10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒ Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the Quarterly Period Ended March 31, 2021

Or

☐ Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from ______to______

Commission file number 001-33761

PZENA INVESTMENT MANAGEMENT, INC.

(Exact Name of Registrant as Specified in its Charter)

Delaware	20-8999751
(State or Other Jurisdiction of	(I.R.S. Employer
Incorporation or Organization)	Identification No.)

320 Park Avenue

New York, New York 10022

(Address of Principal Executive Offices) (Zip Code)

Registrant’s telephone number, including area code: (212) 355-1600

Not Applicable

(Former Address of Principal Executive Offices) (Zip Code)

Securities registered or to be registered pursuant to Section 12(b) of the Act.

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A common stock, par value $0.01 per share	PZN	New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☒
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. Yes ☐ No ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of May 5, 2021, there were 17,089,896 outstanding shares of the registrant’s Class A common stock, par value $0.01 per share.

As of May 5, 2021, there were 55,477,623 outstanding shares of the registrant’s Class B common stock, par value $0.000001 per share.

PZENA INVESTMENT MANAGEMENT, INC.

FORM 10-Q

TABLE OF CONTENTS

		Page
	PART I — FINANCIAL INFORMATION
Item 1.	Financial Statements
	Consolidated Statements of Financial Condition of Pzena Investment Management, Inc.as of March 31, 2021 (unaudited) and December 31, 2020	1
	Consolidated Statements of Operations (unaudited) of Pzena Investment Management, Inc. for the Three Months Ended March 31, 2021 and 2020	2
	Consolidated Statements of Comprehensive Income (unaudited) of Pzena Investment Management, Inc. for the Three Months Ended March 31, 2021 and 2020	3
	Consolidated Statement of Changes in Equity (unaudited) of Pzena Investment Management, Inc. for the Three Months Ended March 31, 2021 and 2020	4
	Consolidated Statements of Cash Flows (unaudited) of Pzena Investment Management, Inc. for the Three Months Ended March 31, 2021 and 2020	5
	Notes to the Consolidated Financial Statements (unaudited)	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25
Item 4.	Controls and Procedures	39
	PART II — OTHER INFORMATION
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	40
Item 6.	Exhibits	41
SIGNATURES		42

i

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements.  Forward-looking statements provide our current expectations, or forecasts, of future events.  Forward-looking statements include statements about our expectations, beliefs, plans, objectives, intentions, assumptions and other statements that are not historical facts.  Words or phrases such as “anticipate,” “believe,” “continue,” “ongoing,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project” or similar words or phrases, or the negatives of those words or phrases, may identify forward-looking statements, but the absence of these words does not necessarily mean that a statement is not forward-looking.

Forward-looking statements are subject to known and unknown risks and uncertainties and are based on our views, plans, estimates, and expectations.  Potentially inaccurate assumptions could cause actual results to differ materially from those expected or implied by the forward-looking statements.  Our actual results could differ materially from those anticipated in forward-looking statements for many reasons, including the factors described in Item 1A, “Risk Factors” in Part I of our Annual Report on Form 10-K for our fiscal year ended December 31, 2020.  Accordingly, you should not unduly rely on these forward-looking statements, which speak only as of the date they are made.  We undertake no obligation to publicly revise any forward-looking statements included in this Quarterly Report to reflect circumstances or events after the date of this Quarterly Report, or to reflect the occurrence of unanticipated events.  You should, however, review the factors and risks we describe in the reports we will file from time to time with the Securities and Exchange Commission ("SEC"), after the date of this Quarterly Report on Form 10-Q.

Forward-looking statements include, but are not limited to, statements about:

• our ability to respond to global economic, market, business and geopolitical conditions, including changes in such conditions resulting from the COVID-19 pandemic and government responses thereto;

• our anticipated future results of operations and operating cash flows;

• our successful formulation and execution of business strategies and investment policies;

• our financing plans and the availability of short- or long-term borrowing, or equity financing;

• our competitive position and the effects of competition on our business;

• our ability to identify and capture potential growth opportunities available to us;

• the effective recruitment and retention of our executives and employees;

• our expected levels of compensation for our employees;

• expectations relating to dividend payments and our ability to make such payments;

• our potential operating performance, achievements, efficiency, and cost reduction efforts;

• our expected tax rate;

• changes in interest rates;

• our expectations with respect to the economy, capital markets, the market for asset management services, and other industry trends;

• the potential impact of disruptions as a result of natural disasters, pandemics, or other international health emergencies, including the COVID-19 pandemic as well as the conditions in the sectors in which we invest; and

• the impact of future legislation and regulation, and changes in existing legislation and regulation, on our business.

