Compensation and Benefits (Tables)

12 Months Ended

Dec. 31, 2021

Summary of compensation and benefits expenses to employees and members

Compensation and benefits expenses to employees and members is comprised of the following:

	For the Years Ended December 31,
	2021		2020
	(in thousands)
Cash Compensation and Other Benefits	$	61,248	$	55,283
Non-Cash Compensation		15,824		13,204
Total Compensation and Benefits Expense	$	77,072	$	68,487

Schedule of share based compensation activity

All non-cash compensation awards granted have varying vesting schedules and are issued at prices equal to the assessed fair market value at the time of issuance, as discussed below. Details of awards of Class B-1 units of the operating company, Delayed Exchange Class B units, phantom Delayed Exchange Class B units, options to purchase shares of Class A common stock, and shares of Class A common stock awarded for the years ended December 31, 2021 and 2020, are as follows:

	For the Years Ended December 31,
	2021				2020
	Amount		Fair Value1		Amount		Fair Value1
Class B-1 Units2		1,456,753	$	2.41		2,092,879	$	3.98
Delayed Exchange Class B Units3		810,857	$	4.68		620,543	$	5.95
Deferred Compensation Phantom Delayed Exchange Class B Units4		—	$	—		188,283	$	4.67
Options to Purchase Shares of Class A Common Stock5		—	$	—		146,804	$	2.03
Restricted Shares of Class A Common Stock6		17,706	$	4.67		16,806	$	4.74

1Represents the weighted average grant date estimated fair value per share, unit, or option.

2Represents Class B-1 units issued under the 2007 Equity Incentive Plan (as defined below). These Class B-1 units are entitled to receive dividends for the duration of the holder’s employment, and upon the end of employment are exchanged for shares of Class A common stock in an amount based upon the appreciation in price of the Class A common stock from the date of grant to the date of exchange. Of the units issued during the year ended December 31, 2021, 1,400,305 units vest on the fifth anniversary of the grant date, 38,462 units vest ratably over four years, and 17,986 units vested immediately. Of the units issued during the year ended December 31, 2020, 2,032,879 units vest on the fifth anniversary of the grant date and 60,000 units vest ratably over four years. Amounts reflected include the impact of a modification as of May 1, 2020, which resulted in the cancellation of 166,804 Class B-1 Units.

3Represents Class B units issued under the 2006 Equity Incentive Plan (as defined below). 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.

4Represents phantom Delayed Exchange Class B units issued under the 2006 Equity Incentive Plan and pursuant to the Bonus Plan (as defined below). These phantom units vest ratably over four years, but may not be exchanged pursuant to the Amended and Restated Operating Agreement of the operating company until seven years after the date they vest. These units are also not entitled to any benefits under the Tax Receivable Agreement between the Company and members of the operating company.

5Represents options to purchase shares of Class A common stock issued under the 2007 Equity Incentive Plan. These options become exercisable five years from the date of grant. Amounts reflected include the impact of a modification as of May 1, 2020, which resulted in the issuance of 146,804 options to purchase shares of Class A common stock.

6Represents shares of Class A common stock issued under the 2007 Equity Incentive Plan. Of the shares issued during the year ended December 31, 2021, 12,353 shares vest immediately and 5,353 shares vest ratably over four years. The 16,806 shares issued during the year ended December 31, 2020, vest ratably over four years. These shares are restricted and may not be sold until the seventh anniversary of the date of grant. Amounts reflected include the impact of a modification as of May 1, 2020, which resulted in the issuance of 16,806 restricted shares of Class A common stock.

As part of the Company's year-end bonus structure, certain employee members may elect to have all or part of year-end cash compensation paid in the form of cash, or equity issued pursuant to Pzena Investment Management, LLC Amended and Restated 2006 Equity Incentive Plan (“the 2006 Equity Incentive Plan”). For the year ended December 31, 2021, $6.8 million of cash compensation was elected to be paid in the form of equity, which was issued and vested immediately on January 1, 2021. Details of these awards issued on January 1, 2022 are as follows:

	January 1,
	2022
	Amount		Fair Value1
Delayed Exchange Class B Units2		1,084,675	$	6.16
Restricted Shares of Class A Common Stock3		17,057	$	6.16

1Represents the weighted average grant date estimated fair value per share, unit, or option as of December 31, 2021.

2Represents 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.

3Represents shares of Class A common stock issued under the 2007 Equity Incentive Plan. These shares vest immediately upon grant, but are restricted and may not be sold until the seventh anniversary of the date of grant.

Schedule of weighted average assumptions

For each of the years ended December 31, 2021 and 2020, the Company issued options and units valued using the Black-Scholes option pricing model with the following weighted average assumptions:

	2021			2020
	January 1,			January 1,
Weighted Average Time Until Exercise	10 years			10 years
Expected Volatility		45	%		44	%
Risk-Free Rate		0.90	%		1.90	%
Dividend Yield		4.40	%		4.40	%

Schedule of exercise prices for stock options outstanding and exercisable

Exercise prices for options outstanding and exercisable as of December 31, 2021 are as follows:

	Options Outstanding						Options Exercisable
	Number Outstanding as of December 31, 2021		Weighted- Average Remaining Contractual Life		Weighted Average Exercise Price		Number Exercisable as of December 31, 2021		Weighted- Average Remaining Contractual Life		Weighted Average Exercise Price
$5.00 – $10.00		5,308,921		5.7	$	7.02		1,215,769		6.1	$	6.90
$10.00 – $15.00		1,392,134		1.7		13.19		522,134		0.6		12.88
$5.00 – $15.00		6,701,055		4.8	$	8.30		1,737,903		4.4	$	8.69

