11.

STOCKHOLDERS’ EQUITY

Lazard Group Distributions—As previously described, Lazard Group’s common membership interests are held by subsidiaries of Lazard Ltd and, until May 2014, also were held 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 incur and, until May 2014, that the members of LAZ-MD Holdings incurred, as a result of holding Lazard Group common membership interests.

During the nine month periods ended September 30, 2014 and 2013, Lazard Group distributed the following amounts to LAZ-MD Holdings and the subsidiaries of Lazard Ltd (none of which related to tax distributions):


	Nine Months Ended September 30,
	2014		2013
LAZ-MD Holdings	$	213	$	565
Subsidiaries of Lazard Ltd		109,592		60,931

	$	109,805	$	61,496

Pursuant to Lazard Group’s 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.

Exchanges of Lazard Group Common Membership Interests—During the nine month periods ended September 30, 2014 and 2013, Lazard Ltd issued 710,009 and 839,658 shares of Class A common stock, respectively, in connection with the exchanges 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 Note 1 of Notes to Condensed Consolidated Financial Statements for a discussion of the Final Exchange of LAZ-MD Interests).

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

Share Repurchase Program—During the nine month period ended September 30, 2014 and for the years ended December 31, 2013, 2012 and 2011, the Board of Directors of Lazard Ltd authorized the repurchase of Class A common stock and Lazard Group common membership interests as set forth in the table below.


Date	Share Repurchase Authorization		Expiration
February, 2011	$	250,000		December 31, 2012
October, 2011	$	125,000		December 31, 2013
April, 2012	$	125,000		December 31, 2013
October, 2012	$	200,000		December 31, 2014
October, 2013	$	100,000		December 31, 2015
April, 2014	$	200,000		December 31, 2015

The Company expects that the share repurchase program will primarily be used 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 the share repurchase program, purchases have been made in the open market or through privately negotiated transactions. The rate at which the Company purchases shares in connection with the share repurchase program may vary from quarter to quarter due to a variety of factors. Purchases with respect to such program are set forth in the table below:


	Number of Shares/Common Membership Interests Purchased		Average Price Per Share/Common Membership Interest
Nine Months Ended September 30:

2013		2,201,657	$	35.40
2014		4,114,206	$	46.83

The shares purchased in the nine months ended September 30, 2014 included 1,000,000 shares purchased from Natixis S.A. on June 26, 2014 for $50,340 in connection with the sale by Natixis S.A. of its entire investment in the Company’s Class A common stock. The purchase transaction closed on July 1, 2014. As of September 30, 2014, a total of $128,932 of share repurchase authorization remained available under the Company’s share repurchase program, which will expire on December 31, 2015.

During the nine month period ended September 30, 2014, the Company had in place trading plans under Rule 10b5-1 of the Securities Exchange Act of 1934, pursuant to which it effected stock repurchases in the open market.

Preferred Stock—Lazard Ltd has 15,000,000 authorized shares of preferred stock, par value $0.01 per share, inclusive of its Series A and Series B preferred stock. Series A and Series B preferred shares were issued in connection with certain prior year business acquisitions and are each non-participating securities convertible into Class A common stock, and have no voting or dividend rights. As of both September 30, 2014 and December 31, 2013, 7,921 shares of Series A preferred stock were outstanding, and no shares of Series B preferred stock were outstanding. At September 30, 2014 and December 31, 2013, 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 tables below reflect changes in the balances of each component of AOCI during the nine month periods ended September 30, 2014 and 2013:


	Currency Translation Adjustments			Employee Benefit Plans			Total AOCI			Amount Attributable to Noncontrolling Interests			Total Lazard Ltd AOCI
Balance, January 1, 2014	$	3,869		$	(137,431	)	$	(133,562	)	$	(558	)	$	(133,004	)

Activity January 1 to September 30, 2014:
Other comprehensive gain (loss) before reclassifications		(18,640	)		(3,695	)		(22,335	)		559			(22,894	)
Adjustments for items reclassified to earnings, net of tax		–			3,714			3,714			–			3,714