The reports that we file with the SEC, accessible on the SEC’s website at www.sec.gov, identify additional factors that can affect forward-looking statements. The impact of COVID-19 may also exacerbate these risks, any of which could have a material effect on us.

ii

PART I.  FINANCIAL INFORMATION

Item 1.  Financial Statements

PZENA INVESTMENT MANAGEMENT, INC.

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(in thousands, except share and per-share amounts)

	As of
	March 31, 2021		December 31, 2020
	(unaudited)
ASSETS
Cash and Cash Equivalents ($2,050 and $2,201)1	$	29,650	$	65,534
Restricted Cash		1,054		1,050
Due from Broker ($25 and $0)1		268		87
Advisory Fees Receivable		40,798		36,524
Investments ($5,646 and $1,131)1		41,419		34,104
Receivable from Related Parties		3,727		2,880
Other Receivables ($15 and $8)1		151		154
Prepaid Expenses and Other Assets		2,185		2,569
Right-of-use Assets		10,989		11,578
Deferred Tax Asset		27,825		29,831
Property and Equipment, Net of Accumulated Depreciation of $6,203 and $5,980, respectively		4,092		4,376
TOTAL ASSETS	$	162,158	$	188,687
LIABILITIES AND EQUITY
Liabilities:
Accounts Payable and Accrued Expenses ($30 and $28)1	$	19,111	$	36,317
Due to Broker ($0 and $2)1		—		56
Securities Sold Short, at Fair Value		743		714
Liability to Selling and Converting Shareholders		25,701		25,701
Lease Liabilities		11,304		11,905
Deferred Compensation Liability		1,644		5,039
TOTAL LIABILITIES		58,503		79,732
Commitments and Contingencies (see Note 12)
Equity:
Preferred Stock (Par Value $0.01; 200,000,000 Shares Authorized; None Outstanding)		—		—
Class A Common Stock (Par Value $0.01; 750,000,000 Shares Authorized; 17,092,573 and 17,328,899 Shares Issued and Outstanding in 2021 and 2020, respectively)		170		173
Class B Common Stock (Par Value $0.000001; 750,000,000 Shares Authorized; 55,447,723 and 54,313,620 Shares Issued and Outstanding in 2021 and 2020, respectively)		—		—
Additional Paid-In Capital		5,042		5,190
Retained Earnings		25,496		25,611
Accumulated Other Comprehensive Income		127		132
Total Pzena Investment Management, Inc.'s Equity		30,835		31,106
Non-Controlling Interests		72,820		77,849
TOTAL EQUITY		103,655		108,955
TOTAL LIABILITIES AND EQUITY	$	162,158	$	188,687

1 Asset and liability amounts in parentheses represent the aggregated balances at March 31, 2021 and December 31, 2020 attributable to Pzena Investment Management Special Situations, LLC, Pzena U.S. Best Ideas (GP), LLC, Pzena Global Best Ideas (GP), LLC, and Pzena Global Focus Value Fund which were variable interest entities as of March 31, 2021 and December 31, 2020, respectively.

See accompanying notes to unaudited consolidated financial statements.

1

PZENA INVESTMENT MANAGEMENT, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except share and per-share amounts)

	For the Three Months Ended March 31,
	2021		2020
REVENUE	$	45,871	$	34,679
EXPENSES
Compensation and Benefits Expense		19,135		19,140
General and Administrative Expense		3,696		4,422
Total Operating Expenses		22,831		23,562
Operating Income		23,040		11,117
OTHER INCOME
Interest Income		55		159
Dividend Income		142		81
Net Realized and Unrealized Gains/ (Losses) from Investments		2,563		(5,247	)
Equity in Earnings/ (Losses) of Affiliates		1,537		(4,262	)
Other Income/ (Expense)		58		(87	)
Total Other Income/ (Expense)		4,355		(9,356	)
Income Before Income Taxes		27,395		1,761
Income Tax Expense		2,366		992
Net Income		25,029		769
Less: Net Income Attributable to Non-Controlling Interests		20,842		769
Net Income Attributable to Pzena Investment Management, Inc.	$	4,187	$	—
Net Income for Basic Earnings per Share	$	4,187	$	—
Basic Earnings per Share	$	0.24	$	—
Basic Weighted Average Shares Outstanding1		17,240,412		17,790,184
Net Income for Diluted Earnings per Share	$	19,731	$	760
Diluted Earnings per Share	$	0.24	$	—
Diluted Weighted Average Shares Outstanding1		83,451,997		79,583,147
Cash Dividends per Share of Class A Common Stock	$	0.25	$	0.46

