ý
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Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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o
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Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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Delaware
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20-8999751
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(State or Other Jurisdiction of
Incorporation or Organization)
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(I.R.S. Employer
Identification No.)
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Title of Each Class
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Name of Each Exchange on Which Registered
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Class A Common Stock, par value $.01 per share
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New York Stock Exchange
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Large accelerated filer
o
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Accelerated filer
x
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Non-accelerated filer
o
(Do not check if a smaller
reporting company)
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Smaller reporting company
o
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Page
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•
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our ability to respond to global economic, market, business and geopolitical conditions;
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•
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our anticipated future results of operations and operating cash flows;
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•
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our successful formulation and execution of business strategies and investment policies;
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•
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our financing plans and the availability of short- or long-term borrowing, or equity financing;
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•
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our competitive position and the effects of competition on our business;
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•
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our ability to identify and capture potential growth opportunities available to us;
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•
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the recruitment and retention of our employees;
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•
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our expected levels of compensation for our employees;
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•
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our potential operating performance, achievements, efficiency and cost reduction efforts;
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•
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our expected tax rate;
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•
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changes in interest rates;
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•
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our expectation with respect to the economy, capital markets, the market for asset management services and other industry trends; and
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•
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the impact of future legislation and regulation, and changes in existing legislation and regulation, on our business.
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ITEM 1.
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BUSINESS
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(1)
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As of
December 31, 2015
, the members of Pzena Investment Management, LLC, other than us, consisted of:
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•
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Our named executive officers and their estate planning vehicles, who collectively held approximately 55.4% of the economic interests in Pzena Investment Management, LLC.
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•
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33 of our other employee members and their estate planning vehicles, who collectively held approximately 4.7% of the economic interests in Pzena Investment Management, LLC.
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•
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Certain other members of our operating company, including one of our directors and his related entities, and former employees, who collectively held approximately 17.3% of the economic interests in Pzena Investment Management, LLC.
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(2)
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Each share of Class A common stock is entitled to one vote per share.
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(3)
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Each share of Class B common stock is entitled to five votes per share for so long as the number of shares of Class B common stock outstanding represents at least 20% of all shares of common stock outstanding. Holders of Class B common stock have the right to receive the par value of the Class B common stock held by them upon our liquidation, dissolution or winding up, but do not share in dividends.
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(4)
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As of
December 31, 2015
, we held
15,248,223
Class A units of Pzena Investment Management, LLC, which represented the right to receive
22.6%
of the distributions made by Pzena Investment Management, LLC.
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(5)
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As of
December 31, 2015
, the principals collectively held
52,147,440
Class B units of Pzena Investment Management, LLC, which represented the right to receive
77.4%
of the distributions made by Pzena Investment Management, LLC.
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(6)
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Pursuant to the operating agreement of our operating company, each vested Class B unit is exchangeable for a share of the Company's Class A common stock, subject to certain timing and volume restrictions. When a vested Class B unit is exchanged for a share of Class A common stock, or is forfeited, a corresponding share of the Company's Class B common stock will automatically be redeemed and cancelled. When a share of Class A common stock or Class B unit is repurchased and retired, a corresponding membership unit or share of Class B common stock is redeemed and cancelled, respectively. Conversely, to the extent that we issue shares of Class A common stock, or additional Class B units pursuant to our equity incentive plans, the corresponding Class A membership units or shares of Class B common stock will be issued, respectively.
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•
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willingness to invest in companies before their stock prices reflect signs of business improvement, and
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•
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significant patience, based upon our understanding of the business’ fundamentals, and our long-term investment horizon.
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•
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Focus on Investment Excellence.
We recognize that we must achieve investment excellence in order to attain long-term business success. All of our business decisions, including the design of our investment process and our willingness to limit AUM in our investment strategies, are focused on producing attractive long-term investment results. We believe that our long-term investment performance, together with our willingness to close our strategies to new investors in order to optimize the prospects for future performance, has contributed to our positive reputation among our clients and the institutional consultants who advise them.
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•
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Consistency of Investment Process.
Since our inception over twenty years ago, we have utilized a classic value investment approach and a systematic, disciplined investment process to construct portfolios for our investment strategies in U.S. and non-U.S. markets across all market capitalizations. The consistency of our process has allowed us to leverage the same investment team to launch new strategies. We believe that our consistent investment process has resulted in our strong brand recognition in the investment community.
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•
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Diverse and High Quality Client Base.
We believe that we have developed a favorable reputation in the institutional investment community. This is evidenced by our strong relationships with institutional investors, investment consultants, and mutual fund providers, as well as the diversity and sophistication of our investors. For more information concerning our client base, see “Our Client Relationships and Distribution Approach” below.
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•
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Experienced Investment Professionals and a Team-Oriented Approach.
We believe that our greatest asset is the experience of the individuals on our team. For more information on our investment team, see “Our Investment Team” below.
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•
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Employee Retention.
We have focused on building an environment that we believe is attractive to talented investment professionals. Important among our practices are our team-oriented approach to investment decisions, rotation of coverage areas among individuals, and our culture of employee ownership.
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•
|
Culture of Ownership.
We believe in significant ownership of our business by the key contributors to our success. Since our inception, we have communicated to all our employees that they have the opportunity to become members of our operating company. As of
December 31, 2015
, we had 38 employee members positioned within all of our functional areas. We believe this ownership model results in a shared sense of purpose with our clients and their advisers. We intend to continue fostering a culture of ownership through our equity incentive plans, which are designed to align our team’s interests with those of our stockholders and clients. We believe this culture of ownership contributes to our team orientation and connection with clients.
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•
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Unwavering Focus on Classic Value Investing.
We view our unwavering focus on long-term classic value investment excellence to be the key driver of our business success.
|
•
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Capitalize on Growth Opportunities Created By Our Global Strategies.
Among both institutional and retail investors industry-wide, over the past few years, there have been increasing levels of investments in portfolios including non-U.S. equities. As of
December 31, 2015
, the total AUM in our Global Value strategies, International (ex-U.S.) Value strategies, Emerging Markets Focused Value strategy, and other non-U.S. strategies was $11.5 billion, or 44.2% of our overall AUM. Our global capability provides opportunity for implementation of our strategies around the world.
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•
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Work with Our Strong Consultant Relationships.
We believe that we have built strong relationships with the leading investment consulting firms who advise potential institutional clients. Historically, new accounts sourced through consultant-led searches have been a large driver of our inflows and are expected to be a major component of our future inflows. We estimate that approximately 70% of all retirement plan assets are advised by investment consultants, with a relatively small number of these consultants representing a significant majority of these relationships. As a result of a consistent servicing effort over our history, we have built strong relationships with consulting firms that we believe are the most important. New accounts sourced through consultant-led searches have been a large driver of our historical growth and are expected to be a major component of our future growth. As of
December 31, 2015
, our largest consultant relationship represented approximately 11% of our AUM.
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•
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Expand Our Non-U.S. Client Base.
In recent years, we have increased our efforts to develop our non-U.S. client base. Through our strong relationships with global consultants, we have been able to accelerate the development of our relationships with their non-U.S. branches. Over time, we aim to achieve growth of this client base through these relationships and by directly calling on the world’s largest institutional investors. We have also sought to expand our non-U.S. base through our relationships with non-U.S. mutual funds and other investment fund advisers. During 2015, we expanded our physical presence to three continents with the launch of a business development and client service office in London, in addition to our headquarters in the United States and representative office in Melbourne. To date, these marketing efforts have resulted in client relationships in more than fifteen non-U.S. countries, including the United Kingdom, Australia and Canada. As of
December 31, 2015
, we managed $6.9 billion on behalf of non-U.S. clients.
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•
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Provide Access To Our Strategies Through a Range of Investment Vehicles.
Our clients access our investment strategies through a range of investment vehicles, including separately managed accounts, mutual funds that we sub-advise, and certain private placement vehicles and non-U.S. funds that we offer to institutional investors. During 2014 we launched three SEC-registered Pzena mutual funds for which we act as investment adviser in an effort to expand the access investors have to our strategies. For more information concerning access to our strategies, see “Our Client Relationships and Distribution Approach” below.
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•
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Employ Global Team to Serve Clients and Prospects.
Our business development and client service professionals are critical to our business, as noted below under "Business Development and Client Service Teams" and are generally focused geographically. In addition to our headquarters in the United States and representative office in Melbourne, we have two dedicated professionals located in our London office. During 2015 we demonstrated our commitment to the
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Strategy
1
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As of December 31,
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||||||||||
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2015
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2014
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2013
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||||||
U.S. Strategies
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(in billions)
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||||||||||
Large Cap Value
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$
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9.9
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$
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11.9
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$
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11.4
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Mid Cap Value
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1.8
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1.8
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0.4
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|||
Value
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1.6
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1.8
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1.9
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|||
Small Cap Value
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1.1
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1.3
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1.3
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|||
Other U.S. Strategies
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0.1
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—
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—
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|||
Non-U.S. Strategies
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||||||
Global Value
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4.2
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5.6
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|
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6.2
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|
|||
International (ex-U.S.)Value
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4.2
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3.4
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|
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2.1
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|
|||
Emerging Markets Value
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1.8
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1.1
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|
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0.9
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|||
European Value
|
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1.1
|
|
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0.7
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|
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0.7
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|||
Other Global and Non-U.S. Strategies
|
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0.2
|
|
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0.1
|
|
|
0.1
|
|
|||
Total
|
|
$
|
26.0
|
|
|
$
|
27.7
|
|
|
$
|
25.0
|
|
•
|
identifying, developing relationships with, and marketing to prospective institutional clients;
|
•
|
providing ongoing service to existing institutional accounts;
|
•
|
responding to requests for investment management proposals;
|
•
|
developing and maintaining relationships with independent consultants;
|
•
|
developing and maintaining relationships with intermediary partners to grow retail distribution capabilities;
|
•
|
addressing all ongoing client needs, including periodic updates and reporting requirements; and
|
•
|
developing direct relationships with clients sourced through consultant-led searches.
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|
|
As of December 31,
|
||||||||||
Assets Under Management
|
|
2015
|
|
2014
|
|
2013
|
||||||
|
|
(in billions)
|
||||||||||
Institutional Accounts
|
|
$
|
14.9
|
|
|
$
|
15.6
|
|
|
$
|
15.4
|
|
Retail Accounts
|
|
11.1
|
|
|
12.1
|
|
|
9.6
|
|
|||
Total
|
|
$
|
26.0
|
|
|
$
|
27.7
|
|
|
$
|
25.0
|
|
•
|
the performance of our investment strategies;
|
•
|
our clients’ perceptions of our drive, focus and alignment of our interests with theirs;
|
•
|
the quality of the service we provide to our clients and the duration of our relationships with them;
|
•
|
our brand recognition and reputation within the investing community;
|
•
|
the range of strategies and investment vehicles we offer; and
|
•
|
the level of advisory fees we charge for our investment management services.
|
ITEM 1A.
|
RISK FACTORS
|
•
|
Poor performance of our strategies
: Poor performance of our investment strategies may result in decreased market value of AUM. In addition, underperformance could impact our ability to maintain our existing client base and develop new relationships, both of which could negatively impact AUM.
|
•
|
Poor market environment
: We expect our business may generate lower revenue in a depressed equities market or general economic downturn as a result of depreciation of our AUM. Any decline in the market value of securities held in client portfolios due to such adverse conditions would reduce AUM and lead to a decrease in revenue. Investor sentiment in a poor equities market environment could also decrease inflows and increase outflows from our investment strategies in favor of investments perceived as more attractive.
|
•
|
Global market, economic, geo-political and other conditions
: As a company that invests in both U.S. and non-U.S. markets, and with a global client base, our business is subject to changing conditions in the global financial markets, and may also be affected by worldwide political, social and economic conditions, any of which could negatively impact our investment performance, growth strategy and AUM. See "Our non-U.S. strategies consist primarily of investments in the securities of issuers located outside of the United States, which may involve foreign currency exchange, political, social and economic uncertainties and risks" below.
|
•
|
Termination of significant relationships
: Our clients can generally terminate our advisory agreements or reduce assets under management upon short notice and for any reason. Investors in the pooled funds that we manage may also redeem their investments in the funds at any time without prior notice. As of December 31, 2015, three client relationships represented 40% and 22% of our AUM and revenue, respectively, including one client relationship which represents approximately 25% and 11% of our AUM and revenue respectively. The termination of any of these relationships and outflow of money from our pooled funds could significantly reduce our revenue, and we may not be able to establish relationships with other clients in order to replace the lost revenue. There can also be no assurance that our agreements with respect to these relationships will remain in place going forward.
|
•
|
Defined benefit plans are declining
: Defined benefit plans are declining as corporate plan sponsors are decreasing their liabilities and shifting employee enrollment to defined contribution plans. We currently do not have significant exposure to the defined contribution market but are actively trying to gain new assets in this market. There is no guarantee that we will be successful in increasing our penetration of the defined contribution market, which could impact our AUM.
|
•
|
Intermediary dependence:
New accounts sourced through consultant-led searches have been a large driver of our inflows in the past, and are expected to be a major component of our inflows going forward. We have also established relationships with certain mutual fund providers who have offered us opportunities to access certain market segments through sub-investment advsiory roles. Such consultants and mutual fund providers routinely review and evaluate our organization and the services we offer, and poor evaluations may result in client outflows and impact our ability to attract new assets through such intermediaries. See "Item 1 — Our Business Strategy — Work with Our Strong Consultant Relationships" and "Item 1 — Our Client Relationships and Distribution Approach — Distribution Channels — Retail Distribution Channel".
