 10,509,587 | |||||||||||||||
Evan L. Russo Chief Financial Officer | 2021 | $ | 750,000 | $ | 1,320,000 | $ | 4,030,231 | — | $ | 74,209 | $ | 6,174,440 | ||||||||||||||||
2020 | $ | 750,000 | $ | 825,000 | $ | 2,888,556 | — | $ | 60,899 | $ | 4,524,455 | |||||||||||||||||
2019 | $ | 750,000 | $ | 732,500 | $ | 2,366,076 | — | $ | 51,039 | $ | 3,899,615 | |||||||||||||||||
Ashish Bhutani Chief Executive Officer of Lazard Asset Management (4) | 2021 | $ | 750,000 | $ | 4,400,000 | $ | 4,551,135 | — | $ | 74,469 | $ | 9,775,604 | ||||||||||||||||
2020 | $ | 750,000 | $ | 3,400,000 | $ | 4,232,557 | — | $ | 56,347 | $ | 8,438,903 | |||||||||||||||||
2019 | $ | 750,000 | $ | 3,525,000 | $ | 4,732,151 | — | $ | 48,105 | $ | 9,055,256 | |||||||||||||||||
Peter R. Orszag Chief Executive Officer of Lazard Financial Advisory (4) | 2021 | $ | 750,000 | $ | 4,350,000 | $ | 3,362,473 | — | $ | 58,583 | $ | 8,521,056 | ||||||||||||||||
2020 | $ | 750,000 | $ | 4,038,314 | $ | 3,376,402 | — | $ | 49,498 | $ | 8,214,213 | |||||||||||||||||
Alexander F. Stern President | 2021 | $ | 750,000 | $ | 1,575,000 | $ | 4,797,901 | $ | — | $ | 70,452 | $ | 7,193,353 | |||||||||||||||
2020 | $ | 750,000 | $ | 1,125,000 | $ | 4,504,822 | $ | 24,427 | $ | 49,735 | $ | 6,453,984 | ||||||||||||||||
2019 | $ | 750,000 | $ | 1,200,000 | $ | 4,794,069 | $ | 28,263 | $ | 48,034 | $ | 6,820,366 |
(1) | For |
year actually granted (rather than in the year to which the executive’s performance relates) and (ii) (A) in the case of |
(2) | Represents the aggregate change in actuarial present value of the accumulated benefits of Messrs. Jacobs |
(3) | For |
(4) | For |
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Grants of Plan Based Awards
The following table provides information about PRSUs, RSUs and LFIs, as applicable,awards granted to each of our NEOs during fiscal year 20182021 in respect of 20172020 performance.
Potential Future Payout Under Plan Based Awards
Potential Future Payout Under PRSUs | ||||||||||||||||||||||||||||||||||||
Named Executive Officer | Grant Date | Minimum Number | Target Number | Maximum Number | Grant Date Fair | Number of RSUs | Grant Date Fair | Grant Date Fair | ||||||||||||||||||||||||||||
Kenneth M. Jacobs | February 6, 2018 | 0 | 129,870 | 259,740 | $ | 7,376,616 | — | — | — | |||||||||||||||||||||||||||
Evan L. Russo | February 6, 2018 | 0 | 16,320 | 32,640 | $ | 926,976 | 8,160 | $ | 463,488 | $ | 471,250 | |||||||||||||||||||||||||
Ashish Bhutani | February 6, 2018 | 0 | 93,506 | 187,012 | $ | 5,311,141 | — | — | — | |||||||||||||||||||||||||||
Scott D. Hoffman | February 6, 2018 | 0 | 44,762 | 89,524 | $ | 2,542,482 | — | — | — | |||||||||||||||||||||||||||
Alexander F. Stern | February 6, 2018 | 0 | 77,922 | 155,844 | $ | 4,425,970 | — | — | — |
Named Executive Officer | Date Grant Approved | Grant Date | Minimum Number | Target Number | Maximum Number | Grant Date Fair Value of PRPUs (1) | Number of Profits Interest Rights & Restricted Stock Awards | Grant Date Fair Value of Profits Interest Participation Rights & Restricted Stock Awards (1) | ||||||||||||||||||||
Kenneth M. Jacobs | Feb. 2, 2021 | Feb. 17, 2021 | — | 164,628 | 395,107 | $ | 7,676,604 | — | — | |||||||||||||||||||
Evan L. Russo | Feb. 2, 2021 | Feb. 17, 2021 | — | 86,430 | 207,432 | $ | 4,030,231 | — | — | |||||||||||||||||||
Ashish Bhutani | Feb. 2, 2021 | Feb. 17, 2021 | — | 97,601 | 234,242 | $ | 4,551,135 | — | — | |||||||||||||||||||
Peter R. Orszag | Feb. 2, 2021 | Feb. 17, 2021 | — | — | — | — | 77,781 | $ | 3,362,473 | |||||||||||||||||||
Alexander F. Stern | Feb. 2, 2021 | Feb. 17, 2021 | — | 102,893 | 246,943 | $ | 4,797,901 | — | — |
(1) | Amounts represent the grant date fair value of awards made in |
The PRSUsPRPUs included in the table above are subject to performance-based and service-based and other vesting criteria and represent a contingent right to receive a number of shares of our Class A common stock that will range from zero to two2.4 times the target number (i.e., one times). Assuming satisfaction of the applicable vesting criteria, the PRSUsPRPUs granted on February 6, 201817, 2021 to each of our NEOs will vest on or around March 1, 2021.2024. The payout level at which the PRSUsPRPUs will vest is determined based on the score over a performance period beginning January 1, 20182021 and ending on December 31, 20202023 with respect to VARGR, CRRPI-CRR and AOMPI-OMM financial metrics and our performance relativesubject to the performance of our peers; provided, however, that eachincrease or decrease based on a TSR modifier. See “Compensation Program Design—Performance-Based Compensation” above.
Vesting of the three performance metrics also are evaluated on an annual basis at the end of each fiscal year during the performance period and may result in 25% of the total target number of shares of our Class A common stockPRPUs is subject to the PRSUs no longer being at risk based on the achievement of the performance criteria. See “Design of Our Compensation Programs—Performance-Based Compensation” above.
AfterMinimum Value Condition within five years following the end of 2018, the Compensation Committee evaluated our performance for 2018grant date. The Minimum Value Condition has been satisfied with respect to each of the three generally applicable performance metrics and determined that such performance exceeded an aggregate score of 1.0 for 2018. Accordingly, 25% of the total target number of shares of our Class A common stock subject to the PRSUs includedPRPUs granted in the table above are not subject to further achievement of performance goals due to our performance in 2018 (but remain subject to the service-based or other vesting criteria described above).
The RSUs included in the table above are subject to service-based vesting criteria and represent a contingent right to receive an equivalent number of shares of our Class A common stock. Assuming satisfaction of the applicable vesting criteria, approximatelyone-third of the RSUs granted on February 6, 2018 to Mr. Russo will vest on or around March 2, 2020 and the balance of such RSUs will vest on or around March 1, 2021.2019 with respect to 2019 and 2018 compensation, respectively.
Each of our NEOs who received PRPUs in fiscal year 2021 in respect of 2020 performance signed a PRSU or RSU, as applicable,PRPU award agreement in connection with his award.award, and Mr. Orszag signed a profits interest participation right award agreement in connection with the awards he received in 2021 in respect of 2020 performance. In general, these agreements provide that unvested PRSUs and RSUsawards are forfeited on termination of employment, except in cases such as death, disability, a termination by the Company
other than for “cause” (which includes for these purposes a resignation for “good reason”) or a qualifying retirement pursuant to our RSU Retirement Policy. See “RSU Retirement Policy” and “Potential Payments Upon Termination or Change in Control” below. During the performance period, the target number of PRSUs (and, after the performance period, the actual number of shares of our Class A common stock subject to the PRSUs that are earned based on achievement of performance conditions) receive dividend equivalents or, in the case of restricted stock, cash dividends accrued during the performance period, at the same rate that dividends are paid on shares of our Class A common stock. The dividend equivalents with respect to PRSUs are credited as RSUs or, in the case of restricted stock, cash dividends, that are not subject to the performance-based vesting criteria but are otherwise subject to the same restrictions as the underlying PRSUs to which they relate. Similarly, during the period ending on the applicable vesting date, the RSUs granted to Mr. Russo receive dividend equivalents at the same rate that dividends are paid on shares of our Class A common stock, which remain subject to the same restrictions as the underlying RSUs to which they relate. In addition, the PRSU and RSU agreements contain standard covenants including, among others, noncompetition and nonsolicitation of our clients and employees.
The LFIs included in the table above represent interests in certain Lazard investment funds. Pursuant to the terms of these awards, a portion of Mr. Russo’s incentive compensation is invested in funds managed by LAM. The dollar value (determined as of the grant date) of the portion of Mr. Russo’s incentive compensation that is invested in such funds is included in the table above. The LFIs granted on February 6, 2018 to Mr. Russo will vest as follows:one-third on or around March 2, 2020 andtwo-thirds on or around March 1, 2021. Mr. Russo signed an LFI award agreement in connection with his award, which provides that unvested LFIs are forfeited on termination of employment, except in limited cases such as death, disability, a termination by the Company other than for “cause” (which includes for these purposes a resignation for “good reason”) or a qualifying retirement pursuant to our Deferred Compensation Retirement Policy or, solely in the RSU Retirement Policy.case of Mr. Stern, in the event that he resigns to become an advisor to the Company during the term of his retention agreement and remains in that role until the relevant awards have vested. See “RSU“Deferred Compensation Retirement Policy” and “Potential Payments Upon Termination or Change in Control” below. In the event we declare cash dividends on our Class A common stock during the investment fundsperformance period for PRPUs, subject to satisfying the performance conditions and other relevant vesting criteria, our NEOs will be allocated income in whichrespect of such dividends on a pro rata basis as if the LFIs are invested distribute earnings, such earnings are automatically reinvested in additional LFIs, withPRPUs were exchanged for our Class A common stock, based on the same restrictions as the underlying LFIsextent to which they relate.performance conditions are actually achieved. Profits interest participation rights and restricted stock also accrue dividends or dividend equivalents in the event we declare cash dividends on our Class A common stock during the relevant vesting period, which dividends are retained by Lazard until the vesting criteria have been satisfied. In addition, Mr. Russo’sfrom the date
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Item 2: An Advisory Vote Regarding Executive Compensation | Other Compensation Matters
that the applicable dividend is paid to holders of our Class A common stock until the time of payment to the PRPU or profits interest participation right holder, unpaid distributions are credited with interest at a rate of 6% per annum, compounded quarterly. The holders of PRPUs and profits interest participation rights receive distributions necessary to pay related taxes on the income allocations, but otherwise are not entitled to any amounts in respect of such allocations until applicable vesting conditions in respect of such PRPUs and profits interest participation rights have been satisfied. In addition, the PRPU, profits interest participation right, restricted stock and LFI award agreement containsagreements contain standard covenants including, among others, noncompetition and nonsolicitation of our clients and employees.