^{1 The Company issues restricted shares of Class A common stock and restricted Class B units that have non-forfeitable dividend rights.  Under the "two-class method," these shares and units are considered participating securities and are required to be included in the computation of basic and diluted earnings per share.}

See accompanying notes to unaudited consolidated financial statements.

2

PZENA INVESTMENT MANAGEMENT, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands)

	For the Three Months Ended March 31,
	2021			2020
NET INCOME	$	25,029		$	769
OTHER COMPREHENSIVE GAIN
Foreign Currency Translation Adjustment		(12	)		(505	)
Total Other Comprehensive Gain/ (Loss)		(12	)		(505	)
Comprehensive Income		25,017			264
Less: Comprehensive Income Attributable to Non-Controlling Interests		20,835			142
Total Comprehensive Income Attributable to Pzena Investment Management, Inc.	$	4,182		$	122

See accompanying notes to unaudited consolidated financial statements.

3

PZENA INVESTMENT MANAGEMENT, INC.

UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

(in thousands, except share and per-share amounts)

	Shares of Class A Common Stock			Shares of Class B Common Stock			Class A Common Stock			Additional Paid-In Capital			Accumulated Other Comprehensive Income			Retained Earnings			Non-Controlling Interests			Total Equity
Balance at December 31, 2020		17,328,899			54,313,620		$	173		$	5,190		$	132		$	25,611		$	77,849		$	108,955
Amortization of Non-Cash Compensation		14,201			320,495			—			462			—			—			1,683			2,145
Issuance of Shares under Equity Incentive Plan		12,353			805,987			—			872			—			—			2,950			3,822
Sale of Shares under Equity Incentive Plan		—			26,097			—			36			—			—			131			167
Directors' Share Grants		12,338			—			—			53			—			—			194			247
Net Income		—			—			—			—			—			4,187			20,842			25,029
Foreign Currency Translation Adjustments		—			—			—			—			(5	)		—			(7	)		(12	)
Repurchase and Retirement of Class A Common Stock		(275,218	)		—			(3	)		(516	)		—			—			(1,871	)		(2,390	)
Repurchase and Retirement of Class B Units		—			(18,476	)		—			(20	)		—			—			(70	)		(90	)
Class A Cash Dividends Declared and Paid ($0.25 per share)		—			—			—			—			—			(4,302	)		—			(4,302	)
Tax Impact of Transactions with Non-Controlling Shareholders		—			—			—			(494	)		—			—			—			(494	)
Contributions from Non-Controlling Interests		—			—			—			—			—			—			303			303
Distributions to Non-Controlling Interests		—			—			—			—			—			—			(29,725	)		(29,725	)
Other		—			—			—			(541	)		—			—			541			—
Balance at March 31, 2021		17,092,573			55,447,723		$	170		$	5,042		$	127		$	25,496		$	72,820		$	103,655

	Shares of Class A Common Stock			Shares of Class B Common Stock			Class A Common Stock			Additional Paid-In Capital			Accumulated Other Comprehensive Loss			Retained Earnings			Non-Controlling Interests			Total Equity
Balance at December 31, 2019		18,009,350			52,879,323		$	179		$	4,829		$	(3	)	$	26,439		$	76,766		$	108,210
Amortization of Non-Cash Compensation		10,000			321,949			—			479			—			—			1,573			2,052
Issuance of Shares under Equity Incentive Plan		—			637,349			—			890			—			—			2,952			3,842
Sale of Shares under Equity Incentive Plan		—			430,955			—			436			—			—			1,466			1,902
Directors' Share Grants		—			—			—			76			—			—			255			331
Net Income		—			—			—			—			—			—			769			769
Foreign Currency Translation Adjustments		—			—			—			—			122			—			(627	)		(505	)
Repurchase and Retirement of Class A Common Stock		(823,792	)		—			(8	)		(1,283	)		—			—			(4,357	)		(5,648	)
Repurchase and Retirement of Class B Units		—			(94,830	)		—			(131	)		—			—			(434	)		(565	)
Class A Cash Dividends Declared and Paid ($0.46 per share)		—			—			—			—			—			(8,172	)		—			(8,172	)
Tax Impact of Transactions with Non-Controlling Shareholders		—			—			—			(717	)		—			—			—			(717	)
Effect of Deconsolidation		—			—			—			—			—			—			(1,685	)		(1,685	)
Contributions from Non-Controlling Interests		—			—			—			—			—			—			641			641
Distributions to Non-Controlling Interests		—			—			—			—			—			—			(33,327	)		(33,327	)
Other		—			—			—			(1,224	)		—			—			1,224			—
Balance at March 31, 2020		17,195,558			54,174,746		$	171		$	3,355		$	119		$	18,267		$	45,216		$	67,128