|
•
|
Passive strategies have grown substantially in relation to active strategies
: During the past decade, investors have generally exhibited a preference for passive investment products, such as index and exchange traded funds, over active strategies managed by asset managers such as ourselves. If this market preference continues, existing and prospective
|
ITEM 1B.
|
UNRESOLVED STAFF COMMENTS
|
ITEM 2.
|
PROPERTIES
|
ITEM 3.
|
LEGAL PROCEEDINGS
|
ITEM 4.
|
MINE SAFETY DISCLOSURES
|
ITEM 5.
|
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
|
|
|
2015
|
|
2014
|
||||||||||||||||||||
Quarter
|
|
High
|
|
Low
|
|
Dividends
Declared Per
Share
|
|
High
|
|
Low
|
|
Dividends
Declared Per
Share
|
||||||||||||
Quarter Ended March 31
|
|
$
|
9.60
|
|
|
$
|
7.78
|
|
|
$
|
0.32
|
|
|
$
|
12.73
|
|
|
$
|
9.89
|
|
|
$
|
0.26
|
|
Quarter Ended June 30
|
|
$
|
11.22
|
|
|
$
|
8.37
|
|
|
$
|
0.03
|
|
|
$
|
12.68
|
|
|
$
|
9.02
|
|
|
$
|
0.03
|
|
Quarter Ended September 30
|
|
$
|
12.25
|
|
|
$
|
7.66
|
|
|
$
|
0.03
|
|
|
$
|
11.30
|
|
|
$
|
9.04
|
|
|
$
|
0.03
|
|
Quarter Ended December 31
|
|
$
|
9.81
|
|
|
$
|
8.16
|
|
|
$
|
0.03
|
|
|
$
|
10.58
|
|
|
$
|
8.32
|
|
|
$
|
0.03
|
|
|
|
Period Ended
|
||||||||||||||||||||||
Index
|
|
2010
|
|
2011
|
|
2012
|
|
2013
|
|
2014
|
|
2015
|
||||||||||||
Pzena Investment Management, Inc.
|
|
$
|
100.00
|
|
|
$
|
60.25
|
|
|
$
|
78.88
|
|
|
$
|
177.72
|
|
|
$
|
147.16
|
|
|
$
|
139.19
|
|
SNL Asset Manager Index*
|
|
$
|
100.00
|
|
|
$
|
86.50
|
|
|
$
|
110.98
|
|
|
$
|
169.67
|
|
|
$
|
179.00
|
|
|
$
|
152.65
|
|
S&P 500 Index
|
|
$
|
100.00
|
|
|
$
|
102.11
|
|
|
$
|
118.45
|
|
|
$
|
156.80
|
|
|
$
|
178.00
|
|
|
$
|
180.44
|
|
*
|
The SNL Asset Manager Index is comprised of the securities of 44 publicly traded asset management companies.
|
Period
|
|
(a) Total Number of
Shares of Class A
Common
Stock Purchased
|
|
(b) Average
Price Paid per
Share of Class A
Common
Stock
|
|
(c) Total Number
of Shares
Purchased as Part of
Publicly
Announced Plans
or Programs
|
|
(d) Approximate
Dollar Value of
Shares that May Yet
Be Purchased Under
the Plans or
Programs
(1)
|
||||||
|
|
|
|
|
|
|
|
(in millions)
|
||||||
October 1, 2015 through
October 31, 2015
|
|
44,219
|
|
|
$
|
9.53
|
|
|
44,219
|
|
|
$
|
11.4
|
|
November 1, 2015 through
November 30, 2015
|
|
34,100
|
|
|
9.70
|
|
|
34,100
|
|
|
11.0
|
|
||
December 1, 2015 through
December 31, 2015
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10.7
|
|
||
Total
|
|
78,319
|
|
|
$
|
9.61
|
|
|
78,319
|
|
|
$
|
10.7
|
|
|
(1)
|
The dollar amount in the column entitled "Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs," reflects the remainder of the program and also reflects the repurchase of 33,690 of the operating company's Class B units during December 2015 for an average price of $8.75 per unit. Class B units are repurchased at fair value determined by reference to our Class A common stock on the date of the transaction since Class B units are exchangeable for shares of our Class A common stock on a one-for-one basis.
|
ITEM 6.
|
SELECTED FINANCIAL DATA
|
|
For the Years Ended December 31,
|
||||||||||||||||||
|
2015
|
|
2014
|
|
2013
|
|
2012
|
|
2011
|
||||||||||
|
(in thousands, except share and per share amounts)
|
||||||||||||||||||
Statements of Operations Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
REVENUE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Management Fees
|
$
|
112,102
|
|
|
$
|
108,675
|
|
|
$
|
91,866
|
|
|
$
|
75,980
|
|
|
$
|
79,230
|
|
Performance Fees
|
4,505
|
|
|
3,836
|
|
|
3,903
|
|
|
300
|
|
|
3,815
|
|
|||||
Total Revenue
|
116,607
|
|
|
112,511
|
|
|
95,769
|
|
|
76,280
|
|
|
83,045
|
|
|||||
EXPENSES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Cash Compensation and Benefits
|
35,431
|
|
|
32,396
|
|
|
31,374
|
|
|
28,690
|
|
|
29,518
|
|
|||||
Other Non-Cash Compensation
|
11,092
|
|
|
8,877
|
|
|
5,448
|
|
|
3,065
|
|
|
5,047
|
|
|||||
Total Compensation and Benefits Expense
|
46,523
|
|
|
41,273
|
|
|
36,822
|
|
|
31,755
|
|
|
34,565
|
|
|||||
General and Administrative Expenses
|
14,667
|
|
|
10,285
|
|
|
8,099
|
|
|
7,346
|
|
|
10,626
|
|
|||||
TOTAL OPERATING EXPENSES
|
61,190
|
|
|
51,558
|
|
|
44,921
|
|
|
39,101
|
|
|
45,191
|
|
|||||
Operating Income
|
55,417
|
|
|
60,953
|
|
|
50,848
|
|
|
37,179
|
|
|
37,854
|
|
|||||
Other Expense
|
(3,300
|
)
|
|
(4,036
|
)
|
|
(1,821
|
)
|
|
(863
|
)
|
|
(1,466
|
)
|
|||||
INCOME BEFORE INCOME TAXES
|
52,117
|
|
|
56,917
|
|
|
49,027
|
|
|
36,316
|
|
|
36,388
|
|
|||||
Income Tax Provision
|
5,114
|
|
|
1,883
|
|
|
589
|
|
|
1,911
|
|
|
3,145
|
|
|||||
Consolidated Net Income
|
47,003
|
|
|
55,034
|
|
|
48,438
|
|
|
34,405
|
|
|
33,243
|
|
|||||
Less: Net Income Attributable to
Non-Controlling Interests
|
39,324
|
|
|
46,934
|
|
|
41,768
|
|
|
30,565
|
|
|
29,861
|
|
|||||
NET INCOME Attributable to Pzena
Investment Management, Inc.
|
$
|
7,679
|
|
|
$
|
8,100
|
|
|
$
|
6,670
|
|
|
$
|
3,840
|
|
|
$
|
3,382
|
|
Per Share Data
1
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Net Income for Basic Earnings per Share
|
$
|
7,679
|
|
|
$
|
8,100
|
|
|
$
|
6,670
|
|
|
$
|
3,840
|
|
|
$
|
3,382
|
|
Basic Earnings per Share
|
$
|
0.55
|
|
|
$
|
0.64
|
|
|
$
|
0.56
|
|
|
$
|
0.36
|
|
|
$
|
0.34
|
|
Basic Weighted Average Shares Outstanding
|
14,014,219
|
|
|
12,628,676
|
|
|
11,990,757
|
|
|
10,787,540
|
|
|
9,972,978
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Net Income for Diluted Earnings per Share
|
$
|
33,809
|
|
|
$
|
35,685
|
|
|
$
|
30,317
|
|
|
$
|
20,821
|
|
|
$
|
20,631
|
|
Diluted Earnings per Share
|
$
|
0.50
|
|
|
$
|
0.53
|
|
|
$
|
0.45
|
|
|
$
|
0.32
|
|
|
$
|
0.32
|
|
Diluted Weighted Average Shares Outstanding
|
68,126,786
|
|
|
67,797,524
|
|
|
66,759,840
|
|
|
65,491,273
|
|
|
65,095,797
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash Dividends Declared Per Share
|
$
|
0.41
|
|
|
$
|
0.35
|
|
|
$
|
0.25
|
|
|
$
|
0.28
|
|
|
$
|
0.12
|
|
1
|
The operating company issues shares of Class A common stock and Class B units that have non-forfeitable dividend rights. Under the “two-class method”, these shares and units are considered participating securities and are required to be included in the computation of basic and diluted earnings per share.
|
|
As of December 31,
|
||||||||||||||||||
|
2015
|
|
2014
|
|
2013
|
|
2012
|
|
2011
|
||||||||||
|
(in thousands)
|
||||||||||||||||||
Statements of Financial Condition Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Cash and Cash Equivalents
|
$
|
35,417
|
|
|
$
|
39,109
|
|
|
$
|
33,878
|
|
|
$
|
32,645
|
|
|
$
|
35,083
|
|
TOTAL ASSETS
|
114,309
|
|
|
111,886
|
|
|
80,213
|
|
|
64,679
|
|
|
66,678
|
|
|||||
TOTAL LIABILITIES
|
28,847
|
|
|
26,853
|
|
|
21,664
|
|
|
16,713
|
|
|
20,454
|
|
|||||
Non-Controlling Interests
|
67,040
|
|
|
66,632
|
|
|
42,187
|
|
|
33,397
|
|
|
32,287
|
|
|||||
EQUITY
|
18,422
|
|
|
18,401
|
|
|
16,362
|
|
|
14,569
|
|
|
13,937
|
|
ITEM 7.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
|
For the Years Ended December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
|
(in thousands, except share and per share amounts)
|
||||||||||
GAAP Net Income Attributable to Pzena Investment Management, Inc.
|
$
|
7,679
|
|
|
$
|
8,100
|
|
|
$
|
6,670
|
|
Net Effect of Non-Recurring Lease Expenses
|
183
|
|
|
35
|
|
|
—
|
|
|||
Net Effect of Tax Receivable Agreement
|
(424
|
)
|
|
(1,392
|
)
|
|
(989
|
)
|
|||
Non-GAAP Net Income Attributable to Pzena Investment Management, Inc.
|
$
|
7,438
|
|
|
$
|
6,743
|
|
|
$
|
5,681
|
|
|
|
|
|
|
|
||||||
GAAP Income Attributable to Non-Controlling Interest of Pzena Investment
Management, LLC
|
$
|
41,562
|
|
|
$
|
47,026
|
|
|
$
|
40,533
|
|
Effect of Non-Recurring Lease Expenses
|
1,475
|
|
|
313
|
|
|
—
|
|
|||
Non-GAAP Income Attributable to Non-Controlling Interest of Pzena Investment
Management, LLC
|
43,037
|
|
|
47,339
|
|
|
40,533
|
|
|||
Less: Assumed Corporate Income Taxes
|
15,980
|
|
|
19,570
|
|
|
16,886
|
|
|||
Assumed After-Tax Income Attributable to Non-Controlling Interest of Pzena Investment Management, LLC
|
27,057
|
|
|
27,769
|
|
|
23,647
|
|
|||
Non-GAAP Net Income of Pzena Investment Management, Inc.
|
7,438
|
|
|
6,743
|
|
|
5,681
|
|
|||
Non-GAAP Diluted Net Income
|
$
|
34,495
|
|
|
$
|
34,512
|
|
|
$
|
29,328
|
|
Non-GAAP Diluted Earnings Per Share Attributable to Pzena Investment
Management, Inc. Common Stockholders:
|
|
|
|
|
|
|
|
|
|||
Non-GAAP Net Income for Diluted Earnings per Share
|
$
|
34,495
|
|
|
$
|
34,512
|
|
|
$
|
29,328
|
|
Non-GAAP Diluted Earnings Per Share
|
$
|
0.51
|
|
|
$
|
0.51
|
|
|
$
|
0.44
|
|
Non-GAAP Diluted Weighted-Average Shares Outstanding
|
68,126,786
|
|
|
67,797,524
|
|
|
66,759,840
|
|
•
|
changes in AUM due to appreciation or depreciation of our investment portfolios, and the levels of the contribution and withdrawal of assets by new and existing clients;
|
•
|
distribution of AUM among our investment strategies, which have differing fee schedules;
|
•
|
distribution of AUM between institutional accounts and retail accounts, for which we generally earn lower overall advisory fees; and
|
•
|
the level of our performance with respect to accounts on which we are paid performance fees.
|
•
|
variations in the level of total compensation expense due to, among other things, bonuses, awards of equity to our employees and employee members of our operating company, changes in our employee count and mix, and competitive factors; and
|
•
|
general and administrative expenses, such as rent, professional service fees and data-related costs, incurred, as necessary, to run our business.