RSU RETIREMENT POLICY
Deferred Compensation Retirement Policy
Pursuant to the RSUDeferred Compensation Retirement Policy, outstanding and unvested PRUs, profits interest participation rights, RSUs, restricted stock and LFIs will vest (and in the case of members of Lazard Group who report income from Lazard Group and its affiliates on ScheduleK-1 to Lazard Group’s Federal income tax return, RSUs and certain PRSUs will be settled in restricted stock) as long as (i) the holder is at least 56 years old, (ii) the holder has completed at least five years of service with the Company, (iii) the sum of the holder’s actual age and years of service is at least 70, and (iv) commencing with the RSUs and PRSUsrelevant deferred compensation granted in 2017,2021, the holder has completed a service period of approximately three months following the date of grant.grant and ending in the year of the applicable grant on August 31st, in the case of awards granted to Managing Directors, unless another date is set forth in the applicable award agreement. Similarly, following the retirement eligibility date, the service-based vesting criteria of the PRSUsPRUs will no longer apply, but the performance-based vesting criteria will continue to apply through the end of the applicable performance period, including
following the executive’s retirement during the performance period. Following retirement, the PRUs, profits interest participation rights, RSUs, PRSUs and restricted stock granted to the former RSU and PRSU holders, as applicable,LFIs remain subject to all restrictive covenants, including continued compliance withnon-compete,non-solicit and other provisions contained in the original award agreement through the original vesting date of the RSUs or PRSUs, as applicable,relevant deferred compensation, notwithstanding any expiration date specified therein. Any dividends payable with respect to the profits interest participation rights, PRPUs and restricted stock are held in escrow until the forfeiture provisions lapse. A recipient of restricted stock is required to make an election under Section 83(b) of the Internal Revenue Code, which subjects him or her to taxation on such restricted stock on the date of grant. With the consent of the compliance department of the Company, a recipient may dispose of a portion of the restricted stock granted to him or her to pay such taxes. Pursuant to the restricted stock, LFI, profits interest participation right
Messrs. Jacobs and PRPU award agreements, the RSU Retirement Policy also applies to such awards.
Although Mr. Jacobs satisfied the age and service criteria pursuant to the RSU Retirement Policy in September 2014, due to his previous waiver ofBhutani are retirement eligibility, he became retirement eligible on March 31, 2016, which is the date that his prior retention agreement was scheduled to expire. Mr. Bhutani became retirement eligible on May 8, 2017, which was the date that he satisfied the age and service criteria pursuant to the RSU Retirement Policy. In addition, Mr. Hoffman became retirement eligible on December 24, 2018, which was the date that he satisfied the age and service criteria pursuant to the RSU Retirement Policy.eligible. The retirement eligibility dates for Messrs. Russo, Orszag and Stern are August 2, 2030, December 16, 2027 and November 4, 2022, respectively.
RETENTION AGREEMENTS WITH OUR NEOS
Retention Agreements with Our NEOs
In anticipation of the expiration of the prior retention agreements with our NEOs, (other than Mr. Russo), which was scheduled to occur on March 31, 2016,2019, on March 9, 2016,29, 2019, we entered into amended retention agreements with each of the NEOs.NEOs at that time. Effective February 25, 2021, in connection with his appointment as an executive officer of the Company, we entered into a retention agreement with Mr. Orszag. Generally, the provision of services under the retention agreements is terminable by either party upon three months’ notice, and the agreements also contain the terms and conditions set forth below. Effective as of October 30, 2017, we entered into an amendment to Mr. Hoffman’s amended retention agreement solely to reflect that, in addition to continuing to serve as General Counsel of the Company, effective July 26, 2017, Mr. Hoffman was appointed Chief Administrative Officer of the Company. In addition, in connection with Mr. Russo’s appointment, effective October 1, 2017, as Chief Financial Officer of the Company, effective as of October 30, 2017, we entered into a retention agreement with Mr. Russo with terms substantially similar to the amended retention agreements with our other NEOs.
Compensation and Employee Benefits. The term of the amended retention agreements in effect for our NEOs expires2021 expired on March 31, 2019 or, if later, the second anniversary2022, for each of a change in control of the Company.our NEOs. The retention agreements with our NEOs in effect for 2021 provide for a minimum annual base salary of $900,000 for Mr. Jacobs and $750,000 for each of Messrs. Russo, Bhutani, Hoffman,Orszag and Stern. In addition, each of our NEOs is entitled to an annual bonus to be determined under the Company’s applicable annual bonus plan on the same basis as annual bonuses are determined for other executive officers of the Company; provided that, in each case, the NEO is employed by the Company at the end of the applicable fiscal year.
Such bonus will be paid in the same ratio of cash to equity and deferred awards as is generally applicable to other executives receiving comparable bonuses. The retention agreements in effect for 2021 with our NEOs also provide that each is entitled to participate in employee retirement and welfare benefit plans and programs of the type made available to our most senior executives.
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In addition, under the retention agreement in effect for 2021, Mr. Jacobs is entitled, subject to his continued employment with the Company, to the fringe benefits and perquisites to which he was entitled as of March 9, 2016.29, 2019 and Mr. Orszag is entitled to receive a special retention award, as described below in “Potential Payments Upon Termination or Change in Control”.
Payments and Benefits Upon Certain Terminations of Service. The retention agreements in effect for 2021 with our NEOs also provide for certain severance benefits in the event of a termination by us other than for “cause” or by the NEO for “good reason” (which we refer to below as a “qualifying termination”) prior to the expiration of the retention agreement. See “Potential Payments Upon Termination or Change in Control” below for further details.
OUTSTANDING EQUITY AWARDS AT 2018 FISCALOutstanding Equity Awards At 2021 Fiscal YEAR-ENDYear-End
The following table provides information about the number and value of RSUs, PRSUsPRPUs, profits interest participation rights and shares of restricted stock that were actually held (or, pursuant to the rules and guidance of the SEC, were for purposes of the table deemed held) by our NEOs as of December 31, 2018.2021. The market value of the RSUs, PRSUsPRPUs, profits interest participation rights and restricted stock was calculated based on the NYSE closing price of our Class A common stock on December 31, 20182021 ($36.91)43.63). The table does not include PRPU awards that relate to 20182021 performance, which were granted in February 2019.2022.
Named Executive Officer | Number of RSUs and Shares of Restricted Stock That Have Not Vested (1)(2)(3)(4) | Market Value of RSUs and Shares of Restricted Stock That Have Not Vested | Number of PRSUs That Have Not Vested (5) | Market or Payout Value of PRSUs That Have Not Vested | Number of Profits Restricted Stock That Have Not (2)(3)(4) | Market Value of Restricted Stock That Have Not | Number of PRPUs That Have Not Vested (5) | Market or Payout Value of PRPUs That Have Not | ||||||||||||||||||||||||
Kenneth M. Jacobs | 507,069 | $ | 18,715,917 | 454,492 | $ | 16,775,300 | 421,962 | $ | 18,410,202 | 637,489 | $ | 27,813,645 | ||||||||||||||||||||
Evan L. Russo | 70,919 | $ | 2,617,620 | 28,560 | $ | 1,054,150 | 142,643 | $ | 6,223,514 | 308,454 | $ | 13,457,848 | ||||||||||||||||||||
Ashish Bhutani | 339,399 | $ | 12,527,217 | 322,861 | $ | 11,916,800 | 267,279 | $ | 11,661,383 | 382,268 | $ | 16,678,353 | ||||||||||||||||||||
Scott D. Hoffman | 164,091 | $ | 6,056,599 | 158,806 | $ | 5,861,529 | ||||||||||||||||||||||||||
Peter R. Orszag | 189,861 | $ | 8,283,635 | — | — | |||||||||||||||||||||||||||
Alexander F. Stern | 362,051 | $ | 13,363,302 | 280,958 | $ | 10,370,160 | 273,304 | $ | 11,924,254 | 404,491 | $ | 17,647,942 |
(1) |
|
(2) | With respect to |
number of shares of our Class A common stock subject to these |
(3) |
|
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(4) | This column also reflects |
(5) | The |
|
STOCK VESTED
Stock Vested
The following table sets forth certain information concerning PRSUs, RSUs and restricted stock held by our NEOs that vested in 2018.2021. The value realized on vesting was calculated based on the NYSE closing price of our Class A common stock on the trading day immediately preceding the vesting date.
Named Executive Officer | Number of Shares That Vested or Were Acquired on Vesting | Value Realized on Vesting (1) | Number of Shares Withheld or Available to Fund Tax Obligation for Retirement Eligible NEOs (2) | Value Realizable from Shares Withheld or Available to Fund Tax Obligation for Retirement Eligible NEOs (3) | Number of Shares That Vested or Were Acquired on Vesting | Value Realized on Vesting | ||||||||||||||||||
Kenneth M. Jacobs | 162,703 | $ | 8,781,081 | 168,484 | $ | 8,991,860 | 203,986 | $ | 8,065,300 | |||||||||||||||
Evan L. Russo | 30,564 | $ | 1,649,539 | – | – | 38,825 | $ | 1,502,952 | ||||||||||||||||
Ashish Bhutani | 73,407 | $ | 3,961,776 | 101,736 | $ | 5,426,007 | 146,600 | $ | 5,797,592 | |||||||||||||||
Scott D. Hoffman | 103,734 | $ | 5,598,524 | 38,863 | $ | 1,352,432 | ||||||||||||||||||
Peter R. Orszag | 16,166 | $ | 625,801 | |||||||||||||||||||||
Alexander F. Stern | 175,702 | $ | 9,482,637 | – | – | 153,795 | $ | 5,953,542 |
|
|
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PENSION BENEFITSPension Benefits
U.S. Defined Benefit Pension Plans. The following table provides information with respect to the Lazard Frères & Co. LLC Employees’ Pension Plan, a qualified defined-benefit pension plan, and a related supplemental defined-benefit pension plan. Each of Messrs. Jacobs Hoffman and Stern has an accrued benefit under the Lazard Frères & Co. LLC Employees’ Pension Plan, and Messrs. Hoffman andMr. Stern havehas accrued additional benefits under the
related supplemental defined-benefit pension plan. The annual benefit under the Lazard Frères & Co. LLC Employees’ Pension Plan and, if applicable, the supplemental defined-benefit pension plan, payable as a single life annuity commencing at age 65, would be $6,447 for Mr. Jacobs, $18,845 for Mr. Hoffman and $12,421 for Mr. Stern. Under the terms of the supplemental defined-benefit pension plan, the benefits are only payable in a singlelump-sum lump sum payment. These benefits accrued in each case prior to the date the applicable NEO became a managing director of the Company. Benefit accruals under both of these plans were frozen for all participants effective January 31, 2005. For a discussion of the valuation methodology and material assumptions applied in quantifying the present value of the current accrued benefit, see Note 1617 of Notes to the Consolidated Financial Statements contained in our Annual Report on Form10-K for the fiscal year ended December 31, 2018.2021. Messrs. Russo, Orszag and Bhutani do not participate in any of these plans.
Named Executive Officer | Plan Name | Number of Years of Credited Service (1) | Present Value of Accumulated Benefit ($) (2) | Payments During Last Fiscal Year ($) | ||||||||||
Kenneth M. Jacobs | Lazard Frères & Co. LLC Employees’ Pension Plan | 3 | $ | 70,678 | $ | 0 | ||||||||
Scott D. Hoffman | Lazard Frères & Co. LLC Employees’ Pension Plan | 5 | $ | 101,370 | $ | 0 | ||||||||
Supplemental Defined- Benefit Pension Plan | 5 | $ | 73,203 | $ | 0 | |||||||||
Alexander F. Stern | Lazard Frères & Co. LLC Employees’ Pension Plan | 6 | $ | 93,376 | $ | 0 | ||||||||
Supplemental Defined- Benefit Pension Plan | 6 | $ | 4,641 | $ | 0 |
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Named Executive Officer | Plan Name | Number of of Credited Service (1) | Present Value of Accumulated Benefit ($) (2) | Payments During Last Fiscal Year ($) | ||||||||||
Kenneth M. Jacobs | Lazard Freres & Co. LLC Employees’ Pension Plan | 3 | $ | 94,362 | — | |||||||||
Alexander F. Stern | Lazard Freres & Co. LLC Employees’ Pension Plan | 6 | $ | 139,094 | — | |||||||||
Supplemental Defined- Benefit Pension Plan | 6 | $ | 6,866 | — |
(1) | Mr. Jacobs has been employed by the Company for |
(2) | In calculating the present value of accumulated benefits outlined above, Messrs. Jacobs |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
Potential Payments Upon Termination or Change in Control
As described above, for 2021, each of our NEOs has entered intowas party to a retention agreement with the Company, which provides for certain severance benefits in the event of a termination by us other than for “cause” or by the NEO for “good reason” (which we refer to below as a “qualifying termination”) prior to the expiration of the retention agreement.