See accompanying notes to unaudited consolidated financial statements.

4

PZENA INVESTMENT MANAGEMENT, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

	For the Three Months Ended March 31,
	2021			2020
OPERATING ACTIVITIES
Net Income	$	25,029		$	769
Adjustments to Reconcile Net Income to Cash
Provided by Operating Activities:
Depreciation		296			306
Non-Cash Compensation		3,789			2,890
Directors' Share Grants		247			331
Net Realized and Unrealized (Gains)/ Losses from Investments		(2,563	)		5,247
Equity in (Earnings)/ Losses of Affiliates		(1,537	)		4,262
Accretion of Discount		—			—
Noncash Lease Expense		589			596
Foreign Currency Translation Adjustments		(12	)		(505	)
Deferred Income Taxes		1,513			360
Changes in Operating Assets and Liabilities:
Advisory Fees Receivable		(4,274	)		3,646
Due from Broker		(181	)		19
Prepaid Expenses and Other Assets		387			(175	)
Due to Broker		(56	)		(34	)
Accounts Payable, Accrued Expenses, and Other Liabilities		(18,424	)		(23,267	)
Lease Liabilities		(601	)		(608	)
Purchases of Equity Securities		(10,892	)		(9,479	)
Proceeds from Equity Securities		10,792			5,759
Net Cash Provided by/ (Used in) Operating Activities		4,102			(9,883	)
INVESTING ACTIVITIES
Purchases of Investments		(5,790	)		(21,590	)
Proceeds from Sale of Investments		2,704			45,735
Payments from/ (to) Related Parties		(847	)		(886	)
Purchases of Property and Equipment		(12	)		(33	)
Net Cash Provided by/ (Used in) Investing Activities		(3,945	)		23,226
FINANCING ACTIVITIES
Repurchase and Retirement of Class A Common Stock		(2,390	)		(5,648	)
Repurchase and Retirement of Class B Units		(90	)		(565	)
Sale of Shares under Equity Incentive Plan		167			1,902
Distributions to Non-Controlling Interests		(29,725	)		(33,327	)
Contributions from Non-Controlling Interests		303			641
Dividends		(4,302	)		(8,172	)
Net Cash Provided by/ (Used in) Financing Activities		(36,037	)		(45,169	)
NET CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH	$	(35,880	)	$	(31,826	)
CASH, CASH EQUIVALENTS AND RESTRICTED CASH - Beginning of Period	$	66,584		$	53,516
Effect of (Deconsolidation)/ Consolidation of Affiliates		—			(123	)
Net Change in Cash, Cash Equivalents and Restricted Cash		(35,880	)		(31,826	)
CASH, CASH EQUIVALENTS AND RESTRICTED CASH - End of Period	$	30,704		$	21,567
Supplementary Cash Flow Information:
Issuances of Shares under Equity Incentive Plan	$	3,822		$	3,842
Income Taxes Paid	$	121		$	98

See accompanying notes to unaudited consolidated financial statements.

5

Pzena Investment Management, Inc.

Notes to Unaudited Consolidated Financial Statements

Note 1—Organization

Pzena Investment Management, Inc. (the “Company”) is the sole managing member of its operating company, Pzena Investment Management, LLC (the “operating company”).  As a result, the Company: (i) consolidates the financial results of the operating company and reflects the membership interests in the operating company that it does not own as a non-controlling interest in its consolidated financial statements; and (ii) recognizes income generated from its economic interest in the operating company’s net income.

The operating company is an investment adviser registered under the Investment Advisers Act of 1940 and is headquartered in New York, New York.  As of March 31, 2021, the operating company managed assets in a variety of value-oriented investment strategies across a wide range of market capitalizations in both U.S. and non-U.S. capital markets.