|
|
|
Period Ended December 31, 2015
1
|
||||||||||
Investment Strategy (Inception Date)
|
|
Since
Inception
|
|
5 Years
|
|
3 Years
|
|
1 Year
|
||||
Large Cap Expanded Value (July 2012)
|
|
|
|
|
|
|
|
|
|
|
|
|
Annualized Gross Returns
|
|
15.2
|
%
|
|
N/A
|
|
|
14.8
|
%
|
|
(4.7
|
)%
|
Annualized Net Returns
|
|
15.0
|
%
|
|
N/A
|
|
|
14.6
|
%
|
|
(4.9
|
)%
|
Russell 1000
®
Value Index
|
|
13.6
|
%
|
|
N/A
|
|
|
13.1
|
%
|
|
(3.8
|
)%
|
Large Cap Focused Value (October 2000)
|
|
|
|
|
|
|
|
|
|
|
|
|
Annualized Gross Returns
|
|
6.5
|
%
|
|
10.3
|
%
|
|
14.1
|
%
|
|
(6.1
|
)%
|
Annualized Net Returns
|
|
6.0
|
%
|
|
9.8
|
%
|
|
13.7
|
%
|
|
(6.4
|
)%
|
Russell 1000
®
Value Index
|
|
6.0
|
%
|
|
11.3
|
%
|
|
13.1
|
%
|
|
(3.8
|
)%
|
Global Focused Value (January 2004)
|
|
|
|
|
|
|
|
|
|
|
|
|
Annualized Gross Returns
|
|
4.7
|
%
|
|
7.1
|
%
|
|
9.8
|
%
|
|
(5.7
|
)%
|
Annualized Net Returns
|
|
3.9
|
%
|
|
6.4
|
%
|
|
9.1
|
%
|
|
(6.3
|
)%
|
MSCI
World Index – Net/U.S.$
2
|
|
6.1
|
%
|
|
7.6
|
%
|
|
9.6
|
%
|
|
(0.9
|
)%
|
International (ex-U.S.) Expanded Value (November 2008)
|
|
|
|
|
|
|
|
|
|
|
|
|
Annualized Gross Returns
|
|
11.2
|
%
|
|
5.4
|
%
|
|
6.6
|
%
|
|
(1.6
|
)%
|
Annualized Net Returns
|
|
10.9
|
%
|
|
5.1
|
%
|
|
6.3
|
%
|
|
(1.8
|
)%
|
MSCI
EAFE Index – Net/U.S.$
2
|
|
7.7
|
%
|
|
3.6
|
%
|
|
5.0
|
%
|
|
(0.8
|
)%
|
Focused Value (January 1996)
|
|
|
|
|
|
|
|
|
|
|
|
|
Annualized Gross Returns
|
|
10.5
|
%
|
|
11.2
|
%
|
|
14.8
|
%
|
|
(5.6
|
)%
|
Annualized Net Returns
|
|
9.7
|
%
|
|
10.5
|
%
|
|
14.1
|
%
|
|
(6.2
|
)%
|
Russell 1000
®
Value Index
|
|
8.5
|
%
|
|
11.3
|
%
|
|
13.1
|
%
|
|
(3.8
|
)%
|
Emerging Markets Focused Value (January 2008)
|
|
|
|
|
|
|
|
|
|
|
|
|
Annualized Gross Returns
|
|
(1.1
|
)%
|
|
(4.1
|
)%
|
|
(5.8
|
)%
|
|
(15.6
|
)%
|
Annualized Net Returns
|
|
(1.9
|
)%
|
|
(4.7
|
)%
|
|
(6.4
|
)%
|
|
(16.3
|
)%
|
MSCI Emerging Markets
Index – Net/U.S.$
2
|
|
(3.1
|
)%
|
|
(4.8
|
)%
|
|
(6.8
|
)%
|
|
(14.9
|
)%
|
Global Expanded Value (January 2010)
|
|
|
|
|
|
|
|
|
||||
Annualized Gross Returns
|
|
8.0
|
%
|
|
7.5
|
%
|
|
10.0
|
%
|
|
(3.6
|
)%
|
Annualized Net Returns
|
|
7.7
|
%
|
|
7.1
|
%
|
|
9.7
|
%
|
|
(4.0
|
)%
|
MSCI World
Index – Net/U.S.$
2
|
|
8.3
|
%
|
|
7.6
|
%
|
|
9.6
|
%
|
|
(0.9
|
)%
|
Mid Cap Expanded Value (April 2014)
|
|
|
|
|
|
|
|
|
||||
Annualized Gross Returns
|
|
1.7
|
%
|
|
N/A
|
|
|
N/A
|
|
|
(2.0
|
)%
|
Annualized Net Returns
|
|
1.5
|
%
|
|
N/A
|
|
|
N/A
|
|
|
(2.3
|
)%
|
Russell Mid Cap® Value Index
|
|
2.2
|
%
|
|
N/A
|
|
|
N/A
|
|
|
(4.8
|
)%
|
Small Cap Focused Value (January 1996)
|
|
|
|
|
|
|
|
|
|
|
|
|
Annualized Gross Returns
|
|
13.8
|
%
|
|
11.7
|
%
|
|
16.3
|
%
|
|
(0.2
|
)%
|
Annualized Net Returns
|
|
12.6
|
%
|
|
10.6
|
%
|
|
15.1
|
%
|
|
(1.2
|
)%
|
Russell 2000
®
Value Index
|
|
9.3
|
%
|
|
7.7
|
%
|
|
9.1
|
%
|
|
(7.5
|
)%
|
International (ex-US) Focused Value (January 2004)
|
|
|
|
|
|
|
|
|
||||
Annualized Gross Returns
|
|
5.8
|
%
|
|
5.6
|
%
|
|
6.2
|
%
|
|
(2.2
|
)%
|
Annualized Net Returns
|
|
4.9
|
%
|
|
4.9
|
%
|
|
5.6
|
%
|
|
(2.6
|
)%
|
MSCI EAFE
Index – Net/U.S.$
2
|
|
5.2
|
%
|
|
3.6
|
%
|
|
5.0
|
%
|
|
(0.8
|
)%
|
European Focused Value (August 2008)
|
|
|
|
|
|
|
|
|
|
|
|
|
Annualized Gross Returns
|
|
4.3
|
%
|
|
5.5
|
%
|
|
5.3
|
%
|
|
(3.6
|
)%
|
Annualized Net Returns
|
|
3.9
|
%
|
|
5.1
|
%
|
|
5.0
|
%
|
|
(4.0
|
)%
|
MSCI
Europe Index – Net/U.S.$
2
|
|
1.0
|
%
|
|
3.9
|
%
|
|
4.5
|
%
|
|
(2.8
|
)%
|
Mid Cap Focused Value (September 1998)
|
|
|
|
|
|
|
|
|
|
|
|
|
Annualized Gross Returns
|
|
12.6
|
%
|
|
13.6
|
%
|
|
15.2
|
%
|
|
(2.7
|
)%
|
Annualized Net Returns
|
|
11.8
|
%
|
|
12.8
|
%
|
|
14.5
|
%
|
|
(3.3
|
)%
|
Russell Mid Cap
®
Value Index
|
|
10.1
|
%
|
|
11.3
|
%
|
|
13.4
|
%
|
|
(4.8
|
)%
|
|
(1)
|
The historical returns of these investment strategies are not necessarily indicative of their future performance, or the future performance of any of our other current or future investment strategies.
|
(2)
|
Net of applicable withholding taxes and presented in U.S.$.
|
|
|
For the Years Ended December 31,
|
||||||||||
Assets Under Management
|
|
2015
|
|
2014
|
|
2013
|
||||||
|
|
(in billions)
|
||||||||||
Institutional Accounts
|
|
|
|
|
|
|
|
|
|
|||
Assets
|
|
|
|
|
|
|
|
|
|
|||
Beginning of Period
|
|
$
|
15.6
|
|
|
$
|
15.4
|
|
|
$
|
11.2
|
|
Inflows
|
|
3.2
|
|
|
2.8
|
|
|
1.9
|
|
|||
Outflows
|
|
(3.0
|
)
|
|
(3.0
|
)
|
|
(2.0
|
)
|
|||
Net Flows
|
|
0.2
|
|
|
(0.2
|
)
|
|
(0.1
|
)
|
|||
Market Appreciation/(Depreciation)
|
|
(0.9
|
)
|
|
0.4
|
|
|
4.3
|
|
|||
End of Period
|
|
$
|
14.9
|
|
|
$
|
15.6
|
|
|
$
|
15.4
|
|
Retail Accounts
|
|
|
|
|
|
|
|
|
|
|||
Assets
|
|
|
|
|
|
|
|
|
|
|||
Beginning of Period Assets
|
|
$
|
12.1
|
|
|
$
|
9.6
|
|
|
$
|
5.9
|
|
Inflows
|
|
1.2
|
|
|
3.3
|
|
|
2.3
|
|
|||
Outflows
|
|
(1.7
|
)
|
|
(1.7
|
)
|
|
(1.2
|
)
|
|||
Net Flows
|
|
(0.5
|
)
|
|
1.6
|
|
|
1.1
|
|
|||
Market Appreciation/(Depreciation)
|
|
(0.5
|
)
|
|
0.9
|
|
|
2.6
|
|
|||
End of Period
|
|
$
|
11.1
|
|
|
$
|
12.1
|
|
|
$
|
9.6
|
|
Total
|
|
|
|
|
|
|
|
|
|
|||
Assets
|
|
|
|
|
|
|
|
|
|
|||
Beginning of Period
|
|
$
|
27.7
|
|
|
$
|
25.0
|
|
|
$
|
17.1
|
|
Inflows
|
|
4.4
|
|
|
6.1
|
|
|
4.2
|
|
|||
Outflows
|
|
(4.7
|
)
|
|
(4.7
|
)
|
|
(3.2
|
)
|
|||
Net Flows
|
|
(0.3
|
)
|
|
1.4
|
|
|
1.0
|
|
|||
Market Appreciation/(Depreciation)
|
|
(1.4
|
)
|
|
1.3
|
|
|
6.9
|
|
|||
End of Period
|
|
$
|
26.0
|
|
|
$
|
27.7
|
|
|
$
|
25.0
|
|
|
|
For the Years Ended December 31,
|
||||||||||
Revenue
|
|
2015
|
|
2014
|
|
2013
|
||||||
|
|
(in thousands)
|
||||||||||
Institutional Accounts
|
|
$
|
85,964
|
|
|
$
|
82,805
|
|
|
$
|
75,783
|
|
Retail Accounts
|
|
30,643
|
|
|
29,706
|
|
|
19,986
|
|
|||
Total
|
|
$
|
116,607
|
|
|
$
|
112,511
|
|
|
$
|
95,769
|
|
|
|
For the Years Ended December 31,
|
||||||||||
|
|
2015
|
|
2014
|
|
2013
|
||||||
|
|
(in thousands)
|
||||||||||
Cash Compensation and Other Benefits
|
|
$
|
35,431
|
|
|
$
|
32,396
|
|
|
$
|
31,374
|
|
Other Non-Cash Compensation
|
|
11,092
|
|
|
8,877
|
|
|
5,448
|
|
|||
Total Compensation and Benefits Expense
|
|
46,523
|
|
|
41,273
|
|
|
36,822
|
|
|||
General and Administrative Expense
|
|
14,667
|
|
|
10,285
|
|
|
8,099
|
|
|||
Total Operating Expenses
|
|
$
|
61,190
|
|
|
$
|
51,558
|
|
|
$
|
44,921
|
|
|
For the Years Ended December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
|
(in thousands)
|
||||||||||
Unincorporated and Other Business Tax Expenses
|
$
|
2,228
|
|
|
$
|
2,953
|
|
|
$
|
2,434
|
|
Corporate Tax Expense:
|
|
|
|
|
|
||||||
Corporate Income Tax Expense
|
4,160
|
|
|
4,209
|
|
|
4,011
|
|
|||
Change in the Valuation Allowance
|
(1,274
|
)
|
|
(6,174
|
)
|
|
(6,142
|
)
|
|||
Net Adjustment to Deferred Tax Asset
|
—
|
|
|
895
|
|
|
286
|
|
|||
Total Corporate Tax Expense
|
2,886
|
|
|
(1,070
|
)
|
|
(1,845
|
)
|
|||
Total Income Tax Expense
|
$
|
5,114
|
|
|
$
|
1,883
|
|
|
$
|
589
|
|
|
For the Years Ended December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
|
(in thousands)
|
||||||||||
Corporate Tax Expense
|
$
|
2,886
|
|
|
$
|
(1,070
|
)
|
|
$
|
(1,845
|
)
|
Effects of One Time Adjustments
|
132
|
|
|
31
|
|
|
—
|
|
|||
Less: Change in the Valuation Allowance Associated with the Tax Receivable Agreement
|
847
|
|
|
6,005
|
|
|
5,710
|
|
|||
Less: Net Adjustment to Deferred Tax Assets Associated with the Tax Receivable Agreement
|
—
|
|
|
(445
|
)
|
|
(253
|
)
|
|||
Non-GAAP Corporate Income Tax Expense
|
$
|
3,865
|
|
|
$
|
4,521
|
|
|
$
|
3,612
|
|
|
For the Years Ended December 31,
|
|||||||||||||||||||
|
2015
|
|
2014
|
|
2013
|
|||||||||||||||
|
Tax
|
|
% of Non-
GAAP
Pre-tax
Income
|
|
Tax
|
|
% of Non-
GAAP
Pre-tax
Income
|
|
Tax
|
|
% of Non-
GAAP
Pre-tax
Income
|
|||||||||
|
(in
thousands)
|
|
|
|
(in
thousands)
|
|
|
|
(in
thousands)
|
|
|
|||||||||
Federal Corporate Tax
|
$
|
3,843
|
|
|
34.0
|
%
|
|
$
|
3,830
|
|
|
34.0
|
%
|
|
$
|
3,159
|
|
|
34.0
|
%
|
State and Local Taxes, Net of Federal Benefit
|
350
|
|
|
3.1
|
%
|
|
827
|
|
|
7.3
|
%
|
|
716
|
|
|
7.7
|
%
|
|||
Prior Period and Other Adjustments
|
(328
|
)
|
|
(2.9
|
)%
|
|
(136
|
)
|
|
(1.2
|
)%
|
|
(263
|
)
|
|
(2.8
|
)%
|
|||
Non-GAAP Effective Taxes
|
$
|
3,865
|
|
|
34.2
|
%
|
|
$
|
4,521
|
|
|
40.1
|
%
|
|
$
|
3,612
|
|
|
38.9
|
%
|
|
|
Payments Due by Period
|
||||||||||||||||||
|
|
Total
|
|
Less Than
1 Year
|
|
1 – 3 Years
|
|
3 – 5 Years
|
|
More Than
5 Years
|
||||||||||
|
|
(in thousands)
|
||||||||||||||||||
Operating Lease Expenses, Net of Sublease Rental Income
|
|
$
|
19,042
|
|
|
$
|
1,604
|
|
|
$
|
3,583
|
|
|
$
|
5,938
|
|
|
$
|
7,917
|
|
Total
|
|
$
|
19,042
|
|
|
$
|
1,604
|
|
|
$
|
3,583
|
|
|
$
|
5,938
|
|
|
$
|
7,917
|
|
ITEM 7A.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
ITEM 8.