Each As of December 31, 2021, each of our NEOs has received RSUsother than Mr. Orszag had outstanding PRPUs. As of such date, Mr. Orszag had outstanding profits interest participation rights, restricted stock and PRUsLFIs. Except in the case of the LFIs, all such awards have been made pursuant to the 2008 Plan andor the 2018 Plan, Messrs. Russo and Bhutani have also received LFIs, and Mr. Russo has also received restricted stock.Plan.
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The following table shows the potential payments that would have been made by the Company to each of our NEOs assuming that such NEO’s employment with the Company terminated, or a change in control occurred, on December 31, 20182021 under the circumstances outlined in the table. For purposes of this table, the price of our Class A common stock is assumed to be $36.91,$43.63, which was the closing price on December 31, 2018,2021 and the amounts set forth below reflect the terms of the retention agreements as in effect on December 31, 2018.2021.
Prior to a Change in Control | On or After a Change in Control | |||||||||||||||||||||||||||||||
Named Executive Officer | Death or Disability | Involuntary Termination Without “Cause” | Resignation for “Good Reason” | Retirement | No Termination of Employment | Death or Disability | Involuntary Termination Without “Cause” or Resignation for “Good Reason” | Retirement | ||||||||||||||||||||||||
Kenneth M. Jacobs |
| |||||||||||||||||||||||||||||||
Severance Payment (1) | — | $ | 23,500,000 | $ | 23,500,000 | — | — | — | $ | 23,500,000 | — | |||||||||||||||||||||
RSU, PRSU and Restricted Stock Vesting (2) (3) | $ | 30,708,060 | $ | 30,708,060 | $ | 30,708,060 | $ | 25,382,795 | — | $ | 35,767,424 | $ | 35,767,424 | $ | 35,767,424 | |||||||||||||||||
Pro-rata Annual Incentive Payment (4) | $ | 10,850,000 | $ | 10,850,000 | $ | 10,850,000 | — | — | $ | 10,850,000 | $ | 10,850,000 | — | |||||||||||||||||||
Salary in Lieu of Notice (5) | — | $ | 225,000 | — | — | — | — | $ | 225,000 | — | ||||||||||||||||||||||
Evan L. Russo |
| |||||||||||||||||||||||||||||||
Severance Payment (1) | — | $ | 6,837,500 | $ | 6,837,500 | — | — | — | $ | 6,837,500 | — | |||||||||||||||||||||
RSU, PRSU, Restricted Stock and LFI Vesting (2) (3) | $ | 4,623,320 | $ | 4,623,320 | $ | 4,623,320 | — | $ | 3,038,763 | $ | 5,024,901 | $ | 5,024,901 | — | ||||||||||||||||||
Pro-rata Annual Incentive Payment (4) | $ | 2,668,750 | $ | 2,668,750 | $ | 2,668,750 | — | — | $ | 2,668,750 | $ | 2,668,750 | — | |||||||||||||||||||
Salary in Lieu of Notice (5) | — | $ | 187,500 | — | — | — | — | $ | 187,500 | — | ||||||||||||||||||||||
Ashish Bhutani | ||||||||||||||||||||||||||||||||
Severance Payment (1) | — | $ | 20,050,000 | $ | 20,050,000 | — | — | — | $ | 20,050,000 | — | |||||||||||||||||||||
RSU, PRSU and LFI Vesting (2) (3) | $ | 20,993,283 | $ | 20,993,283 | $ | 20,993,283 | $ | 17,230,825 | — | $ | 24,600,165 | $ | 24,600,165 | $ | 24,600,165 | |||||||||||||||||
Pro-rata Annual Incentive Payment (4) | $ | 9,275,000 | $ | 9,275,000 | $ | 9,275,000 | — | — | $ | 9,275,000 | $ | 9,275,000 | — | |||||||||||||||||||
Salary in Lieu of Notice (5) | — | $ | 187,500 | — | — | — | — | $ | 187,500 | — | ||||||||||||||||||||||
Scott D. Hoffman |
| |||||||||||||||||||||||||||||||
Severance Payment (1) | — | $ | 8,400,000 | $ | 8,400,000 | — | — | — | $ | 8,400,000 | — | |||||||||||||||||||||
RSU, PRSU and Restricted Stock Vesting (2) (3) | $ | 10,156,635 | $ | 10,156,635 | $ | 10,156,635 | $ | 8,285,778 | — | $ | 11,918,128 | $ | 11,918,128 | $ | 11,918,128 | |||||||||||||||||
Pro-rata Annual Incentive Payment (4) | $ | 3,450,000 | $ | 3,450,000 | $ | 3,450,000 | — | — | $ | 3,450,000 | $ | 3,450,000 | — | |||||||||||||||||||
Salary in Lieu of Notice (5) | — | $ | 187,500 | — | — | — | — | $ | 187,500 | — | ||||||||||||||||||||||
Alexander F. Stern |
| |||||||||||||||||||||||||||||||
Severance Payment (1) | — | $ | 14,500,000 | $ | 14,500,000 | — | — | — | $ | 14,500,000 | — | |||||||||||||||||||||
RSU and PRSU Vesting (2) (3) | $ | 20,630,069 | $ | 20,630,069 | $ | 20,630,069 | — | — | $ | 23,733,462 | $ | 23,733,462 | — | |||||||||||||||||||
Pro-rata Annual Incentive Payment (4) | $ | 6,500,000 | $ | 6,500,000 | $ | 6,500,000 | — | — | $ | 6,500,000 | $ | 6,500,000 | — | |||||||||||||||||||
Salary in Lieu of Notice (5) | — | $ | 187,500 | — | — | — | — | $ | 187,500 | — |
Prior to a Change in Control | On or After a Change in Control | |||||||||||||||||||||||||||||||||||
Named | Death or Disability | Involuntary Termination Without “Cause” | Resignation for “Good Reason” | Retirement | No Termination of Employment | Death or Disability | Involuntary Termination Without “Cause” | Resignation for “Good Reason” | Retirement | |||||||||||||||||||||||||||
Kenneth M. Jacobs | ||||||||||||||||||||||||||||||||||||
Severance Payment (1) | — | $ | 20,000,000 | $ | 20,000,000 | — | — | — | $ | 20,000,000 | $ | 20,000,000 | — | |||||||||||||||||||||||
PRPU Vesting (2) (3) | $ | 39,874,220 | $ | 39,874,220 | $ | 39,874,220 | $ | 29,589,776 | — | $ | 49,440,233 | $ | 49,440,233 | $ | 49,440,233 | $ | 49,440,233 | |||||||||||||||||||
Pro-rata Annual Incentive Payment (4) | $ | 9,100,000 | $ | 9,100,000 | $ | 9,100,000 | — | — | $ | 9,100,000 | $ | 9,100,000 | $ | 9,100,000 | — | |||||||||||||||||||||
Salary in Lieu of Notice (5) | — | $ | 225,000 | — | — | — | — | $ | 225,000 | $ | 225,000 | — | ||||||||||||||||||||||||
Evan L. Russo | ||||||||||||||||||||||||||||||||||||
Severance Payment (1) | — | $ | 9,650,000 | $ | 9,650,000 | — | — | — | $ | 9,650,000 | $ | 9,650,000 | — | |||||||||||||||||||||||
PRPU Vesting (2) (3) | $ | 16,181,078 | $ | 16,181,078 | $ | 16,181,078 | — | — | $ | 20,925,704 | $ | 20,925,704 | $ | 20,925,704 | — | |||||||||||||||||||||
Pro-rata Annual Incentive Payment (4) | $ | 4,075,000 | $ | 4,075,000 | $ | 4,075,000 | — | — | $ | 4,075,000 | $ | 4,075,000 | $ | 4,075,000 | — | |||||||||||||||||||||
Salary in Lieu of Notice (5) | — | $ | 187,500 | — | — | — | — | $ | 187,500 | $ | 187,500 | — | ||||||||||||||||||||||||
Ashish Bhutani | ||||||||||||||||||||||||||||||||||||
Severance Payment (1) | — | $ | 16,850,000 | $ | 16,850,000 | — | — | — | $ | 16,850,000 | $ | 16,850,000 | — | |||||||||||||||||||||||
PRPU Vesting (2) (3) | $ | 24,622,697 | $ | 24,622,697 | $ | 24,622,697 | $ | 18,357,900 | — | $ | 30,339,768 | $ | 30,339,768 | $ | 30,339,768 | $ | 30,339,768 | |||||||||||||||||||
Pro-rata Annual Incentive Payment (4) | $ | 7,675,000 | $ | 7,675,000 | $ | 7,675,000 | — | — | $ | 7,675,000 | $ | 7,675,000 | $ | 7,675,000 | — | |||||||||||||||||||||
Salary in Lieu of Notice (5) | — | $ | 187,500 | — | — | — | — | $ | 187,500 | $ | 187,500 | — | ||||||||||||||||||||||||
Peter R. Orszag | ||||||||||||||||||||||||||||||||||||
Severance Payment (1) | — | $ | 6,427,084 | $ | 6,427,084 | — | — | — | $ | 6,427,084 | $ | 6,427,084 | — | |||||||||||||||||||||||
Restricted Stock, Profits Interest Participation Right and LFI Vesting (2) (3) | $ | 12,255,146 | $ | 12,255,146 | $ | 12,255,146 | — | — | $ | 12,255,146 | $ | 12,255,146 | $ | 12,255,146 | — | |||||||||||||||||||||
Pro-rata Annual Incentive Payment (4) | $ | 5,677,084 | $ | 5,677,084 | $ | 5,677,084 | — | — | $ | 5,677,084 | $ | 5,677,084 | $ | 5,677,084 | — | |||||||||||||||||||||
Salary in Lieu of Notice (5) | — | $ | 187,500 | — | — | — | — | $ | 187,500 | $ | 187,500 | — | ||||||||||||||||||||||||
Alexander F. Stern | ||||||||||||||||||||||||||||||||||||
Severance Payment (1) | — | $ | 6,375,000 | $ | 6,375,000 | — | — | — | $ | 6,375,000 | $ | 6,375,000 | — | |||||||||||||||||||||||
PRPU Vesting (2) (3) (6) | $ | 25,600,252 | $ | 25,600,252 | $ | 25,600,252 | — | — | $ | 31,643,147 | $ | 31,643,147 | $ | 31,643,147 | — | |||||||||||||||||||||
Pro-rata Annual Incentive Payment (4) | $ | 5,625,000 | $ | 5,625,000 | $ | 5,625,000 | — | — | $ | 5,625,000 | $ | 5,625,000 | $ | 5,625,000 | — | |||||||||||||||||||||
Salary in Lieu of Notice (5) | — | $ | 187,500 | — | — | — | — | $ | 187,500 | $ | 187,500 | — |
(1) | In addition to the severance payments listed (each of which is described below under “Retention Agreements”), each of our NEOs would have been entitled to receive two years of medical and dental coverage following termination. However, amounts relative to this benefit are immaterial and have not been included in the table. |
(2) | Valuation of all |
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performance period has not ended (i.e., those granted in |
(3) | Upon death, (i) all |
the amount sufficient to cover payment of taxes will be delivered to the executive or withheld immediately upon termination, and the remaining percentage will be delivered on the original vesting dates, provided that the executive does not violate his restrictive covenants. Messrs. Jacobs |
The table above assumes, with respect to the PRSU awards for which the three-year performance period has not ended (i.e., those granted in 2018 and 2017 in respect of compensation for 2017 and 2016, respectively), that (x) in the case of a termination without “cause”, upon death or disability or resignation for “good reason” (other than following a change in control), the performance conditions would be equal to approximately 1.3333 times and 1.6667 times the target level, respectively, and (y) in the case of retirement of Messrs. Jacobs, Bhutani and Hoffman (other than following a change in control), the performance conditions would be equal to 1.0 times the target level, with the payout level determined accordingly in all cases. These assumptions are not necessarily indicative of future payouts for the awards, which are not now known but will ultimately be based on our actual performance through the relevant period (which may be higher or lower than the amount assumed for this calculation). For the PRSU awards granted in 2016, since the three-year performance period ended as of December 31, 2018, the performance conditions and the payout level are based on actual performance equal to 2.0 times the target level. The scheduled vesting dates for outstanding PRSU, RSU and restricted stock awards are set forth in footnotes (1) through (4) to the “Outstanding Equity Awards at 2018 Fiscal Year-End” table above.
