Earnings per Share (Tables)

9 Months Ended

Sep. 30, 2018

For the three and nine months ended September 30, 2018 and 2017, the Company’s basic earnings per share was determined as follows:

	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2018		2017		2018		2017
	(in thousands, except share and per share amounts)
Net Income for Basic Earnings per Share Allocated to:
Class A Common Stock	$	4,262	$	2,989	$	11,257	$	7,952
Participating Shares of Restricted Class A Common Stock		—		—		—		2
Total Net Income for Basic Earnings per Share	$	4,262	$	2,989	$	11,257	$	7,954
Basic Weighted-Average Shares Outstanding		17,489,380		17,285,307		17,752,788		17,316,392
Add: Participating Shares of Restricted Class A Common Stock¹		—		—		—		3,556
Total Basic Weighted-Average Shares Outstanding		17,489,380		17,285,307		17,752,788		17,319,948
Basic Earnings per Share	$	0.24	$	0.17	$	0.63	$	0.46

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.

Summary of diluted net income

For the three and nine months ended September 30, 2018 and 2017, the Company’s diluted net income was determined as follows:

	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2018		2017		2018		2017
	(in thousands)
Net Income Attributable to Non-Controlling Interests of Pzena Investment Management, LLC	$	15,169	$	14,013	$	43,200	$	36,518
Less: Assumed Corporate Income Taxes		3,645		5,140		10,424		13,395
Assumed After-Tax Income of Pzena Investment Management, LLC		11,524		8,873		32,776		23,123
Net Income of Pzena Investment Management, Inc.		4,262		2,989		11,257		7,954
Diluted Net Income	$	15,786	$	11,862	$	44,033	$	31,077

Summary of diluted earnings per share

For the three and nine months ended September 30, 2018 and 2017, the Company’s diluted earnings per share were determined as follows:

	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2018		2017		2018		2017
	(in thousands, except share and per share amounts)
Diluted Net Income Allocated to:
Class A Common Stock	$	15,775	$	11,851	$	44,002	$	31,047
Participating Shares of Restricted Class A Common Stock		—		—		—		2
Participating Class B Units		11		11		31		28
Total Diluted Net Income Attributable to Shareholders	$	15,786	$	11,862	$	44,033	$	31,077

Total Basic Weighted-Average Shares Outstanding		17,489,380		17,285,307		17,752,788		17,319,948
Dilutive Effect of Class B Units		51,930,114		51,123,950		51,537,499		51,108,273
Dilutive Effect of Options¹		691,159		579,881		1,071,344		474,785
Dilutive Effect of Phantom Class B Units & Phantom Shares of Class A Common Stock		1,461,725		1,636,784		1,463,747		1,808,570
Dilutive Effect of Restricted Shares of Class A Common Stock²		56,828		72,405		60,433		69,430
Dilutive Weighted-Average Shares Outstanding		71,629,206		70,698,327		71,885,811		70,781,006
Add: Participating Class B Units³		48,600		64,886		48,600		64,886
Total Dilutive Weighted-Average Shares Outstanding		71,677,806		70,763,213		71,934,411		70,845,892
Diluted Earnings per Share	$	0.22	$	0.17	$	0.61	$	0.44

1	Represents the dilutive effect of options to purchase operating company Class B units and Company Class A common stock.

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.

Unvested Class B Units granted to employees have nonforfeitable rights to dividend equivalent distributions 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.