|
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
ITEM 9.
|
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
|
ITEM 9A.
|
CONTROLS AND PROCEDURES
|
ITEM 9B.
|
OTHER INFORMATION
|
ITEM 10.
|
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
|
ITEM 11.
|
EXECUTIVE COMPENSATION
|
ITEM 12.
|
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
|
ITEM 13.
|
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
|
ITEM 14.
|
PRINCIPAL ACCOUNTANT FEES AND SERVICES
|
ITEM 15.
|
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
|
1.
|
Financial Statements
|
Pzena Investment Management, Inc.
|
|
Page
|
|
||
|
||
|
||
|
||
|
||
|
||
|
2.
|
Financial Statement Schedules
|
3.
|
Exhibit List
|
Exhibit
|
|
Description of Exhibit
|
3.1
|
|
Amended and Restated Certificate of Incorporation of Pzena Investment Management, Inc., effective as of October 30, 2007
(1)
|
3.2
|
|
Second Amended and Restated Bylaws of Pzena Investment Management, Inc., effective as of January 15, 2016
(2)
|
4.1
|
|
Form of Pzena Investment Management, Inc. Class A Common Stock Certificate
(3)
|
4.2
|
|
Form of Exchange Rights of Class B Members
(3)
|
4.3
|
|
Resale and Registration Rights Agreement, dated as of October 30, 2007, by and among Pzena Investment Management, Inc. and the Holders named on the signature pages thereto
(1)
|
4.4
|
|
Class B Stockholders’ Agreement, dated as of October 30, 2007, by and among Pzena Investment Management, Inc. and the Class B Stockholders named on the signature pages thereto
(1)
|
10.1
|
|
Amended and Restated Operating Agreement of Pzena Investment Management, LLC, dated as of October 30, 2007, by and among Pzena Investment Management, Inc. and the Class B Members named on the signature pages thereto
(1)
|
10.2
|
|
Tax Receivable Agreement, dated as of October 30, 2007, by and among Pzena Investment Management, Inc., Pzena Investment Management, LLC and the Continuing Members and Exiting Members named on the signature pages thereto
(1)
|
10.3
|
|
Pzena Investment Management, LLC Amended and Restated 2006 Equity Incentive Plan
(17)
|
10.4
|
|
Pzena Investment Management, LLC Amended and Restated Bonus Plan, as amended, dated as of October 21, 2008
(4)
|
10.5
|
|
Pzena Investment Management, Inc. 2007 Equity Incentive Plan, as amended, dated as of
May 19, 2009
(5)
|
10.6
|
|
Lease, dated as of February 4, 2003, between Magnolia Associates, Ltd. and Pzena Investment Management, LLC, and the amendments thereto dated as of March 31, 2005 and
October 31, 2006
(6)
|
10.7
|
|
Agreement of Sublease, dated November 4, 2011, between Pzena Investment Management, LLC together, as Sublessor and Perimeter Internetworking Corp, as Sublessee
(7)
|
Exhibit
|
|
Description of Exhibit
|
10.8
|
|
Executive Employment Agreement for Richard S. Pzena, dated as of October 30, 2007, by and among Pzena Investment Management, Inc., Pzena Investment Management, LLC and Richard S. Pzena
(1)
|
10.9
|
|
Executive Employment Agreement for John P. Goetz, dated as of October 30, 2007, by and among Pzena Investment Management, Inc., Pzena Investment Management, LLC and John P. Goetz
(1)
|
10.10
|
|
Amended and Restated Executive Employment Agreement for William L. Lipsey, dated as of October 30, 2007, by and among Pzena Investment Management, Inc., Pzena Investment Management, LLC and William L. Lipsey
(1)
|
10.11
|
|
Indemnification Agreement for Richard S. Pzena, dated as of October 30, 2007, by and among Pzena Investment Management, Inc. and Richard S. Pzena
(1)
|
10.12
|
|
Indemnification Agreement for Steven M. Galbraith, dated as of October 30, 2007, by and among Pzena Investment Management, Inc. and Steven M. Galbraith
(1)
|
10.13
|
|
Indemnification Agreement for Joel M. Greenblatt, dated as of October 30, 2007, by and among Pzena Investment Management, Inc. and Joel M. Greenblatt
(1)
|
10.14
|
|
Indemnification Agreement for Richard P. Meyerowich, dated as of October 30, 2007, by and among Pzena Investment Management, Inc. and Richard P. Meyerowich
(1)
|
10.15
|
|
Indemnification Agreement for Myron E. Ullman, III, dated as of October 30, 2007, by and among Pzena Investment Management, Inc. and Myron E. Ullman, III
(1)
|
10.16
|
|
Indemnification Agreement for Ronald W. Tysoe, dated as of December 11, 2008, by and among Pzena Investment Management, Inc. and Ronald W. Tysoe
(8)
|
10.17
|
|
Indemnification Agreement for John P. Goetz, dated as of May 17, 2011, by and among Pzena Investment Management, Inc. and John P. Goetz
(7)
|
10.18
|
|
Indemnification Agreement for William L. Lipsey, dated as of May 17, 2011, by and among Pzena Investment Management, Inc. and William L. Lipsey
(7)
|
10.19
|
|
Pzena Investment Management, Inc. Non-Employee Director Deferred Compensation Plan, dated as of July 21, 2009
(9)
|
10.20
|
|
Amendment, effective March 24, 2010, to Amended and Restated Operating Agreement of Pzena Investment Management, LLC, dated as of October 30, 2007, by and among Pzena Investment Management, Inc. as the Managing Member of Pzena Investment Management, LLC and those Class B members whose signatures are affixed thereto
(10)
|
10.21
|
|
Amendment, dated as of March 5, 2012, to Amended and Restated Operating Agreement of Pzena Investment Management, LLC, dated as of October 30, 2007, by and among Pzena Investment Management, Inc. as the Managing Member of Pzena Investment Management, LLC and those Class B members whose signatures are affixed thereto
(7)
|
10.22
|
|
Amendment to Executive Employment Agreement for Richard S. Pzena, dated as of November 1, 2012, by and among Pzena Investment Management, Inc., Pzena Investment Management, LLC, and Richard S. Pzena
(11)
|
10.23
|
|
Amendment to Executive Employment Agreement for John P. Goetz, dated as of November 1, 2012, by and among Pzena Investment Management, Inc., Pzena Investment Management, LLC, and John P. Goetz
(11)
|
10.24
|
|
Amendment to Amended and Restated Executive Employment Agreement for William L. Lipsey, dated as of November 1, 2012, by and among Pzena Investment Management, Inc., Pzena Investment Management, LLC, and William L. Lipsey
(11)
|
10.25
|
|
Amendment, dated as of November 12, 2012, to Tax Receivable Agreement, dated as of October 30, 2007, by and among Pzena Investment Management, Inc., Pzena Investment Management, LLC and the Continuing Members and Exiting Members named on the signature pages thereto
(12)
|
10.26
|
|
Indemnification Agreement for Charles D. Johnston, dated as of February 5, 2014, by and among Pzena Investment Management, Inc. and Charles D. Johnston
(13)
|
10.27
|
|
Lease, dated as of June 13, 2014, between Mutual of America Life Insurance Company, as Landlord and Pzena Investment management, LLC, as Tenant
(14)
|
10.28
|
|
Amendment No. 3 to Pzena Investment Management, LLC Amended and Restated Operating Agreement, dated November 1, 2014
(15)
|
10.29
|
|
Amendment to the Pzena Investment Management, LLC Amended and Restated 2006 Equity Incentive Plan, dated December 2, 2014
(15)
|
10.30
|
|
Amendment to the Pzena Investment Management, LLC Amended and Restated Bonus Plan, dated December 2, 2014
(15)
|
10.31
|
|
Form of Unit-Based Award Agreement for Phantom Class B Units
(15)
|
10.32
|
|
Form of Class B Unit Agreement - Delayed Exchange
(15)
|
10.33
|
|
Form of Class B Unit-Based Agreement for Phantom Class B Units - Revised December, 2015 (filed herewith)
|
10.34
|
|
Form of Class B Unit Agreement - Delayed Exchange - Revised December, 2015 (filed herewith)
|
Exhibit
|
|
Description of Exhibit
|
14.1
|
|
Code of Business Conduct and Ethics, effective as of October 25, 2007, amended as of January 16, 2009
(16)
|
14.2
|
|
Code of Ethics for Senior Financial Officers
(10)
|
21.1
|
|
List of Subsidiaries of Pzena Investment Management, Inc. (filed herewith)
|
23.1
|
|
Consent of KPMG LLP, Independent Registered Public Accounting Firm (filed herewith)
|
31.1
|
|
Certification of Chief Executive Officer pursuant to Exchange Act Rule 13a-14(a) (filed herewith)
|
31.2
|
|
Certification of Chief Financial Officer pursuant to Exchange Act Rule 13a-14(a) (filed herewith)
|
32.1
|
|
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith)
|
32.2
|
|
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith)
|
101
|
|
Materials from the Pzena Investment Management, Inc. Annual Report on Form 10-K for the year ended December 31, 2015, formatted in Extensible Business Reporting Language (XBRL):
(i) Consolidated Statements of Financial Condition, (ii) Consolidated Statements of Operations,
(iii) Consolidated Statement of Changes in Equity, (iv) Consolidated Statements of Cash Flows, and
(vi) related Unaudited Notes to the Consolidated Financial Statements, tagged in detail
(furnished herewith)
|
|
(1)
|
Previously filed as an exhibit to our quarterly report on Form 10-Q filed with the Securities and Exchange Commission on December 5, 2007 (SEC File No. 001-33761).
|
(2)
|
Previously filed as an exhibit to our current report on Form 8-K filed with the Securities and Exchange Commission on January 19, 2016 (SEC File No. 001-33761).
|
(3)
|
Previously filed as an exhibit to Amendment No. 4 of the Registration Statement on Form S-1 (No. 333-143660) of Pzena Investment Management, Inc., which was filed with the Securities and Exchange Commission on October 22, 2007.
|
(4)
|
Previously filed as an exhibit to our quarterly report on Form 10-Q filed with the Securities and Exchange Commission on November 13, 2008 (SEC File No. 001-33761).
|
(5)
|
Previously filed as an exhibit to our quarterly report on Form 10-Q filed with the Securities and Exchange Commission on August 10, 2009 (SEC File No. 001-33761).
|
(6)
|
Previously filed as an exhibit to Amendment No. 1 of the Registration Statement on Form S-1 (No. 333-143660) of Pzena Investment Management, Inc., which was filed with the Securities and Exchange Commission on July 10, 2007.
|
(7)
|
Previously filed as an exhibit to our annual report on Form 10-K filed with the Securities and Exchange Commission on March 14, 2012 (SEC File No. 001-33761).
|
(8)
|
Previously filed as an exhibit to our current report on Form 8-K filed with the Securities and Exchange Commission on December 12, 2008 (SEC File No. 001-33761).
|
(9)
|
Previously filed as an exhibit to our quarterly report on Form 10-Q filed with the Securities and Exchange Commission on November 9, 2009 (SEC File No. 001-33761).
|
(10)
|
Previously filed as an exhibit to our quarterly report on Form 10-Q filed with the Securities and Exchange Commission on May 7, 2010 (SEC File No. 001-33761).
|
(11)
|
Previously filed as an exhibit to our current report on Form 8-K filed with the Securities and Exchange Commission on November 2, 2012 (SEC File No. 001-33761).
|
(12)
|
Previously filed as an exhibit to our annual report on Form 10-K filed with the Securities and Exchange Commission on March 13, 2013 (SEC File No. 001-33761).
|
(13)
|
Previously filed as an exhibit to our current report on Form 8-K filed with the Securities and Exchange Commission on January 30, 2014 (SEC File No. 001-33761).
|
(14)
|
Previously filed as an exhibit to our quarterly report on Form 10-Q filed with the Securities and Exchange Commission on August 7, 2014 (SEC File No. 001-33761).
|
(15)
|
Previously filed as an exhibit to our annual report on Form 10-K filed with the Securities and Exchange Commission on March 16, 2015 (SEC File No. 001-33761)
|
(16)
|
Previously filed as an exhibit to our quarterly report on Form 10-Q filed with the Securities and Exchange Commission on May 11, 2009 (SEC File No. 001-33761).
|
(17)
|
Previously filed as an attachment to our definitive proxy statement on Schedule 14A filed with the Securities and Exchange Commission on April 17, 2013 (SEC File No. 001-33761).
