STOCKHOLDERS' EQUITY

9 Months Ended

Sep. 30, 2012

STOCKHOLDERS' EQUITY

12. STOCKHOLDERS’ EQUITY

Issuance of Class A Common Shares—During the third quarter of 2011, the Company issued an aggregate of 3,682,116 shares (including 1,247,555 shares delivered from Class A common stock held by a subsidiary) of Class A common stock in connection with certain prior year business acquisitions.

Lazard Group Distributions—As previously described, Lazard Group’s common membership interests are held by subsidiaries of Lazard Ltd and by LAZ-MD Holdings. Pursuant to provisions of the Operating Agreement, Lazard Group distributions in respect of its common membership interests are allocated to the holders of such interests on a pro rata basis. Such distributions represent amounts necessary to fund (i) any dividends Lazard Ltd may declare on its Class A common stock and (ii) tax distributions in respect of income taxes that Lazard Ltd’s subsidiaries and the members of LAZ-MD Holdings incur as a result of holding Lazard Group common membership interests.

During the nine month periods ended September 30, 2012 and 2011, Lazard Group distributed the following amounts to subsidiaries of Lazard Ltd and LAZ-MD Holdings (none of which related to tax distributions):

	Nine Months Ended September 30,
	2012		2011
Subsidiaries of Lazard Ltd	$	66,219	$	51,409
LAZ-MD Holdings		3,729		3,280
Total	$	69,948	$	54,689

Pursuant to the Operating Agreement, Lazard Group allocates and distributes to its members a substantial portion of its distributable profits in installments, as soon as practicable after the end of each fiscal year. Such installment distributions usually begin in February.

Exchange of Lazard Group Common Membership Interests— During the nine month periods ended September 30, 2012 and 2011, Lazard Ltd issued 191,701 and 738,655 shares of Class A common stock, respectively, in connection with the exchange of a like number of Lazard Group common membership interests (received from members of LAZ-MD Holdings in exchange for a like number of LAZ-MD Holdings exchangeable interests).

See “Noncontrolling Interests” below for additional information regarding Lazard Ltd’s and LAZ-MD Holdings’ ownership interests in Lazard Group.

Share Repurchase Program—In February 2011, October 2011 and April 2012, the Board of Directors of Lazard Ltd authorized, on a cumulative basis, the repurchase of up to $250,000, $125,000 and $125,000, respectively, in aggregate cost of Class A common stock and Lazard Group common membership interests through December 31, 2012, December 31, 2013 and December 31, 2013, respectively. The Company’s prior share repurchase authorizations expired on December 31, 2009 and December 31, 2011. The Company expects that the share repurchase program, with respect to the Class A common stock, will continue to be used, among other ways, to offset a portion of the shares that have been or will be issued under the Lazard Ltd 2005 Equity Incentive Plan (the “2005 Plan”) and the Lazard Ltd 2008 Incentive Compensation Plan (the “2008 Plan”). Pursuant to such authorizations, purchases have been made in the open market or through privately negotiated transactions. During the nine month period ended September 30, 2012, the Company purchased 8,235,306 shares of Class A common stock, at an aggregate cost of $222,679 (no Lazard Group common membership interests were purchased during such nine month period).

As of September 30, 2012, $114,463 of the current aggregate share repurchase amount authorized as of such date remained available under the share repurchase program, all of which expires on December 31, 2013. In addition, under the terms of the 2005 Plan and the 2008 Plan, upon the vesting of restricted stock units (“RSUs”), shares of Class A common stock may be withheld by the Company to cover the recipient’s estimated income tax liability (see Note 13 of Notes to Condensed Consolidated Financial Statements).

During the nine month period ended September 30, 2012, the Company had written trading plans under Rule 10b5-1 of the Securities Exchange Act of 1934 in place, pursuant to which it effected stock repurchases through the open market.

In October 2012, the Board of Directors of Lazard Ltd authorized the repurchase of up to an additional $200,000 in aggregate cost of Class A common stock and Lazard Group common membership interests through December 31, 2014. During the period October 1 through October 24, 2012, the Company purchased 3,374,308 shares of Class A common stock, at an aggregate cost of $97,858 (including shares of Class A common stock received from members of LAZ-MD Holdings in exchange for a like number of LAZ-MD Holdings exchangeable interests). No Lazard Group common membership interests were purchased during such period. After giving effect to these purchases, and the additional share repurchase authorization described above, $216,605 of the current aggregate share repurchase amount authorized remained available under the share repurchase program as of October 24, 2012, $16,605 of which expires on December 31, 2013 and $200,000 of which expires on December 31, 2014.