The table above assumes, with respect to the PRPU awards for which the three-year performance period has not ended (i.e., those granted in 2021 and 2020 in respect of compensation for 2020 and 2019, respectively), that (x) in the case of a termination without “cause”, upon death or disability or resignation for “good reason” (other than following a change in control), the performance conditions would be equal to approximately 1.467 times and 1.667 times the target level, respectively, and (y) in the case of retirement of Messrs. Jacobs and Bhutani (other than following a change in control), the performance conditions would be equal to 1.0 times the target level, with the payout level determined accordingly in all cases. The payout in respect of PRPU awards granted in 2021 and 2020 also includes any unvested dividend amounts paid at 1.467 times and 1.667 times, respectively, the payout level and interest on unpaid distributions from the date that the applicable dividend was paid to holders of our Class A common stock until December 31, 2021 at 6% per annum, compounded quarterly, less any distributions received to pay related taxes on the income allocations. These assumptions are not necessarily indicative of future payouts for the awards, which are not now known but will ultimately be based on our actual performance through the relevant period (which may be higher or lower than the amount assumed for this calculation). For the PRPU awards granted in 2019, since the three-year performance period ended as of December 31, 2021, the performance conditions and the payout level are based on actual performance equal to 1.78 times the target level. The scheduled vesting dates for outstanding PRPU, profits interest participation right and restricted stock awards are set forth in footnotes (4) and (5) to the “Outstanding Equity Awards at 2021 Fiscal Year-End” table above. |
(4) | Pursuant to their retention agreements, in the event of an involuntary termination without “cause” or resignation for “good reason”, or upon termination due to death or disability, each NEO is entitled to apro-rated portion of the average annual bonus (or, to the extent applicable, cash distributions, and including any bonuses paid in the form of equity awards or LFI awards based on the grant date value of such awards in accordance with our normal valuation methodology, at the target level, in the case of |
(5) |
|
due to a failure by the Company to continue, following the expiration of the retention agreement, Mr. Jacobs’ employment as CEO and Chairman pursuant to an agreement having terms and conditions that are reasonable and customary at the time of such expiration, except in the event that Mr. Jacobs rejects an offer of continued employment consistent with the foregoing. |
(6) | As discussed in further detail under “Retention Agreements” below, Mr. Stern’s retention agreement includes a provision that allows him to become an advisor to the Company at any time prior to March 31, 2022 and serve in that role for the remainder of the term of his retention agreement, except that, in the event Mr. Stern receives equity awards that would vest after March 31, 2022, he would be permitted to elect to continue in his role as an advisor until November 4, 2022. In the event Mr. Stern’s service as an advisor were terminated by the Company without “cause” or due to death or disability, his outstanding awards would continue to vest in accordance with their terms, subject to his continued compliance with such restrictive covenants through the applicable vesting date, and in the event Mr. Stern’s service as an advisor were terminated by the Company for “cause” or if he resigned as an advisor for any reason, his outstanding awards would be forfeited. Based on the assumptions applicable to Messrs. Jacobs and Bhutani in the event of retirement (as described in footnote (3) above), in the event that |
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Mr. Stern had elected to terminate his employment effective December 31, 2021 in order to become an advisor to the Company, the estimated value of RSUs and PRUs subject to continued vesting as described above would have been $19,007,584. |
None of the NEOs is entitled to an excise taxgross-up payment with respect to Section 280G of the Internal Revenue Code. Instead, the retention agreements provide for a “best net” approach, wherebychange-in-control payments are limited to the threshold amount under Section 280G if it would be more favorable to the NEO on a netafter-tax basis than receiving the full payments and paying the excise taxes. These potential reductions are not reflected in the amounts set forth above.
RETENTION AGREEMENTSRetention Agreements
In anticipation of the expiration of the prior retention agreements with our NEOs, which was scheduled to occur on March 31, 2019, on March 29, 2019, we extended the term of the retention agreements with each of the NEOs at that time to March 31, 2022. Effective February 25, 2021, in connection with his appointment as an executive officer of the Company, we entered into a retention agreement with Mr. Orszag, the term of which also expired on March 31, 2022. The terms of the retention agreements that expired on March 31, 2022 are set forth below.
Except in the case of a qualifying termination that occurs on or following a change in control of the Company, the severance benefits described below are conditioned upon the applicable NEO timely delivering an irrevocable waiver and release of claims in favor of the Company and its affiliates.
With respect to a termination for “cause” of an NEO, the term “cause” generally means: (i) conviction of, or a guilty plea or plea of nolo contendere (ornon-U.S. equivalent) to, a felony, or of any other crime that legally prohibits the NEO from working for the Company; (ii) a breach of a regulatory rule that materially adversely affects the NEO’s ability to perform his duties for the Company; (iii) willful and deliberate failure on the part of the NEO (A) to perform his employment duties in any material respect, or (B) to follow specific reasonable directions received from the CEO (or, for Messrs.Mr. Jacobs, and Hoffman, from the Board of Directors or, for Mr. Russo, from the Audit Committee of the Board of Directors); or (C) to comply with the policies of the Company and its affiliates in any material respect, which failure is demonstrably and materially injurious to the Company or any of its affiliates; (iv) a breach of the covenants contained in the retention agreements that is (individually or combined with other such breaches) demonstrably and materially injurious to the Company or any of its affiliates. Notwithstanding the foregoing, (1) with respect to the events described in clauses (ii), (iii)(A), (iii)(C) and (iv) of the prior sentence, the NEO’s acts or failures to act generally shall not constitute cause to the extent taken (or not taken) based upon the direct instructions of the Board of Directors (or the CEO for Messrs. Russo, Bhutani, Hoffman,Orszag and Stern) or upon the direct advice of counsel to the Company; (2) no act or failure to act will be considered “willful” unless it is done (or omitted to be done) by the NEO in bad faith or without reasonable belief that his action or omission was in the best interests of the Company; (3) clause (iii) of the prior sentence will not apply to any failure by the NEO resulting from incapacity due to physical or mental illness or following a termination by the Company of his employment without cause or his resignation for good reason. In addition, any termination following a change in control for a reason other than as described in clause (i) above shall not be considered for “cause” until the NEO is delivered a copy of a valid resolution finding, by the affirmative vote oftwo-thirds of the entire membership of the board of directors (or similar governing body) of the entity that is the parent of the Company, that circumstances constituting “cause” exist.
With respect to a resignation by an NEO for “good reason”, the term “good reason” generally means (subject to notice and a cure period): (i) the assignment to the NEO of any duties
inconsistent in any material respect with his position(s) (including status, offices, titles and reporting requirements), authority, duties or responsibilities (including, for Mr. Jacobs, any authority, duties or responsibilities as are consistent with those exercised generally by the chief executive officer of a public company) as in effect as of March 9, 2016 (or, in the caseeffective date of Mr. Russo, October 30, 2017)the retention agreement or any other action by the Company which results in a material diminution in such position, authority, duties or responsibilities from the level in effect as of such applicable date;date, provided that, in the case of Mr. Stern, the foregoing shall apply solely in the event of a material diminution in his title as President of Lazard and Lazard Group; (ii) any obligation that the NEO report other than directly to (A) the Board of Directors, in the case of Mr. Jacobs, (B) the Board of Directors or CEO, in the case of Mr. Hoffman, (C) the Audit Committee of the Board of Directors or the CEO, in the case of Mr. Russo, and (D)(C) the CEO, in the case of Messrs. Bhutani
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Orszag and Stern;Bhutani; (iii) a material breach by the Company of the terms of the retention agreement, including the nondisparagement covenant favoring the NEO; or (iv) without the NEO’s written consent, any requirement that the NEO’s principal place of employment be relocated to a location that increases the executive’s commute from his primary residence by more than 30 miles. Mr. Bhutani’s retention agreement also defines “good reason” to include any person, other than Mr. Bhutani, receiving the title “Chairman of Lazard Asset Management LLC” or Chairman of our asset management group, unless (1) such person receives such title in connection with a merger or acquisition transaction involving Lazard, on the one hand, and an unrelated company that has an asset management business of comparable size, or greater, to the Company’s asset management group, on the other hand, and (2) such transaction is approved by the Board of Directors. With respect to Mr. Jacobs, his retention agreement also defines “good reason” as any failure by the Company to continue, following the expiration of the retention agreement, Mr. Jacobs’ employment as CEO and Chairman pursuant to an agreement having terms and conditions that are reasonable and customary at the time of such expiration, except in the event that Mr. Jacobs rejects an offer of continued employment consistent with the foregoing.
In the event of a qualifying termination of an NEO on December 31, 2018,2021, the executive generally would have been entitled to receive in a lump sum: (1) any unpaid base salary accrued through the date of termination; (2) any earned but unpaid bonuses for years completed prior to the date of termination; (3) apro-rated portion of the average annual bonus (or, to the extent applicable, cash distributions, and including any bonuses paid in the form of equity awards (including LFI awards), or special retention awards, in the case of Mr. Orszag, based on the grant date value of such equity or cash awards in accordance with our normal valuation methodology) paid or payable to the executive for the Company’s two completed fiscal years immediately preceding the fiscal year in which the termination occurs; and (4) a severance payment in an amount equal to, in the case of Messrs. Jacobs, Bhutani and Russo, two times, and, in the case of Messrs. Orszag and Stern, one times, the sum of such NEO’s base salary and average annual bonus (notpro-rated) described in clause (3). Thepro-rated portion of the average annual bonus described in clause (3) of the immediately preceding payment is also payable in the event of a termination due to death or disability. Upon a qualifying termination, each NEO and his eligible dependents would generally continue to be eligible to participate in the Company’s medical and dental benefit plans, on the same basis as in effect immediately prior to the date of termination (which currently requires the NEO to pay a portion of the premiums) for two years following such termination. The period of such medical and dental benefits continuation would generally be credited towards the NEO’s credited age and service for the purpose of our retiree medical program.
In addition to the post-employment medical and dental benefits described above, following a termination of Mr. Jacobs’ service for any reason other than for “cause”, Mr. Jacobs and his
eligible dependents would be eligible for continued participation in our medical and dental benefits plans for the remainder of Mr. Jacobs’ life and that of his current spouse, with Mr. Jacobs or his spouse paying the full cost of all premiums associated with such coverage (other than during the periods following a qualifying termination described above). If, following termination of Mr. Jacobs’ employment and prior to a change in control of the Company, such coverage becomes impracticable due to fundamental changes in law, Mr. Jacobs and the Company will cooperate to implement reasonable changes to such coverage, as mutually agreed in writing.