Net other comprehensive income (loss)		(18,640	)		19			(18,621	)		559			(19,180	)

Balance, September 30, 2014	$	(14,771	)	$	(137,412	)	$	(152,183	)	$	1		$	(152,184	)


	Currency Translation Adjustments			Interest Rate Hedge			Employee Benefit Plans			Total AOCI			Amount Attributable to Noncontrolling Interests			Total Lazard Ltd AOCI
Balance, January 1, 2013	$	19,405		$	(2,502	)	$	(128,536	)	$	(111,633	)	$	(1,092	)	$	(110,541	)

Activity January 1 to September 30, 2013:
Other comprehensive gain (loss) before reclassifications		(18,610	)		–			(2,669	)		(21,279	)		451			(21,730)
Adjustments for items reclassified to earnings, net of tax		–			791			3,653			4,444			25			4,419

Net other comprehensive income (loss)		(18,610	)		791			984			(16,835	)		476			(17,311	)

Balance, September 30, 2013	$	795		$	(1,711	)	$	(127,552	)	$	(128,468	)	$	(616	)	$	(127,852	)

The table below reflects adjustments for items reclassified out of AOCI, by component, for the three month and nine month periods ended September 30, 2014 and 2013:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2014		2013		2014		2013
Amortization of interest rate hedge (a)	$	–	$	264	$	–	$	791

Amortization relating to employee benefit plans (b)		1,673		1,627		5,105		4,859
Less – related income taxes		528		404		1,391		1,206

Net of tax		1,145		1,223		3,714		3,653

Total reclassifications, net of tax	$	1,145	$	1,487	$	3,714	$	4,444

(a)	Included in “interest expense” on the condensed consolidated statements of operations.

(b)	Included in the computation of net periodic benefit cost (see Note 13 of Notes to Condensed Consolidated Financial Statements). Such amount is included in “compensation and benefits” expense on the condensed consolidated statement of operations.

Noncontrolling Interests—Noncontrolling interests principally represent interests held in (i) Lazard Group by LAZ-MD Holdings until May 2014 and (ii) Edgewater’s management vehicles that the Company is deemed to control, but does not own. Following the Final Exchange of LAZ-MD Interests, Lazard Group became a wholly-owned indirect subsidiary of Lazard Ltd.

The following table summarizes the ownership interests in Lazard Group held by Lazard Ltd and LAZ-MD Holdings:


	Lazard Ltd					LAZ-MD Holdings					Total Lazard Group Common Membership Interests
As of September 30:	Common Membership Interests		% Ownership			Common Membership Interests		% Ownership			Total Lazard Group Common Membership Interests
2013		129,056,081		99.5	%		710,009		0.5	%		129,766,090
2014		129,766,090		100	%		–		–			129,766,090

The change in Lazard Ltd’s ownership in Lazard Group in the nine month periods ended September 30, 2014 and 2013 did not materially impact Lazard Ltd’s stockholders’ equity.

The tables below summarize net income attributable to noncontrolling interests for the three month and nine month periods ended September 30, 2014 and 2013 and noncontrolling interests as of September 30, 2014 and December 31, 2013 in the Company’s condensed consolidated financial statements:


	Net Income (Loss) Attributable To Noncontrolling Interests
	Three Months Ended September 30,				Nine Months Ended September 30,
	2014		2013		2014		2013
Edgewater	$	1,060	$	2,018	$	5,732	$	4,671
LAZ-MD Holdings		–		365		631		862
Other		1		83		2		(210	)

Total	$	1,061	$	2,466	$	6,365	$	5,323


	Noncontrolling Interests As Of
	September 30, 2014		December 31, 2013
Edgewater	$	64,360	$	66,641
LAZ-MD Holdings		–		2,566
Other		730		582

Total	$	65,090	$	69,789

Dividend Declared, October 2014—On October 22, 2014, Lazard Ltd announced a quarterly dividend of $0.30 per share on its Class A common stock, payable on November 14, 2014, to stockholders of record on November 3, 2014.