Summary of the option activity

The following is a summary of the option activity for the two years ended December 31, 2021:

	For the Years Ended December 31,
	2021					2020
	Options Outstanding			Weighted Average Exercise Price		Options Outstanding			Weighted Average Exercise Price
Beginning Balance		6,762,389		$	8.27		6,779,677		$	8.24
Options Granted1		—			—		189,539			7.65
Options Cancelled		—			—		(8,426	)		7.58
Options Forfeited		—			—		(178,740	)		6.57
Options Exercised		(61,334	)		4.77		(19,661	)		7.58
Ending Balance		6,701,055		$	8.30		6,762,389		$	8.27

1Options granted for the year ended December 31, 2020 include 189,539 options to purchase shares of Class A common stock.

Schedule of aggregate intrinsic value

Based on the closing market price of the Company’s Class A common stock on December 31, 2021, the aggregate intrinsic value of the Company’s options was as follows:

	Options Outstanding		Options Exercisable
	(in thousands)
Aggregate Intrinsic Value	$	12,989	$	3,130

Summary of Phantom Class B Units and Phantom Delayed Exchange Class B Units that vest ratably

Phantom Delayed Exchange Class B units issued pursuant to the Bonus Plan, which vest ratably over four years, are summarized as follows:

	For the Years Ended December 31,
	2021					2020
	Phantom Units Outstanding			Weighted Average Price		Phantom Units Outstanding			Weighted Average Price
Beginning Balance		472,302		$	5.57		503,869		$	6.33
Phantom Delayed Exchange Class B Units Issued1		-			-		188,283			4.67
Vesting of Phantom Delayed Exchange Class B Units1		(201,523	)		5.97		(208,879	)		6.56
Phantom Delayed Exchange Class B Units Forfetied1		-			-		(10,971	)		6.04
Ending Balance		270,779		$	5.29		472,302		$	5.57

1Represents phantom Delayed Exchange Class B units issued under the 2006 Equity Incentive Plan. These phantom units vest ratably over four years, but may not be exchanged pursuant to the Amended and Restated Operating Agreement of the operating company until seven years after the date they vest. These units are also not entitled to any benefits under the Tax Receivable Agreement between the Company and members of the operating company.

Phantom Class B units and Phantom Delayed Exchange Class B units issued pursuant to the 2006 Equity Incentive Plan, which vest ratably over 10 years and are not eligible to receive dividends or dividend equivalents until vested, are summarized as follows:

	For the Years Ended December 31,
	2021					2020
	Phantom Units Outstanding			Weighted Average Price		Phantom Units Outstanding			Weighted Average Price
Beginning Balance		3,108,154		$	4.00		3,734,050		$	4.05
Phantom Delayed Exchange Class B Units Issued		—			—		—			—
Vesting of Phantom Class B Units		(626,158	)		4.29		(625,896	)		4.29
Phantom Class B Units Forfeited		—			—		—			—
Ending Balance		2,481,996		$	3.93		3,108,154		$	4.00

Units and shares remaining available for future issuance

As of December 31, 2021, the total units and shares remaining available for future issuance under the equity incentive plans are as follows:

Plan	Number of Securities Remaining Available For Future Issuance Under Equity Incentive Plans
Pzena Investment Management, LLC 2006 Equity Incentive Plan		4,984,985
Pzena Investment Management, Inc. 2007 Equity Incentive Plan		6,555,791
Total		11,540,776

Class B-1 Unit

Schedule of share based compensation activity

The following is a summary of the Class B-1 unit activity for the two years ended December 31, 2021:

	For the Years Ended December 31,
	2021				2020
	Units Outstanding		Weighted Average Threshold Price		Units Outstanding		Weighted Average Threshold Price
Beginning Balance		5,775,952	$	8.15		3,683,073	$	8.15
Units Granted1		1,456,753		7.06		2,092,879		8.15
Units Cancelled		—		—		—		—
Units Forfeited		—		—		—		—
Units Exercised		—		—		—		—
Ending Balance		7,232,705	$	7.93		5,775,952	$	8.15

1Amounts reflected include the impact of a modification as of May 1, 2020, which resulted in the cancellation of 166,804 Class B-1 units.

Schedule of exercise prices for stock options outstanding and exercisable

Exercise prices for Class B-1 units outstanding and exercisable as of December 31, 2021 are as follows:

	Units Outstanding				Units Exercisable
	Number Outstanding as of December 31, 2021		Weighted Average Threshold Price		Number Exercisable as of December 31, 2021		Weighted Average Threshold Price
$5.00 – $10.00		7,214,719	$	7.92		3,709,776	$	8.15
$10.00 – $15.00		17,986		11.01		17,986		11.01
$5.00 – $15.00		7,232,705	$	7.93		3,727,762	$	8.16

Schedule of aggregate intrinsic value

Based on the closing market price of the Company’s Class A common stock on December 31, 2021, the aggregate intrinsic value of the Company’s Class B-1 units was as follows:

	Units Outstanding		Units Exercisable
	(in thousands)
Aggregate Intrinsic Value	$	11,164	$	4,914