A resignation by an NEO for “good reason” will be treated as a termination by the Company without “cause” for purposes of all of his equity and LFI awards outstanding at the time of such resignation. In addition, Mr. Stern’s retention agreement provides that in the case of a termination of his employment without “cause” or for “good reason” prior to March 31, 2022, in order to continue vesting in his equity awards, Mr. Stern must continue to comply with the restrictive covenants set forth in the amended retention agreement and his outstanding equity award agreements (including non-competition and nonsolicitation of employees and clients) through the applicable vesting date of such outstanding awards. Furthermore, solely in the case of Mr. Jacobs, in the event of a qualifying termination of Mr. Jacobs’ employment prior to March 31, 2019,2022, he will be permitted to sell his shares of restricted stock that are subject to ongoing vesting requirements, provided that the proceeds of the sale must be deposited in escrow and will remain subject to forfeiture until the restricted stock otherwise would have vested.
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Mr. Stern’s retention agreement includes a provision that allows him to become an advisor of the Company at any time prior to March 31, 2022 and serve in that role for the remainder of the term of his retention agreement, except that, in the event Mr. Stern receives equity awards that would vest after March 31, 2022, he would be permitted to elect to continue in his role as an advisor until November 4, 2022. As an advisor, Mr. Stern would be paid an annual cash fee to be agreed and his outstanding awards would continue to vest in accordance with their terms, subject to achievement of applicable performance goals and Mr. Stern’s continued service as an advisor. In addition, Mr. Stern would be required to comply with the restrictive covenants set forth in the retention agreement and his award agreements (including non-competition and nonsolicitation of employees and clients) through the applicable vesting date of such outstanding awards in order to vest. In the event Mr. Stern’s service as an advisor were terminated by the Company without “cause” or due to death or disability, his outstanding awards would continue to vest in accordance with their terms, subject to his continued compliance with such restrictive covenants through the applicable vesting date. In the event Mr. Stern’s service as an advisor were terminated by the Company for “cause” or if he resigned as an advisor for any reason, his outstanding awards would be forfeited.
Mr. Orszag’s retention agreement includes the grant of a special retention award payable on July 15, 2022, subject to Mr. Orszag’s continued employment with the Company through such date, consisting of a cash payment equal to $1,250,000 and equity-based awards with a grant date value of $2,500,000, which is subject to vesting on September 3, 2024. In the event Mr. Orszag resigns without “good reason” or is terminated for “cause” on or prior to July 15, 2024, he will be obligated to repay the cash payment to the Company. Additional special retention awards payable on July 15, 2023 are reflected in Mr. Orszag’s amended retention agreement as described in the Company’s Current Report on Form 8-K, filed with the SEC on April 6, 2022. In addition, Mr. Orszag is also required to repay certain special cash retention awards paid to him prior to entry into his retention agreement in the event that he terminates his employment without “good reason” or is terminated for “cause” on or prior to the dates specified therein.
Noncompetition and Nonsolicitation of Clients. While providing services to the Company and during thesix-month period following termination of the NEO’s services (or three-month period in the event of such a termination by us without “cause” or by the NEO for “good reason”), the NEO may not:
provide services or perform activities in a line of business that is similar to any line of business in which the NEO provided services to us in a capacity that is similar to the capacity in which the NEO acted for us while providing services to us (“competing activity”) for any business or business unit that engages in any activity, or owns or controls a significant interest in any entity that engages in any activity, that competes with any activity in which we are engaged up to and including the date of termination of employment (a “competitive enterprise”);
acquire an ownership or voting interest of more than 5% in any competitive enterprise; or
solicit any of our clients on behalf of a competitive enterprise or reduce or refrain from doing business with us in connection with the performance of services that would be competing activities, or otherwise interfere with or damage (or attempt such acts in respect of) any client’s relationship with us.
Nonsolicitation of Employees. While providing services to us (including during any period of notice of termination) and during the nine-month period following termination of the NEO’s services, the NEO may not, directly or indirectly, in any manner, solicit or hire any of our officers, agents or employees at the associate level or above to apply for, or accept employment with, any competitive enterprise, or otherwise interfere with any such officer’s, agent’s or employee’s relationship with us.
Transfer of Client Relationships, Nondisparagement and Notice Period Restrictions. The NEO is required, upon termination of his services to us and during the90-day period following termination, to take all actions and do all things reasonably requested by us to maintain for us the business, goodwill and business relationships with our clients with which he worked; provided that such actions and things do not materially interfere with other employment or
professional activities of the NEO. In addition, while providing services to us and thereafter, the NEO generally may not disparage us and the Company
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generally may not disparage him, and before and during the three-month notice period prior to termination, the NEO is prohibited from entering into a written agreement to perform competing activities for a competitive enterprise.
AWARD AGREEMENTS AND “DOUBLE-TRIGGER” VESTING2022 Updates. In anticipation of the March 31, 2022 expiration of the prior retention agreements with our NEOs, on such date, we entered into amended and restated retention agreements with Messrs. Jacobs, Russo and Orszag. In addition, on March 31, 2022, after being notified by each of them of his intention to retire from Lazard, we entered into resignation letter agreements with each of Mr. Bhutani and Mr. Stern. Each of the agreements and a description of the material terms thereof is included in the Company’s Current Report on Form 8-K, filed with the SEC on April 6, 2022.
Award Agreements And “Double-Trigger” Vesting
Beginning in 2013, we adopted “double-trigger” vesting for NEO long-term incentive awards in the event of a change in control, such that long-term incentive awards granted to our NEOs in 2013 and later generally will not immediately accelerate vesting upon a change in control, but will instead require both a change in control and another event (such as a qualifying termination) in order to vest. In addition, beginning in 2019, pursuant to the 2018 Plan, we adopted “double-trigger” vesting for such awards granted to all our other employees. In the case of PRUs, upon a change in control, the performance period for the unvested but outstanding awards will be deemed to end and the payout level for such performance period will be determined by the Compensation Committee, based on the greater of (i) the target level or (ii) the Company’s performance (as measured by the performance metrics described in the underlying award agreement) through the date of such change in control. However, any applicable service conditions will continue to apply to the awards following a change in control, subject to acceleration in the case of certain qualifying terminations (whether occurring before or after such change in control).
If an NEO had voluntarily resigned from the Company on December 31, 20182021 without “good reason” or was terminated by the Company for “cause”, he would not have been entitled to receive any severance orpro-rated bonus payments from the Company, and, except in the case of retirement by Mr. Jacobs or Mr. Bhutani, or in the event of Mr. Hoffman,Stern’s resignation to become an advisor of the Company, any unvested long-term incentive awards would have been forfeited. Messrs. Jacobs Bhutani and HoffmanBhutani were retirement-eligible as of December 31, 2018.2021. If an NEO is retirement-eligible, he may retire without forfeiting his long-term incentive awards but (other than following a change in control) or, in Mr. Stern’s case, he may resign to become an advisor to the Company, but such awards remain subject to applicable performance conditions for the full performance period. Following retirement (other than following a change in control), or, in Mr. Stern’s case, resignation to become an advisor to the Company, all such awards remain subject to compliance with restrictive covenants through their original vesting date, notwithstanding any shorter duration provided in award agreements. See “Compensation of Executive Officers—RSU“Deferred Compensation Retirement Policy” above.
CHANGE IN CONTROL
Change in Control
The term “change in control”, as used in the retention agreements, the 2018 Plan and the 2008 Plan, generally means any of the following events: (i) an acquisition (other than directly from the Company) by an individual, entity or a group (excluding the Company or an employee benefit plan of the Company or a corporation controlled by the Company’s shareholders) of 30% or more of either (A) the then-outstanding shares of our Class A common stock (the “Outstanding Company Common Stock”) or (B) the combined voting power of the then-outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); (ii) a change in a
majority of the current Board of Directors of the Company (the “Incumbent Board”) (excluding any persons approved by a vote of at least a majority of the Incumbent Board other than in connection with an actual or a threatened proxy contest); (iii) consummation of a merger, consolidation or sale of all or substantially all of the Company’s assets (collectively, a “Business Combination”) other than a Business Combination in which all or substantially all of the individuals and entities who are the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Business Combination will beneficially own, directly or indirectly, more than 50% of, respectively, the outstanding shares of common stock, and the combined voting power of the then-outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination, at least a majority of the board of directors of the resulting corporation were members of the Incumbent Board, and after which no person owns 30% or more of the
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stock of the resulting corporation, who did not own such stock immediately before the Business Combination; or (iv) shareholder approval of a complete liquidation or dissolution of the Company.
Pay Ratio
Pursuant to Item 402(u) of Regulation S-K, presented below is the ratio of annual total compensation of our CEO to the median annual total compensation of all our employees (excluding our CEO). We refer to theThe employee who received this median annual total compensation is referred to below as our median employee.
As of December 31, 2018,2021, which is the date that we used to determine our employee population for purposes of identifying our median employee, we had 3,1113,310 full-time, part-time, temporary and seasonal employees. We did not include independent contractors or leased workers in our determination.
In order to identify our median employee, we ranked each of our employees (other than our CEO) based on 20182021 awarded compensation. For this purpose, 20182021 awarded compensation was comprised of each employee’s (i) base salary or wages earned during 2018,2021, (ii) annual cash bonus (if any) paid in respect of 20182021 performance, (iii) deferred cash awards (if any) granted in respect of 20182021 performance and (iv) long-term incentive awards (if any) granted in respect of 20182021 performance. This same methodology was used to reflect compensation in respect of 20182021 for each of our NEOs in the table under “Compensation Discussion and Analysis—Awarded Compensation Table” above and, as noted in the text preceding the Awarded Compensation Table, reflects compensation for 20182021 performance in the manner it was considered by our Compensation Committee. In determining 20182021 awarded compensation, we did not apply any cost-of-living adjustments or annualize any partial year compensation.
Once we identified the median employee, we determined that individual’s annual total compensation in accordance with the requirements for determining total compensation in the Summary Compensation Table.
The 20182021 annual total compensation for our CEO, as reported in the Summary Compensation Table in this Proxy Statement, was $11,455,841.$11,777,331. The 20182021 median annual total compensation for all our employees (excluding our CEO),median employee, determined in accordance with the requirements
for determining total compensation in the Summary Compensation Table, was $189,929.$216,902. The ratio of our CEO’s annual total compensation to the median annual total compensation of all employees (excluding our CEO)median employee for 20182021 is 6054 to 1. We believe that this ratio represents a reasonable estimate calculated in a manner consistent with Item 402(u).