The Company also serves as the general partner of Pzena Investment Management, LP, a partnership formed with the objective of aggregating employee ownership in the operating company into one entity.

The Company, through its interest in the operating company, has consolidated the results of operations and financial condition of the following entities as of March 31, 2021: 

		Ownership at
Legal Entity	Type of Entity (Date of Formation)	March 31, 2021
Pzena Investment Management, Pty	Australian Proprietary Limited Company (12/16/2009)	100.0%
Pzena Financial Services, LLC	Delaware Limited Liability Company (10/15/2013)	100.0%
Pzena Investment Management, LTD	England and Wales Private Limited Company (01/08/2015)	100.0%
Pzena U.S. Best Ideas (GP), LLC	Delaware Limited Liability Company (11/16/2017)	100.0%
Pzena Global Best Ideas (GP), LLC	Delaware Limited Liability Company (2/15/2018)	100.0%
Pzena Investment Management International 2, LLC	Delaware Limited Liability Company (1/21/2020)	100.0%
Pzena Investment Management Special Situations, LLC	Delaware Limited Liability Company (12/01/2010)	99.9%
Pzena Global Focused Value Fund	Australian Registered Investment Scheme (6/10/2016)	98.7%
Pzena International Small Cap Value Fund, a series of Advisors Series Trust	Open-end Management Investment Company, series of Delaware Statutory Trust (6/28/2018)	58.1%

Note 2—Significant Accounting Policies

Basis of Presentation:

The consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and related Securities and Exchange Commission (“SEC”) rules and regulations.  

Principles of Consolidation:

The Company’s policy is to consolidate those entities in which it has a direct or indirect controlling financial interest based on either the voting interest model or the variable interest model.  As such, the Company consolidates majority-owned subsidiaries in which it has a controlling financial interest, and certain investment vehicles the operating company sponsors for which it is the investment adviser that are considered to be variable-interest entities (“VIEs”), and for which the Company is deemed to be the primary beneficiary.

6

Pursuant to the Consolidation Topic of the FASB Accounting Standards Codification (“FASB ASC”), for legal entities evaluated for consolidation, the Company determines whether interests it holds and fees paid to the entity qualify as a variable interest.  If it is determined that the Company does not have a variable interest in the entity, no further analysis is required and the Company does not consolidate the entity.  If it is determined that the Company has a variable interest, it considers its direct interests and the proportionate indirect interests through related parties to determine if it is the primary beneficiary of the VIE.

For equity investments where the Company does not control the investee, and where it is not the primary beneficiary of a VIE, but can exert significant influence over the financial and operating policies of the investee, the Company follows the equity method of accounting.  The evaluation of whether the Company exerts control or significant influence over the financial and operating policies of the investee requires significant judgment based on the facts and circumstances surrounding each investment.  Factors considered in these evaluations may include the type of investment, the legal structure of the investee, the terms of the investment agreement, or other agreements with the investee.

The Company analyzes entities structured as series funds which comply with the requirements included in the Investment Company Act of 1940 for registered mutual funds as voting interest entities because the shareholders are deemed to have the ability to direct the activities of the fund that most significantly impact the fund's economic performance.

Consolidated Entities

The Company consolidates the financial results of the operating company and records in its own equity its pro-rata share of transactions that impact the operating company’s net equity, including unit and option issuances, repurchases, and retirements.  The operating company’s pro-rata share of such transactions are recorded as an adjustment to additional paid-in capital or non-controlling interests, as applicable, on the consolidated statements of financial condition.

The majority-owned subsidiaries in which the Company, through its interest in the operating company, has a controlling financial interest and the VIEs for which the Company is deemed to be the primary beneficiary are collectively referred to as “consolidated subsidiaries.”  Non-controlling interests recorded on the consolidated financial statements of the Company include the non-controlling interests of the outside investors in each of these entities, as well as those of the operating company.  All significant inter-company transactions and balances have been eliminated through consolidation.

On January 1, 2020, the Company redeemed its investment in the Pzena International Value Service (a series of Pzena Investment Management International, LLC). As the Company was no longer deemed the primary beneficiary of this entity, it deconsolidated the entity and removed the related assets, liabilities and non-controlling interest from the Company’s Consolidated Statements of Financial Condition.

