EQUITY AND REDEEMABLE INTEREST

12 Months Ended

Dec. 31, 2021

Stockholders' Equity Note [Abstract]

EQUITY AND REDEEMABLE INTEREST

15. EQUITY AND REDEEMABLE INTEREST

Common Stock

The Company's common stock consists of Class A, Class B, Class C and non-voting common stock, each $0.01 par value per share. The non-voting common stock has the same economic rights as the Class A common stock. Sumitomo Mitsui Banking Corporation (“SMBC”) is the sole holder of the non-voting common stock. The Class B common stock and Class C common stock are non-economic and holders are not entitled to dividends from the Company or to receive any assets of the Company in the event of any dissolution, liquidation or winding up of the Company. Ares Management GP LLC is the sole holder of the Class B common stock and Ares Voting LLC (“Ares Voting”) is the sole holder of the Class C common stock.

Except as otherwise expressly provided in the Company’s Certificate of Incorporation (the “Certificate of Incorporation”), the Company’s common stockholders are entitled to vote on all matters on which stockholders of a corporation are generally entitled to vote under the Delaware General Corporation Law (the “DGCL”), including the election of the Company’s board of directors. Holders of shares of the Company’s Class A common stock are entitled to one vote per share of the Company’s Class A common stock. On any date on which the Ares Ownership Condition (as defined in the Certificate of Incorporation) is satisfied, holders of shares of the Company’s Class B common stock are, in the aggregate, entitled to a number of votes equal to (x) four times the aggregate number of votes attributable to the Company’s Class A common stock minus (y) the aggregate number of votes attributable to the Company’s Class C common stock. On any date on which the Ares Ownership Condition is not satisfied, holders of shares of the Company’s Class B common stock are not entitled to vote on any matter submitted to a vote of the Company’s stockholders. The holder of shares of the Company’s Class C common stock is generally entitled to a number of votes equal to the number of Ares Operating Group Units (as defined in the Certificate of Incorporation) held of record by each Ares Operating Group Limited Partner (as defined in the Certificate of Incorporation) other than the Company and its subsidiaries.

The Company has a stock repurchase program that allows for the repurchase of up to $150 million of shares of Class A common stock. Under the program, shares may be repurchased from time to time in open market purchases, privately negotiated transactions or otherwise, including in reliance on Rule 10b5-1 of the Securities Act. The renewal of the program is

subject to authorization by the Company's board of directors on an annual basis. As of December 31, 2021, the program was scheduled to expire in February 2022, and the renewal was subsequently authorized by the Company’s board of directors and will expire in March 2023. Repurchases under the program, if any, will depend on the prevailing market conditions and other factors. During the years ended December 31, 2021 and 2020, the Company did not repurchase any shares as part of the stock repurchase program.

On April 5, 2021, the Company entered into a Share Purchase Agreement (the “Purchase Agreement”) with SMBC. Pursuant to the Purchase Agreement, the Company agreed to issue and sell to SMBC approximately $250.0 million of the Company’s common stock (consisting of 3,489,911 shares of non-voting common stock and 1,234,200 shares of Class A common stock) at a price per share equal to the public offering price of Class A common stock being offered pursuant to the Offering (as defined below), less underwriting discounts and commissions (the “Private Placement”). The Private Placement closed on April 8, 2021 and resulted in gross proceeds to the Company of approximately $250.0 million before deducting offering expenses.

On April 6, 2021, the Company entered into an underwriting agreement pursuant to which the Company agreed to issue and sell 10,925,000 shares of the Class A common stock (including 1,425,000 shares of Class A common stock sold pursuant to the exercise of the underwriters' option to purchase additional shares of Class A common stock) (collectively, the “Offering”). The Offering closed on April 8, 2021 and resulted in gross proceeds to the Company of approximately $578.2 million before deducting offering expenses.

Offering expenses for the Private Placement and Offering amounted to approximately $0.7 million. The expenses have been recorded as a reduction in the proceeds received and are presented on a net basis together with issuances of common stock in additional paid-in-capital within the Consolidated Statements of Changes in Equity.