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING AND COMPLIANCE
Our directorsCertain Relationships and officers file reports with the SEC indicating the number of shares of any class of our equity securities they owned when they became a director or officer and, after that, any changes in their ownership of our equity securities. These reports are required by Section 16(a) of the Exchange Act. We have reviewed these reports and we have received written representations from the individuals required to file these reports. Based on this review, we believe that during 2018 each of our directors and officers required to file these reports has complied with applicable reporting requirements for transactions in our equity securities.Related Transactions
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Policy on Related Party Transactions
Our Board of Directors has adopted a written policy requiring that all “Interested Transactions” (as defined below) be approved or ratified by either the Nominating & Governance Committee or, under certain circumstances, the Chair of the Nominating & Governance Committee. The Nominating & Governance Committee is required to review the material facts of all Interested Transactions that require the Committee’s approval or ratification and either approve or disapprove of the entry into the Interested Transaction. In determining whether to approve or ratify an Interested Transaction, the Nominating & Governance Committee takes into account, among other factors it deems appropriate, whether the Interested Transaction is on terms no less favorable than terms generally available to an unaffiliated third party under the same or similar circumstances and the extent of the interest of the “Related Party” (as defined below) in the transaction. In addition, the Board of Directors has delegated to the Chair of the Nominating & Governance Committee the authority topre-approve or ratify (as applicable) any Interested Transaction with a Related Party in which the aggregate amount involved is expected to be less than $1 million. A report is then made to the Nominating & Governance Committee at its next regularly scheduled meeting of each new Interested Transactionpre-approved by the Chair of the Nominating & Governance Committee. Any director who is a Related Party with respect to an Interested Transaction may not participate in any discussion or approval of such Interested Transaction. An “Interested Transaction” is one in which (i) we are a participant, (ii) the aggregate amount involved will or may be expected to exceed $120,000, (iii) one of our executive officers, directors, director nominees, 5%
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shareholders, or their family members (each a “Related Party”) has a direct or indirect material interest in the transaction and (iv) the transaction is required to be disclosed in our Proxy Statement or Annual Report on Form10-K pursuant to the rules and regulations promulgated by the SEC.
Tax Receivable Agreement
In connection with our initial public offering and related transactions in May 2005, we entered into a tax receivable agreement with the predecessor of LMDC Holdings, LLC (“LMDC Holdings”) on May 10, 2005 (the “Tax Receivable Agreement”). The agreement was based on the mutual recognition that the redemption of Lazard Group membership interests that were held by the historical partners of Lazard Group LLC (“Lazard Group”) on May 10, 2005 for cash resulted in an increase in the tax basis of the tangible and intangible assets of Lazard Group attributable to our subsidiaries’ interest in Lazard Group that otherwise would not have been available. The agreement also was based on the mutual recognition that the exchange from time to time by such historical partners of exchangeable interests inLAZ-MD Holdings LLC for shares of our Class A common stock could subsequently result in additional increases in such tax basis.
On June 16, 2015, the Company and LMDC Holdings amended and restated the Tax Receivable Agreement and, on October 26, 2015, the Company and LTBP Trust, a Delaware statutory trust (the “Trust”), entered into a Second Amended and Restated Tax Receivable Agreement (the “Amended and Restated Tax Receivable Agreement”).
Pursuant to these transactions, among other things, (i) LMDC Holdings assigned all of its obligations under the Tax Receivable Agreement, including the obligation to receive payments and promptly distribute them to historical partners of Lazard Group, to the Trust, and the Trust assumed all of LMDC Holdings’ obligations thereunder, (ii) LMDC Holdings distributed the interests in the Trust to certain owners of LMDC Holdings, and (iii) holders of interests in the Trust obtained the ability, subject to certain restrictions and conditions, to transfer such interests to certain additional persons and entities, including the Company.
The Amended and Restated Tax Receivable Agreement provides for the payment by our subsidiaries to the Trust of (i) approximately 45% (following the July 2015 purchase described below) of the amount of cash savings, if any, in U.S. federal, state and local income tax or franchise tax that we actually realize as a result of the increases in tax basis and of certain other tax benefits related to the Amended and Restated Tax Receivable Agreement, and (ii) an amount that we currently expect will approximate 85% of the cash tax savings that may arise from tax benefitsincreases attributable to payments under the Amended and Restated Tax Receivable Agreement. Our subsidiaries expect to benefit from the balance of cash savings, if any, in income tax that our subsidiaries realize. Any amount paid by our subsidiaries to the Trust will generally be distributed to the owners of the Trust, including from such tax basis increases certain of our executive officers, in proportion to their beneficial interests in the Trust.officers.
For purposes of the Amended and Restated Tax Receivable Agreement, 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 the tangible and intangible assets of Lazard Group attributable to our subsidiaries’ interest in Lazard Group and had our subsidiaries not entered into the Amended and Restated Tax Receivable Agreement. The term of the Amended and Restated Tax Receivable Agreement will continue until approximately 2033 or, if earlier, until all relevant tax benefits have been utilized or expired.
In July 2015, the Company purchased approximately 47% of the then-outstanding beneficial interests in the Trust from certain owners of the Trust for approximately $42 million in cash, which resulted in the automatic cancellation of such beneficial interests and the extinguishment of a significant portion of our payment obligations under the Amended and Restated Tax Receivable Agreement.
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The cumulative liability relating to our obligations under the Amended and Restated Tax Receivable Agreement as of December 31, 20182021 was approximately $271$213 million.
The amount of the Amended and Restated Tax Receivable Agreement liability is an undiscounted amount based upon currently enacted tax laws, the current structure of the Company and various assumptions regarding potential future operating profitability. The assumptions reflected in the estimate involve significant judgment. As such, the actual amount and timing of payments under the Amended and Restated Tax Receivable Agreement could differ materially from our estimates.
The Company made one payment of approximately $33$10 million under the Amended and Restated Tax Receivable Agreement in 20182021 and currently expects that an additional payment of approximately $23$21 million will be made during 2019.2022.
Certain Relationships with Our Directors, Executive Officers, Principal Shareholders and Employees
During 20192021 and 2018,2020, certain of our executive officers received shares of our Class A common stock in connection with the vesting or settlement of previously granted deferred equity incentive awards. The vesting or settlement, as applicable, 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 our Class A common stock from the executive officers equal in value to the estimated amount of such tax. In addition, during 2018,2020 and 2021, the Company purchased shares of our Class A common stock from certain executive officers. Each of the foregoing transactions, including its terms, was reported in a Form 4 filing.
The Vanguard Group beneficially owns more than 5% of our Class A common stock. The Company and its affiliates engage in asset management or other transactions or arrangements with, and provide ordinary course financial services to, entities and funds within the Vanguard Group and its affiliates or their respective clients, including by acting as asub-advisor to certain funds managed by the Vanguard Group. These transactions and arrangements are negotiated on anarm’s-length basis, contain customary terms and conditions, and are unrelated to the ownership of our Class A common stock by the Vanguard Group or its related funds and entities.
FMR LLC beneficially owns more than 5% of our Class A common stock. The Company and its affiliates utilize the services of affiliates of FMR LLC, including management services for our employee retirement and equity plans and distribution services for our asset management business. These transactions and arrangements are negotiated on an arm’s-length basis, contain customary terms and conditions, and are unrelated to the ownership of our Class A common stock by FMR LLC or its related entities.
Some of our directors serve as directors of organizations to which Lazard provides services, or as directors or trustees oftax-exempt organizations to which Lazard makes charitable contributions, in each case in the ordinary course of business. In addition, Mr. Heyer serves as Chairman and CEO of Haymaker Acquisition Corp., an entity to which Lazard provided services in 2018 and early 2019, as further described above under “Information regarding the Board of Directors and Corporate Governance—Director Independence”.
Some of our directors and executive officers (and persons or entities affiliated with them) have funds under management with, or other accounts with, our Asset Management business, and have invested or may invest their personal funds in other funds or investments that we have established and that we may manage or sponsor.
In the fourth quarter of 2018, we established anot-for-profit entity, the Lazard Foundation, with the objective of donating funds to qualifying charities, and made an unconditional commitment of $10 million to the Lazard Foundation. Certain executive officers of the Company will serve as members, directors and officers of the Lazard Foundation.
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RATIFICATION OF THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS OUR INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM FOR 2019
2022
The Audit Committee has recommended the selection of Deloitte & Touche LLP as our independent registered public accounting firm for the 20192022 fiscal year, subject to shareholder ratification. Deloitte & Touche LLP will audit our consolidated financial statements for the 20192022 fiscal year and perform other services. Deloitte & Touche LLP acted as Lazard’s independent registered public accounting firm for the year ended December 31, 20182021 and has acted in such capacity since 2000. In addition to this appointment, shareholders are requested to authorize the Board of Directors, acting by the Audit Committee, to set the remuneration for Deloitte & Touche LLP for their audit of the Company for the year ended December 31, 2019.2022. A Deloitte & Touche LLP representative will be present at the meeting, and will have an opportunity to make a statement and to answer your questions.
BOARD OF DIRECTORS’ RECOMMENDATION
The Board recommends you vote FOR the ratification of the appointment of Deloitte & Touche LLP.
The Board recommends you vote FOR the ratification of the appointment of Deloitte & Touche LLP. |
If a majority of the votes cast on this matter are not cast in favor of the ratification of the appointment of Deloitte & Touche LLP, the Board of Directors, in its discretion, may select another independent auditor as soon as possible.
Unless otherwise directed in the proxy, the persons named in the proxy will vote FOR the ratification of the appointment of Deloitte & Touche LLP.
FEES OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Fees of Independent Registered Public Accounting Firm
For the fiscal years ended December 31, 20182021 and 2017,2020, fees for services provided by Deloitte & Touche LLP, the member firms of Deloitte Touche Tohmatsu and their respective affiliates were as follows (in thousands of dollars):
Fees | 2018 | 2017 | ||||||
Audit Fees for the audit of the Company’s annual financial statements, the audit of the effectiveness of the Company’s internal control over financial reporting and reviews of the financial statements included in the Company’s quarterly reports onForm 10-Q, including services in connection with statutory and regulatory filings or engagements | $ | 8,371 | $ | 7,830 | ||||
Audit-Related Fees, including fees for audits of employee benefit plans, computer and control-related attest services, agreed-upon procedures, regulatory and compliance reviews, fund audits and other accounting research services | $ | 1,398 | $ | 1,440 | ||||
Tax Fees for tax advisory and compliance services not related to the audit | $ | 431 | $ | 651 | ||||
All Other Fees (1) | $ | 13 | $ | 76 |
Fees | 2021 | 2020 | ||||||
Audit Fees for the audit of the Company’s annual financial statements, the audit of the effectiveness of the Company’s internal control over financial reporting and reviews of the financial statements included in the Company’s quarterly reports on Form 10-Q, including services in connection with statutory and regulatory filings or engagements | $ | 8,882 | $ | 8,724 | ||||
Audit-Related Fees, including fees for audits of employee benefit plans, computer and control-related attest services, agreed-upon procedures, regulatory and compliance reviews, fund audits and other accounting research services | $ | 1,559 | $ | 1,926 | ||||
Tax Fees for tax advisory and compliance services not related to the audit | $ | 492 | $ | 464 | ||||
All Other Fees (1) | $ | 13 | $ | 56 |
(1) | Represents fees for subscriptions, training and assessment services (ESG) that were provided to the Company by affiliates of Deloitte & Touche LLP that were unrelated to the audit, audit-related and tax services described above. |
The Audit Committee has adopted a policy regardingpre-approval of audit andnon-audit services provided by our independent auditor to the Company and its subsidiaries. The policy provides the guidelines necessary to adhere to Lazard’s commitment to auditor independence and compliance with relevant laws, regulations and guidelines relating to auditor independence. The policy sets forth four
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Item 3: Ratification of the Appointment of Deloitte & Touche LLP as Our Independent Registered Public Accounting Firm for 2022 | Fees of Independent Registered Public Accounting Firm
categories of permitted services (Audit, Audit-Related, Tax and Other), listing the types of permitted services in each category. All of the permitted services requirepre-approval by the Audit Committee. In lieu of Audit Committeepre-approval on anengagement-by-engagement basis, each category of permitted services, with reasonable detail as to the types of services contemplated, ispre-approved as part of the annual budget approval by the Audit Committee. Permitted services not contemplated during the budget process must be presented to the Audit Committee for approval prior to the commencement of the relevant engagement. The Audit Committee Chair, or, if he is not available, any other member of the Audit Committee, may grant approval for any such engagement if approval is required prior to the next scheduled meeting of the Audit Committee. All of the fees paid to Deloitte & Touche LLP in 20182021 werepre-approved in accordance with these procedures, and there were no services for which the de minimis exception permitted in certain circumstances under SEC rules was utilized.