During 2020, the Company provided the initial cash investment for a Pzena-branded Australian Registered Investment Scheme, Pzena Global Focused Value Fund, in an effort to generate an investment performance track record to attract third-party investors. The Company is considered the primary beneficiary of this entity. At March 31, 2021, Pzena Global Focused Value Fund’s $4.1 million in net assets were included in the Company’s Consolidated Statements of Financial Condition.

These consolidated investment partnerships are investment companies and apply specialized industry accounting for investment companies. The Company has retained this specialized accounting for these investment partnerships pursuant to U.S. GAAP.

Non-Consolidated Variable Interest Entities

VIEs that are not consolidated receive investment management services from the operating company and are generally private investment partnerships sponsored by the operating company.  The total net assets of these VIEs was approximately $308.9 million and $265.9 million at March 31, 2021 and December 31, 2020, respectively.  

As of March 31, 2021 and December 31, 2020, the operating company had $4.0 million and $3.2 million in investments in certain of these firm-sponsored vehicles, the majority of which are primarily held to satisfy certain of the Company’s obligations under its deferred compensation programs, for which the Company was not deemed to be the primary beneficiary.  The Company's exposure to risk of loss in the non-consolidated VIEs is generally limited to any equity investment and any uncollected management fees. As of March 31, 2021 and December 31, 2020, the Company's maximum exposure to loss as a result of its involvement with the non-consolidated VIEs was $4.2 million and $3.6 million, respectively.

7

Accounting Pronouncements Adopted in 2021:

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The amendments simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. The amendments also improve consistent application of and simplify US GAAP for other areas of Topic 740 by clarifying and amending the existing guidance. We adopted this standard prospectively on January 1, 2021. The adoption of this standard did not have a material impact on our financial condition or results of operations.

Management’s Use of Estimates:

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses for the period.  Actual results could materially differ from those estimates.

Revenue Recognition:

Revenue, comprised of advisory fee income, is recognized over the period in which advisory services are provided. Advisory fee income includes management fees that are calculated based on percentages of assets under management (“AUM”), generally billed quarterly, either in arrears or advance, depending on the applicable contractual terms. Advisory fee income also includes performance fees that may be earned by the Company depending on the investment return of the AUM, as well as fulcrum fee arrangements. Performance fee arrangements generally entitle the Company to participate, on a fixed-percentage basis, in any returns generated in excess of an agreed-upon benchmark. The Company’s participation percentage in such return differentials is then multiplied by AUM to determine the performance fees earned. In general, returns are calculated on an annualized basis over the contract’s measurement period, which usually extends to three years. Performance fees are generally payable annually or quarterly. Fulcrum fee arrangements require a reduction in the base fee or allow for an increase in the base fee if the relevant investment strategy underperforms or outperforms, respectively, the agreed-upon benchmark over the contract's measurement period, which extends to three years. Fulcrum fees are generally payable quarterly. Following the Revenue Recognition Topic of the FASB ASC, performance fee income is recorded at the conclusion of the contractual performance period, when it is probable that significant reversal of the performance fee will not occur. Advisory fee income also includes fund expense cap reimbursements which are required to be presented net against Revenue rather than as a component of General and Administrative Expense.

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Revenue from advisory fees is disaggregated into categories based on the composition of the Company's client base and advisory fee structure for the three months ended March 31, 2021 and 2020:

	For the Three Months Ended March 31,
Revenue	2021			2020
	(in thousands)
Separately Managed Accounts
Asset-Based Fees	$	24,547		$	18,696
Total Separately Managed Fees		24,547			18,696
Sub-Advised Accounts
Asset-Based Fees	$	17,623		$	13,723
Impact of Fulcrum Fees1		(995	)		(1,014	)
Performance-Based Fees		—			—
Total Sub-Advised Fees		16,628			12,709
Pzena Funds
Asset-Based Fees	$	4,951		$	3,600
Expense Cap Reimbursements		(255	)		(326	)
Performance-Based Fees		—		—
Total Pzena Funds Fees		4,696			3,274
Total	$	45,871		$	34,679

1 Represents the net impact of fulcrum fee arrangements which require a reduction in the base fee or allow for an increase in the base fee if the relevant investment strategy underperforms or outperforms, respectively, the agreed-upon benchmark over the contract's measurement period.

Cash and Cash Equivalents:

At March 31, 2021 and December 31, 2020, Cash and Cash Equivalents was $29.7 million and $65.5 million, respectively.  The Company considers all money market funds and highly-liquid debt instruments with an original maturity of three months or less at the time of purchase to be cash equivalents. The Company maintains its cash in bank deposits, other accounts whose balances often exceed federally insured limits and treasury money market funds. Cash is stated at cost, which approximates fair value.