Preferred Stock—Lazard Ltd has 15,000,000 authorized shares of preferred stock, par value $0.01 per share, inclusive of its Series A preferred stock and Series B preferred stock. The Series A and Series B preferred shares are each non-participating securities that are or were each convertible into Class A common stock, and have no voting or dividend rights. During the nine month period ended September 30, 2011, 14,100 shares of Series A preferred stock were converted into shares of Class A common stock. The remaining 7,921 shares of Series A preferred stock were outstanding as of both September 30, 2012 and December 31, 2011, and no shares of Series B preferred stock were outstanding at such respective dates. At September 30, 2012, no shares of Series A preferred stock were convertible into shares of Class A common stock on a contingent or a non-contingent basis.

Accumulated Other Comprehensive Income (Loss), Net of Tax (“AOCI”)—The components of AOCI at September 30, 2012 and December 31, 2011 are as follows:

	September 30,			December 31,
	2012			2011
Currency translation adjustments	$	16,071		$	3,719
Interest rate hedge		(2,766	)		(3,557	)
Employee benefit plans		(98,140	)		(92,637	)
Total AOCI		(84,835	)		(92,475	)
Less amount attributable to noncontrolling interests		(3,427	)		(4,111	)
Total Lazard Ltd AOCI	$	(81,408	)	$	(88,364	)

Noncontrolling Interests—Noncontrolling interests principally represent interests held in (i) Lazard Group by LAZ-MD Holdings and (ii) Edgewater’s management vehicles that the Company is deemed to control, but does not own.

As of September 30, 2012 and December 31, 2011, LAZ-MD Holdings held approximately 5.1% and 5.2%, respectively, of the outstanding Lazard Group common membership interests. Subject to certain limitations, LAZ-MD Holdings’ interests in Lazard Group are exchangeable for Class A common stock.

The following tables summarize the changes in ownership interests in Lazard Group held by Lazard Ltd and LAZ-MD Holdings during the nine month periods ended September 30, 2012, and 2011:

	Lazard Ltd					LAZ-MD Holdings						Total Lazard Group Common Membership Interests
	Common Membership Interests		% Ownership			Common Membership Interests			% Ownership
Balance, January 1, 2011		119,697,936		94.0	%		7,652,625			6.0	%		127,350,561
Activity January 1, 2011 to September 30, 2011:
Common membership interest activity in connection with:
Exchanges for Class A common stock		738,655					(738,655	)					–
Business acquisitions		2,434,561					–						2,434,561
Repurchase of common membership interests from LAZ-MD Holdings		–					(19,032	)					(19,032	)
Balance, September 30, 2011		122,871,152		94.7	%		6,894,938			5.3	%		129,766,090
Balance, January 1, 2012		123,009,311		94.8	%		6,756,779			5.2	%		129,766,090
Activity January 1, 2012 to September 30, 2012:
Common membership interest activity in connection with:
Exchanges for Class A common stock		191,701					(191,701	)					–
Balance, September 30, 2012		123,201,012		94.9	%		6,565,078			5.1	%		129,766,090

The change in Lazard Ltd’s ownership in Lazard Group in the nine month periods ended September 30, 2012 and 2011 did not materially impact Lazard Ltd’s stockholders’ equity.

The tables below summarize net income (loss) attributable to noncontrolling interests for the three month and nine month periods ended September 30, 2012 and 2011 and noncontrolling interests as of September 30, 2012 and December 31, 2011 as reflected in the Company’s accompanying condensed consolidated financial statements:

	Net Income (Loss) Attributable To Noncontrolling Interests
	Three Months  Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012		2011
LAZ-MD Holdings	$	1,937		$	4,209		$	4,956	$	11,955
Edgewater		(1,704	)		587			2,168		7,492
Other		139			(362	)		93		(475	)
Total	$	372		$	4,434		$	7,217	$	18,972

	Noncontrolling Interests As Of
	September 30, 2012		December 31, 2011
LAZ-MD Holdings	$	35,819	$	31,954
Edgewater		82,669		91,713
Other		1,511		17,046
Total	$	119,999	$	140,713

Dividend Declared, October 2012—On October 24, 2012, the Board of Directors of Lazard Ltd declared a quarterly dividend of $0.20 per share on its Class A common stock, payable on November 23, 2012, to stockholders of record on November 5, 2012.