AUDIT COMMITTEE REPORT
Audit Committee Report
The primary function of the Audit Committee (referred to in this report as the “Committee”) is to assist the Board of Directors in its oversight of the Company’s financial reporting process. The Committee operates pursuant to a charter approved by our Board of Directors. Management is responsible for the Company’s financial statements, the overall reporting process and the system of internal controls, including internal control over financial reporting. The independent registered public accounting firm, or the independent auditor, is responsible for conducting annual audits and quarterly reviews of the Company’s financial statements and expressing an opinion as to the conformity of the annual financial statements with generally accepted accounting principles in the United States of America, or GAAP, as well as an opinion regarding the Company’s internal control over financial reporting.
In the performance of its oversight function, the Committee has reviewed and discussed the audited financial statements as of and for the year ended December 31, 20182021 with management and the independent auditor. The Committee has also discussed with the independent auditor the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board or PCAOB, Auditing Standard No. 1301, Communications with Audit Committees.(“PCAOB”) and the Securities and Exchange Commission. Finally, the Committee has received the written disclosures and the letter from the independent auditor required by PCAOB Rule 3526, Communications with Audit Committees Concerning Independence, has considered whether the provision of othernon-audit services by the independent auditor to the Company is compatible with maintaining the independent auditor’s independence and has discussed with the independent auditor the independent auditor’s independence.
It is not the duty or responsibility of the Committee to conduct auditing or accounting reviews or procedures. In performing their oversight responsibility, members of the Committee rely without independent verification on the information provided to them, and on the representations made, by management and the independent auditor. Accordingly, the Committee’s oversight does not provide an independent basis to determine that management has maintained appropriate accounting and financial reporting principles or appropriate internal controls and procedures designed to assure compliance with accounting standards and applicable laws and regulations. Furthermore, the Committee’s considerations and discussions do not assure that the audit of the Company’s financial statements has been carried out in accordance with generally accepted auditing standards or that the financial statements are presented in accordance with GAAP.
Based upon the review and discussions described in this report, and subject to the limitations on the role and responsibilities of the Committee referred to above and in the Committee charter, the Committee recommended to our Board of Directors that the audited financial statements referred to above be included in the Company’s Annual Report on Form10-K for the year ended December 31, 20182021 to be filed with the Securities and Exchange Commission.
Dated as of February 21, 201923, 2022
Audit Committee
Philip A. Laskawy (Chair), Ann-Kristin Achleitner, Andrew M. Alper, Steven J. HeyerMichelle Jarrard and Jane L. Mendillo
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SHAREHOLDER PROPOSALS AND NOMINATIONS FOR THE 2020 ANNUAL GENERAL MEETINGShareholder Proposals and Nominations for the 2023 Annual General Meeting
Shareholder Proposals and Nominations for the 2023 Annual Meeting
Proxy Statement Proposals.Proposals. Under the rules of the SEC, proposals that shareholders seek to have included in the proxy statement for our next annual general meeting of shareholders must be received by the Secretary of the Company not later than November 19, 2019.December 7, 2022.
Other Proposals and Nominations.Nominations. OurBye-laws govern the submission of nominations for director or other business proposals that a shareholder wishes to have considered at a meeting of shareholders, but which are not included in the Company’s proxy statement for that meeting. Under ourBye-laws, nominations for director or other business proposals to be addressed at our next annual general meeting may be made by a shareholder entitled to vote who has delivered a notice to the Secretary of the Company no later than the close of business on January 24, 2020,February 17, 2023, and not earlier than December 25, 2019.January 18, 2023. The notice must contain the information required by theBye-laws.
These advance notice provisions are in addition to, and separate from, the requirements that a shareholder must meet in order to have a proposal included in the proxy statement under the rules of the SEC.
A proxy granted by a shareholder will give discretionary authority to the proxies to vote on any matters introduced pursuant to the above advance noticeBye-law provisions, subject to applicable rules of the SEC.
Any proposal or nomination described above should be delivered in writing to the following address:
Lazard Ltd
30 Rockefeller Plaza
New York, New York 10112
Attn: Scott D. Hoffman
Secretary
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General Information
Notice of Proxy Availability
As permitted by the rules of the Securities and Exchange Commission, or the SEC, we are making this Proxy Statement and our 2021 Annual Report available to shareholders electronically via the Internet. The “e-proxy” process expedites shareholders’ receipt of proxy materials and lowers the costs and reduces the environmental impact of our Annual General Meeting.
On or about April 6, 2022, we mailed to shareholders of record as of the close of business on March 22, 2022, the record date, a Notice of Internet Availability of Proxy Materials, or Notice, containing instructions on how to access this Proxy Statement, our 2021 Annual Report and other soliciting materials via the Internet. If you received a Notice by mail, you will not receive a printed copy of the proxy materials in the mail unless you have previously elected to receive proxy materials by mail. Instead, the Notice instructs you on how to access and review all of the important information contained in the Proxy Statement and 2021 Annual Report. The Notice also instructs you on how you may submit your proxy. If you received a Notice by mail and would like to receive a printed copy of our proxy materials, you should follow the instructions included in the Notice to request such materials.
Who Can Vote
Holders of our Class A common stock, as recorded in our share register at the close of business on March 22, 2022, the record date, may vote at the annual general meeting and any adjournment or postponement thereof. As of March 22, 2022, there were 112,766,091 shares of our Class A common stock outstanding (including 10,996,148 shares held by our subsidiaries, which shares are not counted for purposes of the voting calculations set forth in this Proxy Statement).
Voting Your Proxy
You may vote by attending the virtual meeting or by proxy. We recommend you vote by proxy even if you plan to attend the virtual meeting. You can always change your vote at the virtual meeting. Most shareholders have a choice of proxy voting by using a toll-free telephone number, voting through the Internet or, if they received their proxy materials by regular mail, completing the proxy card and mailing it in the postage-paid envelope provided. If you received your materials by regular mail, please refer to your proxy card or the information forwarded by your broker, bank or other holder of record to see which options are available to you. Executors, administrators, trustees, guardians, attorneys and other representatives voting on behalf of a shareholder should indicate the capacity in which they are signing, and corporations should vote by an authorized officer whose title should be indicated.
How Proxies Work
Lazard’s Board of Directors is asking for your proxy. Giving us your proxy means you authorize us to vote your shares at the meeting, or at any adjournment or postponement thereof, in the manner you direct. You may vote for all, some or none of our director nominees. You may also vote for or against the other proposals or abstain from voting. If you sign and return a proxy card or otherwise vote by telephone or the Internet but do not specify how to vote, we will vote your shares: FOR each of our director nominees; FOR a non-binding advisory vote regarding executive compensation as described in this Proxy Statement; and FOR ratification of the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for 2022. The enclosed proxy also confers discretionary authority with respect to amendments or variations to the matters identified in the Notice of 2022 Annual General Meeting and with respect to other matters that may be properly brought before the meeting or any adjournment or postponement thereof. As of the date of this Proxy Statement, we do not know of any other business that will be presented at the meeting. If other business shall properly come before the meeting, the persons named in the proxy will vote according to their best judgment.
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General Information
Revoking Your Proxy
You may revoke your proxy before it is voted by submitting a new proxy with a later date, by attending and voting during the virtual meeting or by sending written notification addressed to:
Lazard Ltd
30 Rockefeller Plaza
New York, New York 10112
Attn: Scott D. Hoffman, Secretary
Mere attendance at the virtual meeting will not revoke a proxy that was previously submitted to us.
Quorum and Conduct of Meeting
In order to carry on the business of the meeting, we must have a quorum. This means that at least two shareholders must be present at the virtual meeting, either in person or by proxy, and those shareholders must generally hold shares representing more than 50% of the votes that may be cast by all shareholders having the right to attend and vote at the meeting. The chairman of the meeting will have broad authority to conduct the meeting so that the business of the meeting is carried out in an orderly and timely manner. In doing so, the chairman will have broad discretion to establish reasonable rules for discussion, comments and questions during the meeting. The chairman also is entitled to rely upon applicable law regarding disruptions or disorderly conduct to ensure that the meeting is conducted in a manner that is fair to all participants.
Attendance at the Annual General Meeting
Due to the COVID-19 pandemic, the annual general meeting will be held in virtual format only to provide a safe experience for all of our shareholders and employees. Only shareholders, their proxy holders and our guests may attend the virtual meeting. If you are a holder of record and plan to attend the virtual meeting, please indicate this when you vote. We have structured the virtual annual general meeting to provide shareholders the same rights as if the meeting were held in person, including the ability to vote electronically during the meeting and to ask questions in accordance with the rules of conduct for the meeting. You may attend, vote and submit questions during the virtual meeting by visiting www.meetnow.global/M924R5T. If you are a registered shareholder, enter the control number included in your Notice or proxy card in order to attend the virtual meeting. If you are a beneficial shareholder whose shares are held through an intermediary, such as a bank or broker, you must register in advance to attend the virtual Annual General Meeting. To register, you must submit proof of your proxy power (legal proxy) reflecting your holdings as of the close of business on March 22, 2022, along with your name and email address to Computershare. To do so, you should forward the email from your broker, or attach an image of your legal proxy to an email, to legalproxy@computershare.com. Requests for registration must be labeled as “Legal Proxy” and be received no later than 5:00 p.m. Eastern Daylight Time on May 13, 2022. You will receive a confirmation of your registration, together with a control number required to log in, by email from Computershare after Computershare receives the necessary registration materials, from you.
The virtual meeting will begin promptly at 9:00 a.m., Eastern Daylight Time. We encourage you to access the meeting prior to the start time leaving ample time for the check in. If you have technical difficulties or any questions regarding the virtual meeting website, please contact the support team at 1-888-724-2416 (toll free) or +1-781-575-2748 (international). If there are any technical issues with convening or hosting the meeting, we will promptly post information to our Investor Relations website, www.lazard.com/investorrelations/, including, if necessary, information on when the virtual meeting will be convened.
We are closely monitoring any continuing developments related to COVID-19 and there is a possibility that we may need to reconsider the date or time of our annual general meeting. If we determine it necessary to make such changes to our annual general meeting logistics, we will announce the decision to do so in advance.
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General Information
Votes Needed
We have adopted a majority vote policy described in additional detail under “Election of Directors-Majority Vote Policy” below, which generally requires that a director receive a majority of the votes cast in order to be elected in an “uncontested election of directors” (as defined below), though our Bye-laws state that directors are elected by a plurality of the votes cast. See “Election of Directors-Majority Vote Policy” below for additional information regarding our majority vote policy. Votes withheld from any director nominee will not be counted in such nominee’s favor. With respect to all other matters to be acted on at the meeting, the affirmative vote of a majority of the combined voting power of all of the shares of our Class A common stock present or represented and entitled to vote at the meeting is required.
As permitted by Bermuda law, we treat abstentions as present and entitled to vote for purposes of determining a quorum, and, in accordance with our Bye-laws, they would be counted in the calculation for determining whether any proposal received a majority vote at the meeting. With regard to “broker non-votes”, we also treat such shares as present for purposes of determining a quorum, but they would not be counted in the calculation for determining whether the relevant proposal received a majority vote at the meeting. A “broker non-vote” is a proxy submitted by a broker or other nominee in which the broker or other nominee does not vote on behalf of a client on a particular matter for lack of instruction when such instruction is required by the rules of the NYSE. Brokers may no longer use discretionary authority to vote “broker non-votes” on matters that are not considered “routine”. The vote in connection with the ratification of the appointment of our independent registered public accounting firm (Item 3) is considered “routine”. The votes in connection with all other matters to be acted on at the meeting are not considered “routine”. If you do not submit voting instructions to your broker or other nominee, we expect that your shares will be treated as broker non-votes.