|
|
By:
|
/s/ Richard S. Pzena
|
|
|
Name: Richard S. Pzena
Title: Chief Executive Officer
|
SIGNATURE
|
|
TITLE
|
|
DATE
|
|
|
|
|
|
/s/ Richard S. Pzena
|
|
Chairman of the Board and
Chief Executive Officer (principal executive officer)
|
|
March 11, 2016
|
Richard S. Pzena
|
|
|
||
/s/ Gary J. Bachman
|
|
Chief Financial Officer
(principal financial and accounting officer)
|
|
March 11, 2016
|
Gary J. Bachman
|
|
|
||
/s/ John P. Goetz
|
|
Director
|
|
March 11, 2016
|
John P. Goetz
|
|
|
||
/s/ William L. Lipsey
|
|
Director
|
|
March 11, 2016
|
William L. Lipsey
|
|
|
||
/s/ Steven M. Galbraith
|
|
Director
|
|
March 11, 2016
|
Steven M. Galbraith
|
|
|
||
/s/ Joel M. Greenblatt
|
|
Director
|
|
March 11, 2016
|
Joel M. Greenblatt
|
|
|
||
/s/ Richard P. Meyerowich
|
|
Director
|
|
March 11, 2016
|
Richard P. Meyerowich
|
|
|
||
/s/ Charles D. Johnston
|
|
Director
|
|
March 11, 2016
|
Charles D. Johnston
|
|
|
|
|
Page
|
Pzena Investment Management, Inc.
|
|
|
|
||
|
||
|
||
|
||
|
||
|
||
|
|
As of
|
||||||
|
December 31,
2015 |
|
December 31,
2014 |
||||
ASSETS
|
|
|
|
|
|
||
Cash and Cash Equivalents
|
$
|
35,417
|
|
|
$
|
39,109
|
|
Restricted Cash
|
3,552
|
|
|
2,810
|
|
||
Due from Broker
|
297
|
|
|
94
|
|
||
Advisory Fees Receivable
|
22,248
|
|
|
22,939
|
|
||
Investments
|
27,452
|
|
|
27,945
|
|
||
Receivable from Related Parties
|
1,054
|
|
|
107
|
|
||
Other Receivables
|
589
|
|
|
647
|
|
||
Prepaid Expenses and Other Assets
|
802
|
|
|
845
|
|
||
Deferred Tax Assets, Net of Valuation Allowance of $53,968 and $44,239, respectively
|
14,995
|
|
|
14,618
|
|
||
Property and Equipment, Net of Accumulated Depreciation of $1,202 and $3,072, respectively
|
7,903
|
|
|
2,772
|
|
||
TOTAL ASSETS
|
$
|
114,309
|
|
|
$
|
111,886
|
|
LIABILITIES AND EQUITY
|
|
|
|
|
|
||
Liabilities:
|
|
|
|
|
|
||
Accounts Payable and Accrued Expenses
|
$
|
7,885
|
|
|
$
|
5,974
|
|
Due to Broker
|
30
|
|
|
698
|
|
||
Securities Sold Short, at Fair Value
|
2,231
|
|
|
1,572
|
|
||
Liability to Selling and Converting Shareholders
|
15,075
|
|
|
15,358
|
|
||
Deferred Compensation Liability
|
2,896
|
|
|
2,211
|
|
||
Lease Liability
|
—
|
|
|
354
|
|
||
Other Liabilities
|
730
|
|
|
686
|
|
||
TOTAL LIABILITIES
|
28,847
|
|
|
26,853
|
|
||
Equity:
|
|
|
|
|
|
||
Preferred Stock (Par Value $0.01; 200,000,000 Shares Authorized;
None Outstanding) |
—
|
|
|
—
|
|
||
Class A Common Stock (Par Value $0.01; 750,000,000
Shares Authorized; 15,218,355 and 13,044,719 Shares Issued and Outstanding in 2015 and 2014, respectively) |
152
|
|
|
130
|
|
||
Class B Common Stock (Par Value $0.000001; 750,000,000 Shares Authorized; 52,089,472 and 52,891,939 Shares Issued and Outstanding in 2015 and 2014 respectively)
|
—
|
|
|
—
|
|
||
Additional Paid-In Capital
|
5,819
|
|
|
8,007
|
|
||
Retained Earnings
|
12,453
|
|
|
10,264
|
|
||
Accumulated Other Comprehensive Loss
|
(2
|
)
|
|
—
|
|
||
Total Pzena Investment Management, Inc.'s Equity
|
18,422
|
|
|
18,401
|
|
||
Non-Controlling Interests
|
67,040
|
|
|
66,632
|
|
||
TOTAL EQUITY
|
85,462
|
|
|
85,033
|
|
||
TOTAL LIABILITIES AND EQUITY
|
$
|
114,309
|
|
|
$
|
111,886
|
|
|
For the Years Ended December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
REVENUE
|
$
|
116,607
|
|
|
$
|
112,511
|
|
|
$
|
95,769
|
|
EXPENSES
|
|
|
|
|
|
|
|
|
|||
Compensation and Benefits Expenses
|
46,523
|
|
|
41,273
|
|
|
36,822
|
|
|||
General and Administrative Expenses
|
14,667
|
|
|
10,285
|
|
|
8,099
|
|
|||
TOTAL OPERATING EXPENSES
|
61,190
|
|
|
51,558
|
|
|
44,921
|
|
|||
Operating Income
|
55,417
|
|
|
60,953
|
|
|
50,848
|
|
|||
OTHER INCOME/(EXPENSE)
|
|
|
|
|
|
|
|
|
|||
Interest Income
|
40
|
|
|
71
|
|
|
112
|
|
|||
Interest Expense
|
(21
|
)
|
|
(8
|
)
|
|
—
|
|
|||
Dividend Income
|
734
|
|
|
337
|
|
|
211
|
|
|||
(Losses)/ Gains and Other Investment Income
|
(3,344
|
)
|
|
(49
|
)
|
|
2,449
|
|
|||
Change in Liability to Selling and
Converting Shareholders |
(423
|
)
|
|
(4,168
|
)
|
|
(4,468
|
)
|
|||
Other Expense
|
(286
|
)
|
|
(219
|
)
|
|
(125
|
)
|
|||
Total Other Expense
|
(3,300
|
)
|
|
(4,036
|
)
|
|
(1,821
|
)
|
|||
Income Before Income Taxes
|
52,117
|
|
|
56,917
|
|
|
49,027
|
|
|||
Income Tax Expense
|
5,114
|
|
|
1,883
|
|
|
589
|
|
|||
Net Income
|
47,003
|
|
|
55,034
|
|
|
48,438
|
|
|||
Less: Net Income Attributable to
Non-Controlling Interests |
39,324
|
|
|
46,934
|
|
|
41,768
|
|
|||
Net Income Attributable to Pzena
Investment Management, Inc. |
$
|
7,679
|
|
|
$
|
8,100
|
|
|
$
|
6,670
|
|
|
|
|
|
|
|
||||||
Net Income for Basic Earnings per Share
|
$
|
7,679
|
|
|
$
|
8,100
|
|
|
$
|
6,670
|
|
Basic Earnings per Share
|
$
|
0.55
|
|
|
$
|
0.64
|
|
|
$
|
0.56
|
|
Basic Weighted Average Shares Outstanding
|
14,014,219
|
|
|
12,628,676
|
|
|
11,990,757
|
|
|||
|
|
|
|
|
|
||||||
Net Income for Diluted Earnings per Share
|
$
|
33,809
|
|
|
$
|
35,685
|
|
|
$
|
30,317
|
|
Diluted Earnings per Share
|
$
|
0.50
|
|
|
$
|
0.53
|
|
|
$
|
0.45
|
|
Diluted Weighted Average Shares Outstanding
1
|
68,126,786
|
|
|
67,797,524
|
|
|
66,759,840
|
|
|||
|
|
|
|
|
|
||||||
Cash Dividends per Share of Class A Common Stock
|
$
|
0.41
|
|
|
$
|
0.35
|
|
|
$
|
0.25
|
|
|
For the Years Ended December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
NET INCOME
|
$
|
47,003
|
|
|
$
|
55,034
|
|
|
$
|
48,438
|
|
OTHER COMPREHENSIVE LOSS
|
|
|
|
|
|
||||||
Foreign Currency Translation Adjustment
|
(10
|
)
|
|
—
|
|
|
—
|
|
|||
Total Other Comprehensive Loss
|
(10
|
)
|
|
—
|
|
|
—
|
|
|||
Comprehensive Income
|
46,993
|
|
|
55,034
|
|
|
48,438
|
|
|||
Less: Comprehensive Income Attributable to Non-Controlling Interests
|
39,316
|
|
|
46,934
|
|
|
41,768
|
|
|||
Total Comprehensive Income Attributable to Pzena Investment Management, Inc.
|
$
|
7,677
|
|
|
$
|
8,100
|
|
|
$
|
6,670
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
Shares of Class A
Common Stock
|
|
Shares of Class B
Common Stock
|
|
Class A
Common Stock
|
|
Additional Paid-In
Capital
|
|
Accumulated Other Comprehensive Loss
|
|
Retained Earnings
|
|
Non-Controlling
Interests
|
|
Total
|
||||||||||||||
Balance at December 31, 2012
|
11,149,941
|
|
|
53,482,324
|
|
|
$
|
111
|
|
|
$
|
11,765
|
|
|
$
|
—
|
|
|
$
|
2,693
|
|
|
$
|
33,397
|
|
|
$
|
47,966
|
|
Unit Conversion
|
1,328,334
|
|
|
(1,328,334
|
)
|
|
13
|
|
|
786
|
|
|
—
|
|
|
—
|
|
|
(680
|
)
|
|
119
|
|
||||||
Amortization of Non-Cash Compensation
|
17,414
|
|
|
602,400
|
|
|
—
|
|
|
600
|
|
|
—
|
|
|
—
|
|
|
2,560
|
|
|
3,160
|
|
||||||
Directors' Shares
|
45,818
|
|
|
—
|
|
|
1
|
|
|
82
|
|
|
—
|
|
|
—
|
|
|
257
|
|
|
340
|
|
||||||
Net Income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6,670
|
|
|
41,768
|
|
|
48,438
|
|
||||||
Options Exercised
|
—
|
|
|
421,173
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Repurchase and Retirement of Class A Common Stock
|
(383,450
|
)
|
|
—
|
|
|
(4
|
)
|
|
(2,410
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,414
|
)
|
||||||
Repurchase and Retirement of Class B Units
|
—
|
|
|
(356,843
|
)
|
|
—
|
|
|
(699
|
)
|
|
—
|
|
|
—
|
|
|
(3,028
|
)
|
|
(3,727
|
)
|
||||||
Repurchase and Retirement of Class B Unit Options
|
—
|
|
|
—
|
|
|
—
|
|
|
(14
|
)
|
|
—
|
|
|
—
|
|
|
(57
|
)
|
|
(71
|
)
|
||||||
Contributions from Non-Controlling Interests
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
147
|
|
|
147
|
|
||||||
Distributions to Non-Controlling Interests
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
(32,537
|
)
|
|
(32,537
|
)
|
|||||||
Class A Cash Dividends Declared and Paid ($0.25 per share)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,872
|
)
|
|
—
|
|
|
(2,872
|
)
|
||||||
Other
|
—
|
|
|
—
|
|
|
—
|
|
|
(360
|
)
|
|
—
|
|
|
—
|
|
|
360
|
|
|
—
|
|
||||||
Balance at December 31, 2013
|
12,158,057
|
|
|
52,820,720
|
|
|
$
|
121
|
|
|
$
|
9,750
|
|
|
$
|
—
|
|
|
$
|
6,491
|
|
|
$
|
42,187
|
|
|
$
|
58,549
|
|
Unit Conversion
|
1,150,060
|
|
|
(1,150,060
|
)
|
|
11
|
|
|
1,038
|
|
|
—
|
|
|
—
|
|
|
(858
|
)
|
|
191
|
|
||||||
Amortization of Non-Cash Compensation
|
28,535
|
|
|
1,215,583
|
|
|
1
|
|
|
1,329
|
|
|
—
|
|
|
—
|
|
|
5,336
|
|
|
6,666
|
|
||||||
Directors' Shares
|
—
|
|
|
—
|
|
|
—
|
|
|
69
|
|
|
—
|
|
|
—
|
|
|
290
|
|
|
359
|
|
||||||
Net Income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8,100
|
|
|
46,934
|
|
|
55,034
|
|
||||||
Options Exercised
|
68,346
|
|
|
95,199
|
|
|
1
|
|
|
37
|
|
|
—
|
|
|
—
|
|
|
(38
|
)
|
|
—
|
|
||||||
Repurchase and Retirement of Class A Common Stock
|
(360,279
|
)
|
|
—
|
|
|
(4
|
)
|
|
(3,492
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,496
|
)
|
||||||
Repurchase and Retirement of Class B Units
|
—
|
|
|
(89,503
|
)
|
|
—
|
|
|
(173
|
)
|
|
—
|
|
|
—
|
|
|
(728
|
)
|
|
(901
|
)
|
||||||
Contributions from Non-Controlling Interests
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,906
|
|
|
4,906
|
|
||||||
Distributions to Non-Controlling Interests
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(44,154
|
)
|
|
(44,154
|
)
|
||||||
Class A Cash Dividends Declared and Paid ($0.35 per share)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,327
|
)
|
|
—
|
|
|
(4,327
|
)
|
||||||
Effect of Deconsolidation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(37
|
)
|
|
(37
|
)
|
||||||
Effect of Consolidation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
12,243
|
|
|
12,243
|
|
||||||
Other
|
—
|
|
|
—
|
|
|
—
|
|
|
(551
|
)
|
|
—
|
|
|
—
|
|
|
551
|
|
|
—
|
|
||||||
Balance at December 31, 2014
|
13,044,719
|
|
|
52,891,939
|
|
|
$
|
130
|
|
|
$
|
8,007
|
|
|
$
|
—
|
|
|
$
|
10,264
|
|
|
$
|
66,632
|
|
|
$
|
85,033
|
|
Unit Conversion
|
2,772,171