The following table presents the changes in each class of common stock:

	Class A Common Stock	Non-Voting Common Stock	Class B Common Stock	Class C Common Stock	Total
Balance - January 1, 2021	147,182,562	—	1,000	112,447,618	259,631,180
Issuance of stock(1)	12,159,200	3,489,911	—	8,744,296	24,393,407
Exchanges of AOG Units	2,524,292	—	—	(2,524,292)	—
Redemptions of AOG Units	—	—	—	(58,290)	(58,290)
Stock option exercises, net of shares withheld for tax	1,976,520	—	—	—	1,976,520
Vesting of restricted stock awards, net of shares withheld for tax	4,508,731	—	—	—	4,508,731
Balance - December 31, 2021	168,351,305	3,489,911	1,000	118,609,332	290,451,548

(1) Issuances of Class C Common stock corresponds with increases in Ares Owners Holdings L.P.’s ownership interest in the AOG entities.

The following table presents each partner's AOG Units and corresponding ownership interest in each of the Ares Operating Group entities, as well as its daily average ownership of AOG Units in each of the Ares Operating Group entities:

							Daily Average Ownership
	As of December 31, 2021			As of December 31, 2020			Year ended December 31,
	AOG Units	Direct Ownership Interest		AOG Units	Direct Ownership Interest		2021		2020		2019
Ares Management Corporation	171,841,216	59.16	%	147,182,562	56.69	%	58.48	%	53.98	%	48.02	%
Ares Owners Holdings, L.P.	118,609,332	40.84		112,447,618	43.31		41.52		46.02		51.98
Total	290,450,548	100.00	%	259,630,180	100.00	%

The Company’s ownership percentage of the AOG Units will continue to change upon: (i) the vesting of restricted units and exercise of options that were granted under the Equity Incentive Plan; (ii) the exchange of AOG Units for shares of Class A common stock; (iii) the cancellation of AOG Units in connection with certain individuals’ forfeiture of AOG Units upon termination of employment and (iv) the issuance of new AOG Units, including in connection with acquisitions, among other reasons. Holders of the AOG Units, subject to any applicable transfer restrictions, may up to four times each year (subject to the terms of the exchange agreement) exchange their AOG Units for shares of Class A common stock on a one-for-one basis. Equity is reallocated among partners upon a change in ownership to ensure each partners’ capital account properly reflects their respective claim on the residual value of the Company. This change is reflected as either a reallocation of interest or as dilution in the Consolidated Statements of Changes in Equity.

Preferred Stock

As of December 31, 2020, the Company had 12,400,000 shares of the Series A Preferred Stock outstanding. As declared by the Company’s board of directors, dividends on the Series A Preferred Stock were payable quarterly at a rate per annum equal to 7.00%.

On June 30, 2021 (the “Redemption Date”), the Company redeemed all shares of the Series A Preferred Stock outstanding at a redemption price per share of $25.00. The redemption price did not include any accrued dividends as the Redemption Date occurred on the dividend payment date. On the Redemption Date, the Company paid $310.0 million for the redemption of the Series A Preferred Stock and $5.4 million for the previously announced dividend of $0.4375 per share. The excess of the redemption price over the carrying value of the Series A Preferred Stock of approximately $11.2 million relates to the original issuance costs and is presented as a reduction to net income available to common stockholders and to non-controlling interests in AOG entities within the Consolidated Statements of Operations.

Redeemable Interest

The following table summarizes the activities associated with the redeemable interest in Ares Operating Group entities:

	Total
Opening balance at July 1, 2020	$	99,804
Net loss	(976)
Currency translation adjustment, net of tax	1,538
Balance - December 31, 2020	$	100,366
Net loss	(1,341)
Currency translation adjustment, net of tax	(627)
Distribution	(2,390)
Balance- December 31, 2021	$	96,008

The following table summarizes the activities associated with the redeemable interest in Consolidated Funds:

	Total
Balance - January 1, 2021	$	—
Change in redemption value	1,000,000
Balance - December 31, 2021	$	1,000,000