Important Notice Regarding the Availability of Proxy Materials for the Annual General Meeting ofShareholders To Be Held on May 18, 2022
This Proxy Statement and the 2021 Annual Report can be viewed on our website at www.lazard.com/investorrelations/. Most shareholders may elect to either view future proxy statements and annual reports over the Internet or receive paper copies in the mail. If you are a shareholder of record, you may make this election by following the instructions provided when you vote over the Internet. If you hold your Class A common stock through a bank, broker or other holder of record, please refer to the information provided by that entity for instructions on how to elect to receive our future proxy statements and annual reports.
Cost of This Proxy Solicitation
We pay the expenses of preparing the proxy materials and soliciting this proxy. We have engaged Morrow Sodali Global LLC to assist in the solicitation and distribution of proxy materials and we expect to pay Morrow Sodali Global LLC a fee of approximately $12,500, plus reasonable out-of-pocket costs and expenses, for its services. We also reimburse brokers and other nominees for their expenses in sending these materials to you and obtaining your voting instructions. In addition to this distribution, proxies may be solicited personally, electronically, by mail or by telephone by our directors, officers, other employees or our agents. If any of our directors, officers and other employees assist in soliciting proxies, they will not receive additional compensation for those services.
Multiple Shareholders Sharing Same Address
If you and other residents at your mailing address with the same last name own shares of our Class A common stock through a bank or broker, your bank or broker may have sent you a notice that your household will receive only one Notice or one annual report and proxy statement for each company in which the members of your household hold stock through that bank or broker. This practice of sending only one copy of proxy materials to holders residing at a single address is known as “householding”, and was authorized by the SEC to allow multiple investors residing at the same address the convenience of receiving a single copy of the Notice or of the annual reports, proxy statements and other disclosure
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General Information
documents, if they consent to do so. If you did not respond that you did not want to participate in householding, you were deemed to have consented to the process. If you did not receive a householding notice from your bank or broker, you can request householding by contacting that entity. You also may revoke your consent to householding at any time by contacting your bank or broker.
If you wish to receive a separate paper copy of this Proxy Statement or the 2021 Annual Report, you may call (212) 632-6886, visit our website at www.lazard.com/investorrelations/, send an e-mail to: investorrelations@lazard.com or write to:
Lazard Ltd
30 Rockefeller Plaza
New York, New York 10112
Attn: Investor Relations
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LAZARD LTD
STANDARDS OF DIRECTOR INDEPENDENCE
The Board has established these guidelines to assist it in determining whether or not directors qualify as “independent” pursuant to the guidelines and requirements set forth in the New York Stock Exchange’s Corporate Governance Rules. In each case, the Board will broadly consider all relevant facts and circumstances and shall apply the following standards (in accordance with the guidance, and subject to the exceptions, provided by the New York Stock Exchange in its Commentary to its Corporate Governance Rules):
1. Employment and commercial relationships affecting independence.
A. Current Relationships. A director will not be independent if: (i) the director is a current partner or current employee of Lazard’s internal or external auditor; (ii) an immediate family member of the director is a current partner of Lazard’s internal or external auditor; (iii) an immediate family member of the director is (a) a current employee of Lazard’s internal or external auditor and (b) participates in the internal or external auditor’s audit, assurance or tax compliance (but not tax planning) practice; (iv) the director is a current employee, or an immediate family member of the director is a current executive officer, of an entity that has made payments to, or received payments from, Lazard for property or services in an amount which, in any of the last three fiscal years, exceeds the greater of $1 million or 2% of such other company’s consolidated gross revenues; or (v) an immediate family member of the director is currently an executive officer of Lazard.
B. Relationships within Preceding Three Years. A director will not be independent if, within the preceding three years: (i) the director is or was an employee of Lazard; (ii) an immediate family member of the director is or was an executive officer of Lazard; (iii) the director or an immediate family member of the director (a) was (but no longer is) a partner or employee of Lazard’s internal or external auditor and (b) personally worked on Lazard’s audit within that time; (iv) the director or an immediate family member of the director received more than $100,000 in direct compensation in any twelve-month period from Lazard, other than director and committee fees and pension or other forms of deferred compensation for prior service (provided such compensation is not contingent in any way on continued service); or (v) a present Lazard executive officer is or was on the Compensation Committee of the Board of Directors of a company that concurrently employed the Lazard director or an immediate family member of the director as an executive officer.
2. Relationships not deemed material for purposes of director independence.
In addition to the provisions of Section 1 above, each of which must be fully satisfied with respect to each independent director, the Board must affirmatively determine that the director has no material relationship with Lazard. To assist the Board in this determination, and as permitted by the New York Stock Exchange’s Corporate Governance Rules, the Board has adopted the following categorical standards of relationships that are not considered material for purposes of determining a director’s independence. Any determination of independence
for a director that does not meet these categorical standards will be based upon all relevant facts and circumstances and the Board shall disclose the basis for such determination in the Company’s proxy statement.
A. Equity Ownership. A relationship arising solely from a director’s ownership of an equity or limited partnership interest in a party that engages in a transaction with Lazard, so long as such director’s ownership interest does not exceed 5% of the total equity or partnership interests in that other party.
A-1
B. Director Status. A relationship arising solely from a director’s position as (i) director or advisory director (or similar position) of another company orfor-profit corporation or organization that engages in a transaction with Lazard or (ii) director or trustee (or similar position) of a tax exempt organization that engages in a transaction with Lazard (other than a charitable contribution to that organization by Lazard).
C. Ordinary Course. A relationship arising solely from financial services transactions between Lazard and a company of which a director is an executive officer, employee or owner of 5% or more of the equity of that company, if such transactions are made in the ordinary course of business and on terms and conditions and under circumstances that are substantially similar to those prevailing at the time for companies with which Lazard has a comparable relationship and that do not have a director of Lazard serving as an executive officer.
D. Indebtedness. A relationship arising solely from a director’s status as an executive officer, employee or owner of 5% or more of the equity of a company to which Lazard is indebted at the end of Lazard’s preceding fiscal year, so long as the aggregate amount of the indebtedness of Lazard to such company is not in excess of 5% of Lazard’s total consolidated assets at the end of Lazard’s preceding fiscal year.
E. Charitable Contributions. The director serves as an officer, employee, director or trustee of atax-exempt organization, and the discretionary charitable contributions by Lazard to the organization are less than the greater of $1 million or 2% of the organization’s aggregate annual charitable receipts during the organization’s preceding fiscal year.
F. Personal Relationships. The director receives products or services (e.g., investment products or investment management services) from Lazard in the ordinary course of business and on substantially the same terms as those prevailing at the time for comparable products or services provided to unaffiliated third parties.
G. Other. Any other relationship or transaction that is not covered by any of the standards listed above and in which the amount involved does not exceed $10,000 in any fiscal year shall not be deemed a material relationship or transaction that would cause a director not to be independent.
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qC123456789 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000004 ENDORSEMENT_LINE SACKPACK MR A SAMPLE DESIGNATION (IF ANY) ADD 1 ADD 2 ADD 3 ADD 4 ADD 5 ADD 6 Your vote matters – here’s how to vote! You may vote online or by phone instead of mailing this card. Online Go to www.investorvote.com/LAZ or scan the QR code — login details are located in the shaded bar below. Phone Call toll free 1-800-652-VOTE IF (8683) within the USA, US territories and Canada Save paper, time and money! Sign up for electronic delivery at www.investorvote.com/LAZ Using a black ink pen, mark your votes with an X as shown in this example. Please do not write outside the designated areas. Annual General Meeting Proxy Card 1234 5678 9012 345 qIF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q A Proposals 1. Election of Directors to Lazard Ltd’s Board of Directors. The Board of Directors recommends you vote “FOR ALL” of the Director nominees. + 01—Richard N. Haass 02—Jane L. Mendillo 03—Richard D. Parsons Mark here to vote Mark here to WITHHOLD For All EXCEPT—To withhold authority to vote for any nominee(s), FOR all nominees vote from all nominees write the name(s) of such nominee(s) below. For Against Abstain For Against Abstain 2. qNon-binding
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advisory vote regarding executive compensation. 3. Ratification of the appointment of Deloitte & Touche LLP as The Board of Directors recommends you vote “FOR” this matter. Lazard Ltd’s independent registered public accounting firm for the fiscal year ending December 31, 2022 and authorization of the Company’s Board of Directors, acting by its Audit Committee, to set their remuneration. The Board of Directors recommends you vote “FOR” this matter. B Authorized Signatures — This section must be completed for your vote to be counted. — Date and Sign Below Please sign exactly as your name or names appear above. For joint accounts, each owner should sign. If signing for a corporation or partnership or as agent, attorney or fiduciary, indicate capacity in which you are signing.
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Date (mm/dd/yyyy) — Please print date below. Signature 1 — Please keep signature within the box. Signature 2 — Please keep signature within the box. C 1234567890 J N T MR A SAMPLE (THIS AREA IS SET UP TO ACCOMMODATE 140 CHARACTERS) MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND 1UPX 537371 MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND
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q IFThe 2022 Annual General Meeting of Shareholders of Lazard Ltd will be held on May 18, 2022 at 9:00 a.m. Eastern Daylight Time, virtually via the internet at www.meetnow.global/M924R5T. To access the virtual meeting, you must have the information that is printed in the shaded bar located on the reverse side of this form. Small steps make an impact. Help the environment by consenting to receive electronic delivery, sign up at www.investorvote.com/LAZ qIF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q
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Proxy — LAZARD LTD + THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE 20192022 ANNUAL GENERAL MEETING OF SHAREHOLDERS
The undersigned hereby appoints Kenneth M. Jacobs, Scott D. Hoffman and Alexander F. SternEvan L. Russo as proxies (each with power to act alone and with the power of substitution) of the undersigned to vote all shares which the undersigned would be entitled to vote at the Annual General Meeting of Shareholders of Lazard Ltd to be held virtually on April 23, 2019May 18, 2022 at 5:30 p.m. Bermuda time (4:30 p.m.9:00 a.m. Eastern Daylight Time), at the Rosewood Tucker’s Point Hotel, 60 Tucker’s Point Drive, Hamilton Parish, HS 02, Bermuda,Time, and at any adjournment or postponement thereof.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN. IF NO DIRECTIONS ARE MADE, IT WILL BE VOTED “FOR ALL” WITH RESPECT TO ITEM 1 AND “FOR” ITEMS 2 AND 3. THE PROXY HOLDERS ARE ALSO AUTHORIZED TO VOTE UPON ANY OTHER MATTERS THAT MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT OR POSTPONEMENT THEREOF, UTILIZING THEIR OWN DISCRETION AS SET FORTH IN THE NOTICE OF 20192022 ANNUAL GENERAL MEETING OF SHAREHOLDERS AND PROXY STATEMENT.
Important Notice Regarding the Availability of Proxy Materials for the 20192022 Annual General Meeting of Shareholders:
The Notice of Annual Meeting, Proxy Statement and 20182021 Annual Report can be viewed at our website atwww.lazard.com/investorrelations/
(Continued (Continued and to be marked, dated and signed, on the other side)
C Non-Voting Items Change of Address — Please print new address below. Comments — Please print your comments below. Meeting Attendance Mark box to the right if you plan to attend the Annual Meeting. | ||
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