|
|
|
(2,772,171
|
)
|
|
28
|
|
|
2,745
|
|
|
—
|
|
|
—
|
|
|
(2,278
|
)
|
|
495
|
|
||||||
Amortization of Non-Cash Compensation
|
29,677
|
|
|
1,510,626
|
|
|
—
|
|
|
1,848
|
|
|
—
|
|
|
—
|
|
|
6,344
|
|
|
8,192
|
|
||||||
Sale of Shares Under Equity Incentive Plan
|
—
|
|
|
78,093
|
|
|
—
|
|
|
87
|
|
|
—
|
|
|
—
|
|
|
285
|
|
|
372
|
|
||||||
Non-Cash Compensation Modification
|
—
|
|
|
(142,315
|
)
|
|
—
|
|
|
(141
|
)
|
|
—
|
|
|
—
|
|
|
(572
|
)
|
|
(713
|
)
|
||||||
Directors' Shares
|
—
|
|
|
—
|
|
|
—
|
|
|
82
|
|
|
—
|
|
|
—
|
|
|
310
|
|
|
392
|
|
||||||
Net Income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,679
|
|
|
39,324
|
|
|
47,003
|
|
||||||
Foreign Currency Translation Adjustments
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
—
|
|
|
(8
|
)
|
|
(10
|
)
|
||||||
Options Exercised
|
962
|
|
|
715,706
|
|
|
—
|
|
|
333
|
|
|
—
|
|
|
—
|
|
|
1,355
|
|
|
1,688
|
|
||||||
Repurchase and Retirement of Class A Common Stock
|
(629,174
|
)
|
|
—
|
|
|
(6
|
)
|
|
(5,770
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,776
|
)
|
||||||
Repurchase and Retirement of Class B Units
|
—
|
|
|
(192,406
|
)
|
|
—
|
|
|
(407
|
)
|
|
—
|
|
|
—
|
|
|
(1,619
|
)
|
|
(2,026
|
)
|
||||||
Contributions from Non-Controlling Interests
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
597
|
|
|
597
|
|
||||||
Distributions to Non-Controlling Interests
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(44,295
|
)
|
|
(44,295
|
)
|
||||||
Class A Cash Dividends Declared and Paid ($0.41 per share)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,490
|
)
|
|
—
|
|
|
(5,490
|
)
|
||||||
Other
|
—
|
|
|
—
|
|
|
—
|
|
|
(965
|
)
|
|
—
|
|
|
—
|
|
|
965
|
|
|
—
|
|
||||||
Balance at December 31, 2015
|
15,218,355
|
|
|
52,089,472
|
|
|
$
|
152
|
|
|
$
|
5,819
|
|
|
$
|
(2
|
)
|
|
$
|
12,453
|
|
|
$
|
67,040
|
|
|
$
|
85,462
|
|
|
For the Years Ended December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
|
|||
Net Income
|
$
|
47,003
|
|
|
$
|
55,034
|
|
|
$
|
48,438
|
|
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:
|
|
|
|
|
|
|
|
|
|||
Depreciation
|
789
|
|
|
224
|
|
|
178
|
|
|||
Loss on Disposal of Fixed Assets
|
428
|
|
|
—
|
|
|
—
|
|
|||
Non-Cash Compensation
|
11,092
|
|
|
8,877
|
|
|
5,523
|
|
|||
Directors' Share Grants
|
392
|
|
|
359
|
|
|
315
|
|
|||
Losses/ (Gains) and Other Investment Income
|
3,344
|
|
|
49
|
|
|
(2,449
|
)
|
|||
Foreign Currency Translation Adjustment
|
(10
|
)
|
|
—
|
|
|
—
|
|
|||
Lease Liability
|
862
|
|
|
—
|
|
|
—
|
|
|||
Change in Liability to Selling and Converting Shareholders
|
423
|
|
|
4,168
|
|
|
4,468
|
|
|||
Deferred Income Taxes
|
2,910
|
|
|
(1,055
|
)
|
|
(1,849
|
)
|
|||
Changes in Operating Assets and Liabilities:
|
|
|
|
|
|
|
|
|
|||
Advisory Fees Receivable
|
691
|
|
|
1,008
|
|
|
(9,321
|
)
|
|||
Due from Broker
|
(198
|
)
|
|
(41
|
)
|
|
(36
|
)
|
|||
Restricted Cash
|
(742
|
)
|
|
(2,494
|
)
|
|
714
|
|
|||
Prepaid Expenses and Other Assets
|
69
|
|
|
(357
|
)
|
|
(491
|
)
|
|||
Non-Cash Compensation Modification
|
(713
|
)
|
|
—
|
|
|
—
|
|
|||
Due to Broker
|
(668
|
)
|
|
694
|
|
|
(18
|
)
|
|||
Subscriptions Receivable
|
—
|
|
|
7,000
|
|
|
—
|
|
|||
Accounts Payable, Accrued Expenses, and Other Liabilities
|
(214
|
)
|
|
(1,660
|
)
|
|
(48
|
)
|
|||
Tax Receivable Agreement Payments
|
(3,512
|
)
|
|
(2,668
|
)
|
|
(2,024
|
)
|
|||
Change in Lease Liability
|
(1,216
|
)
|
|
(424
|
)
|
|
(425
|
)
|
|||
Purchases of Investments
|
(40,493
|
)
|
|
(58,874
|
)
|
|
(78,100
|
)
|
|||
Proceeds from Sale of Investments
|
37,193
|
|
|
45,572
|
|
|
79,582
|
|
|||
Net Cash Provided by Operating Activities
|
57,430
|
|
|
55,412
|
|
|
44,457
|
|
|||
INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
|||
Purchases of Investments
|
(8,669
|
)
|
|
(2,494
|
)
|
|
(1,558
|
)
|
|||
Proceeds from Sale of Investments
|
9,772
|
|
|
2,043
|
|
|
78
|
|
|||
Payments to Related Parties
|
(947
|
)
|
|
12
|
|
|
(36
|
)
|
|||
Purchase of Property and Equipment
|
(6,348
|
)
|
|
(2,161
|
)
|
|
(234
|
)
|
|||
Net Cash Used in Investing Activities
|
(6,192
|
)
|
|
(2,600
|
)
|
|
(1,750
|
)
|
|||
FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
|||
Repurchase and Retirement of Class A Common Stock
|
(5,776
|
)
|
|
(3,496
|
)
|
|
(2,414
|
)
|
|||
Repurchase and Retirement of Class B Units
|
(2,026
|
)
|
|
(901
|
)
|
|
(3,727
|
)
|
|||
Repurchase and Retirement of Class B Unit Options
|
—
|
|
|
—
|
|
|
(71
|
)
|
|||
Option Exercise
|
1,688
|
|
|
—
|
|
|
—
|
|
|||
Sale of Shares under Equity Incentive Plan
|
372
|
|
|
—
|
|
|
—
|
|
|||
Loan Proceeds
|
—
|
|
|
205
|
|
|
—
|
|
|||
Distributions to Non-Controlling Interests
|
(44,295
|
)
|
|
(44,154
|
)
|
|
(32,537
|
)
|
|||
Contributions from Non-Controlling Interests
|
597
|
|
|
4,906
|
|
|
147
|
|
|||
Dividends
|
(5,490
|
)
|
|
(4,327
|
)
|
|
(2,872
|
)
|
|||
Net Cash Used in Financing Activities
|
(54,930
|
)
|
|
(47,767
|
)
|
|
(41,474
|
)
|
|||
NET CHANGE IN CASH
|
$
|
(3,692
|
)
|
|
$
|
5,045
|
|
|
$
|
1,233
|
|
CASH AND CASH EQUIVALENTS — Beginning of Year
|
$
|
39,109
|
|
|
$
|
33,878
|
|
|
$
|
32,645
|
|
Effect of Consolidation/ (Deconsolidation) of Affiliates
|
—
|
|
|
186
|
|
|
—
|
|
|||
Net Change in Cash
|
(3,692
|
)
|
|
5,045
|
|
|
1,233
|
|
|||
CASH AND CASH EQUIVALENTS — End of Year
|
$
|
35,417
|
|
|
$
|
39,109
|
|
|
$
|
33,878
|
|
Supplementary Cash Flow Information:
|
|
|
|
|
|
|
|
|
|||
Income Taxes Paid
|
$
|
1,031
|
|
|
$
|
2,728
|
|
|
$
|
2,502
|
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Investments Not Held at Fair Value
|
|
Total
|
||||||||||
|
(in thousands)
|
||||||||||||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Equity Securities
|
$
|
24,835
|
|
|
$
|
904
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
25,739
|
|
Investments in Equity Method Investees
|
—
|
|
|
—
|
|
|
—
|
|
|
1,713
|
|
|
1,713
|
|
|||||
Total Fair Value
|
$
|
24,835
|
|
|
$
|
904
|
|
|
$
|
—
|
|
|
$
|
1,713
|
|
|
$
|
27,452
|
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Investments Not Held at Fair Value
|
|
Total
|
||||||||||
|
(in thousands)
|
||||||||||||||||||
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Securities Sold Short
|
$
|
2,231
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,231
|
|
Total Fair Value
|
$
|
2,231
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,231
|
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Investments Not Held at Fair Value
|
|
Total
|
||||||||||
|
(in thousands)
|
||||||||||||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Equity Securities
|
$
|
23,036
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
23,036
|
|
Investments in Mutual Funds
|
4,909
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,909
|
|
|||||
Total Fair Value
|
$
|
27,945
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
27,945
|
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Investments Not Held at Fair Value
|
|
Total
|
||||||||||
|
(in thousands)
|
||||||||||||||||||
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Securities Sold Short
|
$
|
1,572
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,572
|
|
Total Fair Value
|
$
|
1,572
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,572
|
|
|
For the Years Ended December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
|
(in thousands)
|
||||||||||
Cash Compensation and Other Benefits
|
$
|
35,431
|
|
|
$
|
32,396
|
|
|
$
|
31,374
|
|
Non-Cash Compensation
|
11,092
|
|
|
8,877
|
|
|
5,448
|
|
|||
Total Compensation and Benefits Expense
|
$
|
46,523
|
|
|
$
|
41,273
|
|
|
$
|
36,822
|
|
|
For the Years Ended December 31,
|
|||||||||||||||||||
|
2015
|
|
2014
|
|
2013
|
|||||||||||||||
|
Amount
|
|
Fair Value
1
|
|
Amount
|
|
Fair Value
1
|
|
Amount
|
|
Fair Value
1
|
|||||||||
Phantom Class B Units
2
|
14,060
|
|
|
$
|
7.11
|
|
|
102,110
|
|
|
$
|
7.62
|
|
|
805,879
|
|
|
$
|
8.50
|
|
Class B Units
|
23,782
|
|
|
$
|
9.46
|
|
|
32,479
|
|
|
$
|
11.76
|
|
|
82,491
|
|
|
$
|
9.17
|
|
Delayed Exchange Class B Units
3
|
993,965
|
|
|
$
|
5.21
|
|
|
662,832
|
|
|
$
|
5.27
|
|
|
—
|
|
|
$
|
—
|
|
Deferred Compensation Phantom Class B Units
|
—
|
|
|
$
|
—
|
|
|
22,959
|
|
|
$
|
11.76
|
|
|
68,518
|
|
|
$
|
5.40
|
|
Options to Purchase Class B Units
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
|
76,522
|
|
|
$
|
3.27
|
|
Options to Purchase Shares of Class A Common Stock
4
|
3,000,000
|
|
|
$
|
1.18
|
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
Participating Shares of Class A Common Stock
|
31,010
|
|
|
$
|
8.38
|
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
Restricted Shares of Class A Common Stock
|
100,000
|
|
|
$
|
6.08
|
|
|
—
|
|
|
$
|
—
|
|
|
100,000
|
|
|
$
|
4.41
|
|
1
|
Represents the weighted average grant date estimated fair value per share, unit, or option.
|
2
|
Represents phantom Class B units issued under the 2006 Equity Incentive Plan. These phantom units vest ratably over
ten
years and are not entitled to receive dividend or dividend equivalents until vested.
|
3
|
Represents Class B units issued under the 2006 Equity Incentive Plan. These units vest immediately upon grant, but may not be exchanged pursuant to the Amended and Restated Operating Agreement of the operating company until the seventh anniversary of the date of grant. These units are also not entitled to any benefits under the Tax Receivable Agreement between the Company and members of the operating company.
|
4
|
Represents options to purchase shares of Class A common stock issued whose vesting is contingent on meeting various performance goals. These options contingently vest over a period of
7 years
.
|
|
2015
|
|
2014
|
|
2013
|
|||||
|
March 2,
|
|
September 22,
|
|
|
|
December 19,
|
|||
Weighted Average Time Until Exercise
|
7 years
|
|
|
7 years
|
|
|
N/A
|
|
7 years
|
|
Expected Volatility
|
35
|
%
|
|
40
|
%
|
|
N/A
|
|
42
|
%
|
Risk-Free Rate
|
1.89
|
%
|
|
1.83
|
%
|
|
N/A
|
|
2.33
|
%
|
Dividend Yield
|
4.83
|
%
|
|
5.02
|
%
|
|
N/A
|
|
3.31
|
%
|
|
For the Years Ended December 31,
|
|||||||||||||||||||
|
2015
|
|
2014
|
|
2013
|
|||||||||||||||
|
Options Outstanding
|
|
Weighted Average Exercise Price
|
|
Options Outstanding
|
|
Weighted Average Exercise Price
|
|
Options Outstanding
|
|
Weighted Average Exercise Price
|
|||||||||
Beginning Balance
|
3,114,282
|
|
|
$
|
7.10
|
|
|
3,793,884
|
|
|
$
|
7.45
|
|
|
4,524,807
|
|
|
$
|
6.88
|
|
Options Granted
|
3,000,000
|
|
|
13.00
|
|
|
—
|
|
|
—
|
|
|
76,522
|
|
|
10.26
|
|
|||
Options Cancelled
|
—
|
|
|
—
|
|
|
(270,000
|
)
|
|
12.78
|
|
|
—
|
|
|
—
|
|
|||
Options Exercised
|
(958,139
|
)
|
|
4.52
|
|
|
(409,602
|
)
|
|
6.53
|
|
|
(752,445
|
)
|
|
4.22
|
|
|||
Options Repurchased by the Company
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(55,000
|
)
|
|
9.29
|
|
|||
Ending Balance
|
5,156,143
|
|
|
$
|
11.01
|
|
|
3,114,282
|
|
|
$
|
7.10
|
|
|
3,793,884
|
|
|
$
|
7.45
|
|
|
|
Options Outstanding
|
|
Options Exercisable
|
||||||||||||||
|
|
Number Outstanding as of December 31, 2015
|
|
Weighted-
Average Remaining Contractual Life
|
|
Weighted Average Exercise Price
|
|
Number Exercisable as of December 31, 2015
|
|
Weighted-
Average Remaining Contractual Life
|
|
Weighted Average Exercise Price
|
||||||
$4.22 – $5.00
|
|
444,448
|
|
|
3.8
|
|
$
|
4.37
|
|
|
444,448
|
|
|
3.8
|
|
$
|
4.37
|
|
$5.00 – $10.00
|
|
1,135,863
|
|
|
4.1
|
|
7.94
|
|
|
1,135,863
|
|
|
4.1
|
|
7.94
|
|
||
$10.00 – $15.00
|
|
3,575,832
|
|
|
5.9
|
|
12.82
|
|
|
575,832
|
|
|
2.5
|
|
11.85
|
|
||
$4.22 – $15.00
|
|
5,156,143
|
|
|
5.3
|
|
$
|
11.01
|
|
|
2,156,143
|
|
|
3.6
|
|
$
|
8.25
|
|
|
Options
Outstanding
|
|
Options
Exercisable
|
||||
|
(in thousands)
|
||||||
Aggregate Intrinsic Value
|
$
|
2,623
|
|
|
$
|
2,623
|
|
|
For the Years Ended December 31,
|
|||||||||||||||||||
|
2015
|
|
2014
|
|
2013
|
|||||||||||||||
|
Phantom Units Outstanding
|
|
Weighted Average Price
|
|
Phantom Units Outstanding
|
|
Weighted Average Price
|
|
Phantom Units Outstanding
|
|
Weighted Average Price
|
|||||||||
Beginning Balance
|
71,688
|
|
|
$
|
6.63
|
|
|
109,665
|
|
|
$
|
5.32
|
|
|
106,340
|
|
|
$
|
5.69
|
|
Phantom Class B Units Issued
|
—
|
|
|
—
|
|
|
22,959
|
|
|
11.76
|
|
|
68,518
|
|
|
5.40
|
|
|||
Vesting of Phantom Class B Units
|
(43,081
|
)
|
|
5.75
|
|
|
(54,984
|
)
|
|
6.09
|
|
|
(65,193
|
)
|
|
6.00
|
|
|||
Phantom Class B Units Forfeited
|
—
|
|
|
—
|
|
|
(5,952
|
)
|
|
7.35
|
|
|
—
|
|
|
—
|
|
|||
Ending Balance
|
28,607
|
|
|
$
|
7.95
|
|
|
71,688
|
|
|
$
|
6.63
|
|
|
109,665
|
|
|
$
|
5.32
|
|
|
For the Years Ended December 31,
|
|||||||||||||||||||
|
2015
|
|
2014
|
|
2013
|
|||||||||||||||
|
Phantom Units Outstanding
|
|
Weighted Average Price
|
|
Phantom Units Outstanding
|
|
Weighted Average Price
|
|
Phantom Units Outstanding
|
|
Weighted Average Price
|
|||||||||
Beginning Balance
|
3,476,934
|
|
|
$
|
4.92
|
|
|
4,499,386
|
|
|
$
|
4.68
|
|
|
4,103,896
|
|
|
$
|
3.85
|
|
Phantom Class B Units Issued
|
14,060
|
|
|
7.11
|
|
|
102,110
|
|
|
7.62
|
|
|
805,879
|
|
|
8.50
|
|
|||
Vesting of Phantom Class B Units
|
(424,669
|
)
|
|
4.83
|
|
|
(423,263
|
)
|
|
4.83
|
|
|
(410,389
|
)
|
|
3.85
|
|
|||
Phantom Class B Units Forfeited
|
—
|
|
|
—
|
|
|
(701,299
|
)
|
|
3.85
|
|
|
—
|
|
|
—
|
|
|||
Ending Balance
|
3,066,325
|
|
|
$
|
4.94
|
|
|
3,476,934
|
|
|
$
|
4.92
|
|
|
4,499,386
|
|
|
$
|
4.68
|
|
Plan
|
|
Number of Securities
Remaining Available
For Future Issuance
Under Equity
Compensation Plans
|
|
Pzena Investment Management, LLC
2006 Equity Incentive Plan |
|
8,828,748
|
|
Pzena Investment Management, Inc.
2007 Equity Incentive Plan |
|
2,456,949
|
|
Total
|
|
11,285,697
|
|
|
For the Years Ended December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
|
(in thousands, except share and per share amounts)
|
||||||||||
Net Income Allocated to:
|
|
|
|
|
|
||||||
Class A Common Stock
|
$
|
7,665
|
|
|
$
|
8,100
|
|
|
$
|
6,670
|
|
Participating Shares of Restricted Class A Common Stock
|
14
|
|
|
—
|
|
|
—
|
|
|||
Net Income for Basic Earnings Per Share
|
$
|
7,679
|
|
|
$
|
8,100
|
|
|
$
|
6,670
|
|
|
|
|
|
|
|
||||||
Basic Weighted-Average Shares Outstanding
|
13,989,589
|
|
|
12,628,676
|
|
|
11,990,757
|
|
|||
Add: Participating Shares of Restricted Class A Common Stock
1
|
24,630
|
|
|
—
|
|
|
—
|
|
|||
Total Basic Weighted-Average Shares Outstanding
|
14,014,219
|
|
|
12,628,676
|
|
|
11,990,757
|
|
|||
Basic Earnings per Share
|
$
|
0.55
|
|
|
$
|
0.64
|
|
|
$
|
0.56
|
|
1
|
Certain unvested shares of Class A common stock granted to employees have nonforfeitable rights to dividends and therefore participate fully in the results of the Company from the date they are granted. They are included in the computation of basic earnings per share using the two-class method for participating securities.
|
|
For the Years Ended December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
|
(in thousands)
|
||||||||||
Net Income Attributable to Non-Controlling Interests of Pzena Investment Management, LLC
|
$
|
41,562
|
|
|
$
|
47,026
|
|
|
$
|
40,533
|
|
Less: Assumed Corporate Income Taxes
|
15,432
|
|
|
19,441
|
|
|
16,886
|
|
|||
Assumed After-Tax Income of Pzena Investment Management, LLC
|
26,130
|
|
|
27,585
|
|
|
23,647
|
|
|||
Net Income of Pzena Investment Management, Inc
|
7,679
|
|
|
8,100
|
|
|
6,670
|
|
|||
Diluted Net Income
|
$
|
33,809
|
|
|
$
|
35,685
|
|
|
$
|
30,317
|
|
|
For the Years Ended December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
|
(In thousands, except share and per share amounts)
|
||||||||||
Diluted Net Income Allocated to:
|
|
|
|
|
|
|
|
|
|||
Class A Common Stock
|
$
|
33,751
|
|
|
$
|
35,606
|
|
|
30,244
|
|
|
Participating Shares of Restricted Class A Common Stock
|
14
|
|
|
—
|
|
|
—
|
|
|||
Participating Class B Units
|
44
|
|
|
79
|
|
|
73
|
|
|||
Total Diluted Net Income Attributable to Shareholders
|
$
|
33,809
|
|
|
$
|
35,685
|
|
|
$
|
30,317
|
|
Basic Weighted-Average Shares Outstanding
|
14,014,219
|
|
|
12,628,676
|
|
|
11,990,757
|
|
|||
Dilutive Effect of Class B Units
|
52,072,070
|
|
|
52,418,097
|
|
|
52,508,211
|
|
|||
Dilutive Effect of Options
1
|
555,940
|
|
|
915,893
|
|
|
690,563
|
|
|||
Dilutive Effect of Phantom Units
|
1,349,050
|
|
|
1,648,210
|
|
|
1,383,794
|
|
|||
Dilutive Effect of Restricted Shares of Class A Common Stock
2
|
51,760
|
|
|
42,599
|
|
|
29,795
|
|
|||
Dilutive Weighted-Average Shares Outstanding
|
68,043,039
|
|
|
67,653,475
|
|
|
66,603,120
|
|
|||
Add: Participating Class B Units
3
|
83,747
|
|
|
144,049
|
|
|
156,720
|
|
|||
Total Dilutive Weighted-Average Shares Outstanding
|
68,126,786
|
|
|
67,797,524
|
|
|
66,759,840
|
|
|||
Diluted Earnings per Share
|
$
|
0.50
|
|
|
$
|
0.53
|
|
|
$
|
0.45
|
|
1
|
Represents the dilutive effect of options to purchase Class B units and Class A common stock.
|
2
|
Certain restricted shares of Class A common stock granted to employees are not entitled to dividend or dividend equivalent payments until they are vested and are therefore non-participating securities and are not included in the computation of basic earnings per share. They are included in the computation of diluted earnings per share when the effect is dilutive using the treasury stock method.
|
3
|
Unvested Class B Units granted to employees have nonforfeitable rights to dividends and therefore participate fully in the results of the operating company's operations from the date they are granted. They are included in the computation of diluted earnings per share using the two-class method for participating securities.
|
|
July 27,
2015 |
|
July 31,
2014 |
|
March 20,
2013 |
||||||
|
(in thousands)
|
||||||||||
Pzena Investment Management, LLC Members' Capital
|
$
|
37,760
|
|
|
$
|
16,142
|
|
|
$
|
18,781
|
|
Pzena Investment Management, LLC Accumulated Deficit
|
(35,482
|
)
|
|
(15,284
|
)
|
|
(18,100
|
)
|
|||
Realizable Deferred Tax Asset
|
3,301
|
|
|
1,272
|
|
|
795
|
|
|||
Net Tax Receivable Liability to Converting Unitholders
|
(2,806
|
)
|
|
(1,081
|
)
|
|
(677
|
)
|
|||
Total
|
$
|
2,773
|
|
|
$
|
1,049
|
|
|
$
|
799
|
|
Common Stock, at Par
|
$
|
28
|
|
|
$
|
11
|
|
|
$
|
13
|
|
Additional Paid-in Capital
|
2,745
|
|
|
1,038
|
|
|
786
|
|
|||
Total
|
$
|
2,773
|
|
|
$
|
1,049
|
|
|
$
|
799
|
|
|
For the Years Ended December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
|
(in thousands)
|
||||||||||
Non-Controlling Interests of Pzena Investment Management, LLC
|
$
|
41,562
|
|
|
$
|
47,026
|
|
|
$
|
40,533
|
|
Non-Controlling Interests of Consolidated Subsidiaries
|
(2,238
|
)
|
|
(92
|
)
|
|
1,235
|
|
|||
Non-Controlling Interests
|
$
|
39,324
|
|
|
$
|
46,934
|
|
|
$
|
41,768
|
|
|
As of
|
||||||
|
December 31, 2015
|
|
December 31, 2014
|
||||
|
(in thousands)
|
||||||
Investment securities, trading
|
|
|
|
||||
Equity Securities
|
$
|
25,739
|
|
|
$
|
23,036
|
|
Investments in Mutual Funds
|
—
|
|
|
4,909
|
|
||
Total investment securities, trading
|
$
|
25,739
|
|
|
$
|
27,945
|
|
Investments in equity method investees
|
1,713
|
|
|
—
|
|
||
Total
|
$
|
27,452
|
|
|
$
|
27,945
|
|
|
Cost
|
|
Unrealized Gain/(Loss)
|
|
Fair Value
|
||||||
|
(in thousands)
|
||||||||||
Equity Securities
|
$
|
30,029
|
|
|
$
|
(4,290
|
)
|
|
$
|
25,739
|
|
Investments in Mutual Funds
|
—
|
|
|
—
|
|
|
—
|
|
|||
Total
|
$
|
30,029
|
|
|
$
|
(4,290
|
)
|
|
$
|
25,739
|
|
|
Cost
|
|
Unrealized (Gain)/Loss
|
|
Fair Value
|
||||||
|
(in thousands)
|
||||||||||
Securities Sold Short
|
$
|
2,391
|
|
|
$
|
(160
|
)
|
|
$
|
2,231
|
|
Total
|
$
|
2,391
|
|
|
$
|
(160
|
)
|
|
$
|
2,231
|
|
|
Cost
|
|
Unrealized Gain/(Loss)
|
|
Fair Value
|
||||||
|
(in thousands)
|
||||||||||
Equity Securities
|
$
|
23,789
|
|
|
$
|
(753
|
)
|
|
$
|
23,036
|
|
Investments in Mutual Funds
|
3,820
|
|
|
1,089
|
|
|
4,909
|
|
|||
Total
|
$
|
27,609
|
|
|
$
|
336
|
|
|
$
|
27,945
|
|
|
Cost
|
|
Unrealized (Gain)/Loss
|
|
Fair Value
|
||||||
|
(in thousands)
|
||||||||||
Securities Sold Short
|
$
|
1,496
|
|
|
$
|
76
|
|
|
$
|
1,572
|
|
Total
|
$
|
1,496
|
|
|
$
|
76
|
|
|
$
|
1,572
|
|
|
As of
|
||||||
|
December 31,
2015 |
|
December 31,
2014 |
||||
|
(in thousands)
|
||||||
Leasehold Improvements
|
$
|
6,826
|
|
|
$
|
3,206
|
|
Computer Hardware
|
689
|
|
|
1,228
|
|
||
Furniture and Fixtures
|
1,190
|
|
|
786
|
|
||
Office Equipment
|
180
|
|
|
279
|
|
||
Computer Software
|
220
|
|
|
345
|
|
||
Total
|
9,105
|
|
|
5,844
|
|
||
Less: Accumulated Depreciation and Amortization
|
(1,202
|
)
|
|
(3,072
|
)
|
||
Total
|
$
|
7,903
|
|
|
$
|
2,772
|
|
Year Ending December 31,
|
|
Minimum
Payments
(1)
|
||
|
|
(in thousands)
|
||
2016
|
|
1,979
|
|
|
2017
|
|
1,979
|
|
|
2018
|
|
1,979
|
|
|
2019
|
|
1,979
|
|
|
2020
|
|
1,979
|
|
|
2021 and thereafter
|
|
9,896
|
|
|
Total
|
|
$
|
19,791
|
|
|
For the Year Ended December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
1
|
||||||
|
(in thousands)
|
||||||||||
Current Provision:
|
|
|
|
|
|
|
|
|
|||
Unincorporated and Other Business Taxes
|
$
|
2,204
|
|
|
$
|
2,938
|
|
|
$
|
2,438
|
|
Local Corporate Tax
|
—
|
|
|
—
|
|
|
—
|
|
|||
State Corporate Tax
|
—
|
|
|
—
|
|
|
—
|
|
|||
Federal Corporate Tax
|
—
|
|
|
—
|
|
|
—
|
|
|||
Total Current Provision
|
$
|
2,204
|
|
|
$
|
2,938
|
|
|
$
|
2,438
|
|
Deferred Provision:
|
|
|
|
|
|
|
|
|
|||
Unincorporated and Other Business Taxes
|
$
|
24
|
|
|
$
|
15
|
|
|
$
|
(4
|
)
|
Local Corporate Tax
|
321
|
|
|
391
|
|
|
405
|
|
|||
State Corporate Tax
|
200
|
|
|
731
|
|
|
714
|
|
|||
Federal Corporate Tax
|
3,639
|
|
|
3,087
|
|
|
2,892
|
|
|||
Total Deferred Provision
|
$
|
4,184
|
|
|
$
|
4,224
|
|
|
$
|
4,007
|
|
Change in Valuation Allowance
|
(1,274
|
)
|
|
(6,174
|
)
|
|
(6,142
|
)
|
|||
Net Adjustment to Deferred Tax Asset
2
|
$
|
—
|
|
|
$
|
895
|
|
|
$
|
286
|
|
Total Income Tax Expense
|
$
|
5,114
|
|
|
$
|
1,883
|
|
|
$
|
589
|
|
|
For the Year Ended December 31,
|
|||||||||||||||||||
|
2015
|
|
2014
|
|
2013
|
|||||||||||||||
|
Amount
|
|
% of Pretax
Income
|
|
Amount
|
|
% of Pretax
Income
|
|
Amount
|
|
% of Pretax
Income
|
|||||||||
|
(in thousands, except % amounts)
|
|||||||||||||||||||
Federal Corporate Tax
|
$
|
17,720
|
|
|
34.0
|
%
|
|
$
|
19,352
|
|
|
34.0
|
%
|
|
$
|
16,669
|
|
|
34.0
|
%
|
State and Local Corporate Tax, net of Federal Benefit
|
1,631
|
|
|
3.1
|
%
|
|
4,178
|
|
|
7.3
|
%
|
|
3,775
|
|
|
7.7
|
%
|
|||
Unincorporated and Other Business Tax
1
|
1,401
|
|
|
2.7
|
%
|
|
1,732
|
|
|
3.1
|
%
|
|
1,741
|
|
|
3.6
|
%
|
|||
Non-Controlling Interests
|
(14,601
|
)
|
|
(28.0
|
)%
|
|
(19,403
|
)
|
|
(34.1
|
)%
|
|
(17,417
|
)
|
|
(35.5
|
)%
|
|||
Increase/(Decrease) in Liability to Selling and Converting Shareholders
|
144
|
|
|
0.3
|
%
|
|
1,417
|
|
|
2.5
|
%
|
|
1,519
|
|
|
3.1
|
%
|
|||
Deferred Income Tax Valuation Allowance
|
(1,274
|
)
|
|
(2.5
|
)%
|
|
(6,174
|
)
|
|
(10.9
|
)%
|
|
(6,142
|
)
|
|
(12.5
|
)%
|
|||
Operating Loss Carryforward
|
(334
|
)
|
|
(0.6
|
)%
|
|
(625
|
)
|
|
(1.1
|
)%
|
|
—
|
|
|
—
|
%
|
|||
Net Adjustment to Deferred Tax Asset
2
|
—
|
|
|
—
|
%
|
|
895
|
|
|
1.6
|
%
|
|
286
|
|
|
0.6
|
%
|
|||
Other
|
427
|
|
|
0.8
|
%
|
|
511
|
|
|
0.9
|
%
|
|
158
|
|
|
0.2
|
%
|
|||
Income Tax Expense
|
$
|
5,114
|
|
|
9.8
|
%
|
|
$
|
1,883
|
|
|
3.3
|
%
|
|
$
|
589
|
|
|
1.2
|
%
|
|
For the Year Ended December 31, 2015
|
||
|
(in thousands)
|
||
Balance at December 31, 2014
|
$
|
1,100
|
|
Increases Related to Current Year Tax Positions
|
1,218
|
|
|
Balance at December 31, 2015
|
$
|
2,318
|
|
|
For the Year Ended December 31, 2014
|
||
|
(in thousands)
|
||
Balance at December 31, 2013
|
$
|
409
|
|
Increases Related to Current Year Tax Positions
|
691
|
|
|
Balance at December 31, 2014
|
$
|
1,100
|
|
|
Section 754
|
|
Other
|
|
Valuation Allowance
|
|
Total
|
||||||||
|
(in thousands)
|
||||||||||||||
Balance at December 31, 2014
|
$
|
54,783
|
|
|
$
|
4,074
|
|
|
$
|
(44,239
|
)
|
|
$
|
14,618
|
|
Deferred Tax (Expense)/Benefit
|
(4,210
|
)
|
|
346
|
|
|
—
|
|
|
(3,864
|
)
|
||||
Unit Exchange
|
14,304
|
|
|
—
|
|
|
(11,003
|
)
|
|
3,301
|
|
||||
Change in Valuation Allowance
|
—
|
|
|
—
|
|
|
1,274
|
|
|
1,274
|
|
||||
Operating Loss Carryforward
|
—
|
|
|
(334
|
)
|
|
—
|
|
|
(334
|
)
|
||||
Balance at December 31, 2015
|
$
|
64,877
|
|
|
$
|
4,086
|
|
|
$
|
(53,968
|
)
|
|
$
|
14,995
|
|
|
Total
|
||
|
(in thousands)
|
||
Balance at December 31, 2014
|
$
|
(18
|
)
|
Deferred Tax Expense
|
14
|
|
|
Balance at December 31, 2015
|
$
|
(4
|
)
|
|
Section 754
|
|
Other
|
|
Valuation Allowance
|
|
Total
|
||||||||
|
(in thousands)
|
||||||||||||||
Balance at December 31, 2013
|
$
|
61,628
|
|
|
$
|
4,657
|
|
|
$
|
(53,973
|
)
|
|
$
|
12,312
|
|
Deferred Tax (Expense)/Benefit
|
(4,067
|
)
|
|
447
|
|
|
—
|
|
|
(3,620
|
)
|
||||
Unit Exchange
|
6,013
|
|
|
—
|
|
|
(4,741
|
)
|
|
1,272
|
|
||||
Change in Valuation Allowance
|
—
|
|
|
—
|
|
|
6,174
|
|
|
6,174
|
|
||||
Operating Loss Carryforward
|
—
|
|
|
(625
|
)
|
|
—
|
|
|
$
|
(625
|
)
|
|||
Net Adjustment to Deferred Tax Asset
1
|
$
|
(8,791
|
)
|
|
$
|
(405
|
)
|
|
$
|
8,301
|
|
|
$
|
(895
|
)
|
Balance at December 31, 2014
|
$
|
54,783
|
|
|
$
|
4,074
|
|
|
$
|
(44,239
|
)
|
|
$
|
14,618
|
|
|
Total
|
||
|
(in thousands)
|
||
Balance at December 31, 2013
|
$
|
(39
|
)
|
Deferred Tax Expense
|
21
|
|
|
Balance at December 31, 2014
|
$
|
(18
|
)
|
|
For the Year Ended December 31,
|
||||||
|
2015
|
|
2014
|
||||
|
(in thousands)
|
||||||
Beginning Balance
|
$
|
15,358
|
|
|
$
|
12,777
|
|
Change in Liability
|
423
|
|
|
4,168
|
|
||
Unit Conversion
|
2,806
|
|
|
1,081
|
|
||
Tax Receivable Agreement Payments
|
(3,512
|
)
|
|
(2,668
|
)
|
||
Ending Balance
|
$
|
15,075
|
|
|
$
|
15,358
|
|
|
For the Quarter Ended 2015
|
||||||||||||||
|
Dec. 31
|
|
Sept. 30
|
|
June 30
|
|
March 31
|
||||||||
|
(in thousands, except per share amounts)
(unaudited)
|
||||||||||||||
Total Revenue
|
$
|
27,672
|
|
|
$
|
30,772
|
|
|
$
|
29,510
|
|
|
$
|
28,653
|
|
Operating Income
|
12,986
|
|
|
16,231
|
|
|
13,220
|
|
|
12,980
|
|
||||
Net Income
|
$
|
2,213
|
|
|
$
|
1,922
|
|
|
$
|
1,922
|
|
|
$
|
1,622
|
|
Basic Earnings Per Share
|
$
|
0.14
|
|
|
$
|
0.13
|
|
|
$
|
0.15
|
|
|
$
|
0.12
|
|
Diluted Earnings Per Share
|
$
|
0.12
|
|
|
$
|
0.13
|
|
|
$
|
0.13
|
|
|
$
|
0.12
|
|
|
For the Quarter Ended 2014
|
||||||||||||||
|
Dec. 31
|
|
Sept. 30
|
|
June 30
|
|
March 31
|
||||||||
|
(in thousands, except per share amounts)
(unaudited)
|
||||||||||||||
Total Revenue
|
$
|
28,560
|
|
|
$
|
29,605
|
|
|
$
|
27,945
|
|
|
$
|
26,401
|
|
Operating Income
|
14,749
|
|
|
16,632
|
|
|
15,541
|
|
|
14,031
|
|
||||
Net Income
|
$
|
2,469
|
|
|
$
|
2,059
|
|
|
$
|
2,124
|
|
|
$
|
1,448
|
|
Basic Earnings Per Share
|
$
|
0.19
|
|
|
$
|
0.16
|
|
|
$
|
0.17
|
|
|
$
|
0.12
|
|
Diluted Earnings Per Share
|
$
|
0.14
|
|
|
$
|
0.14
|
|
|
$
|
0.13
|
|
|
$
|
0.11
|
|
3.
|
Transfer of Delayed Exchange Units
|
4.
|
Additional Award Terms
|
5.
|
Tax Consequences
|
6.
|
Compliance with Law
|
7.
|
General Provisions
|
4.
|
Additional Award Terms
|
5.
|
Tax Consequences
|
6.
|
Compliance with Law
|
7.
|
General Provisions
|
1.
|
I have reviewed this annual report on Form 10-K of Pzena Investment Management, Inc.
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report.
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report.
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date: March 11, 2016
|
/s/ Richard S. Pzena
|
|
Richard S. Pzena
Chief Executive Officer
(principal executive officer)
|
1.
|
I have reviewed this annual report on Form 10-K of Pzena Investment Management, Inc.
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report.
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report.
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date: March 11, 2016
|
/s/ Gary J. Bachman
|
|
Gary J. Bachman
Chief Financial Officer
(principal financial and accounting officer)
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Date: March 11, 2016
|
/s/ Richard S. Pzena
|
|
Richard S. Pzena
Chief Executive Officer
(principal executive officer)
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Date: March 11, 2016
|
/s/ Gary J. Bachman
|
|
Gary J. Bachman
Chief Financial Officer
(principal financial and accounting officer)
|