Interest on cash and cash equivalents is recorded as Interest Income on an accrual basis in the consolidated statements of operations.

Restricted Cash:

At both March 31, 2021 and December 31, 2020, the Company had $1.1 million of compensating balances recorded in Restricted Cash in the consolidated statements of financial condition. These balances reflect a letter of credit issued by a third party in lieu of a cash security deposit, as required by the Company’s lease for its corporate headquarters.

The following table reconciles cash, cash equivalents, and restricted cash per the consolidated statements of cash flows to the consolidated statements of financial condition.

	March 31, 2021		December 31, 2020		March 31, 2020		December 31, 2019
	(in thousands)
Cash and Cash Equivalents	$	29,650	$	65,534	$	20,527	$	52,480
Restricted Cash		1,054		1,050		1,040		1,036
Total	$	30,704	$	66,584	$	21,567	$	53,516

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Due to/from Broker:

Due to/from Broker consists primarily of amounts payable/receivable for unsettled securities transactions held/initiated at the clearing brokers of the Company and its consolidated subsidiaries.

Non-Cash Compensation:

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.  Expenses associated with these awards are recognized over the period during which employees are required to provide service.  The Company accounts for forfeitures as they occur.

Investments:

Investments, at Fair Value

Investments, at Fair Value consist of equity securities at fair value held by the Company and its consolidated subsidiaries, as well as investments in open-ended registered mutual funds.  Management determines the appropriate classification of its investments at the time of purchase and re-evaluates such determination on an ongoing basis. Dividends and interest income associated with the Company's investments and the investments of the Company's consolidated subsidiaries are recognized as Dividend Income on an ex-dividend basis and Interest Income, respectively, in the consolidated statements of operations.

Securities Sold Short represents securities sold short at fair value, not yet purchased by the Company. Dividend expense associated with these investments is recognized in Other Income/ (Expense) on an ex-dividend basis in the consolidated statements of operations.

All such investments are recorded at fair value, with net realized and unrealized gains and losses recognized as a component of Net Realized and Unrealized Gains/ (Losses) from Investments in the consolidated statements of operations.

Investments in equity method investees

The Company accounts for its investments in certain private investment partnerships in which the Company has non-controlling interests and exercises significant influence, using the equity method.  These investments are included in Investments in the Company's consolidated statements of financial condition.  The carrying value of these investments is recorded at the amount of capital reported by the private investment partnership or mutual fund.  The capital account for each entity reflects any contributions paid to, distributions received from, and equity earnings of, the relevant entity.  The earnings of these investments are recognized as Equity in Earnings/ (Losses) of Affiliates in the consolidated statements of operations.

Investments in equity method investees are evaluated for impairment as events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable.  If the carrying amounts of the assets exceed their respective fair values, additional impairment tests are performed to measure the amounts of impairment losses, if any.  During the three months ended March 31, 2021 and 2020, no impairment losses were recognized.

Securities Valuation:

Investments in equity securities and securities sold short for which market quotations are available are valued at the last reported price or closing price on the primary market or exchange on which they trade. If no reported equity sales occurred on the valuation date, equity investments are valued at the bid price. Investments in registered mutual funds are carried at fair value at their respective net asset values as of the valuation date. Otherwise, fair values for investment securities are based on Level 2 or Level 3 inputs detailed in Note 9. Transactions are recorded on a trade date basis.

The net realized gain or loss on sales of equity securities and securities sold short is determined on a specific identification basis and is included in Net Realized and Unrealized Gains/ (Losses) from Investments in the consolidated statements of operations.

Concentrations of Credit Risk:

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents, amounts due from brokers, and advisory fees receivable.  The Company maintains its cash in bank deposits and other accounts whose balances often exceed federally insured limits.

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The concentration of credit risk with respect to advisory fees receivable is generally limited due to the short payment terms extended to clients by the Company.  On a periodic basis, the Company evaluates its advisory fees receivable and establishes an allowance for doubtful accounts, if necessary, based on a history of past write-offs, collections, and current credit conditions.  At both March 31, 2021 and December 31, 2020, there was no allowance for doubtful accounts.

Property and Equipment:

Property and equipment is carried at cost, less accumulated depreciation and amortization.  Depreciation is provided on a straight-line basis over the estimated useful lives of the respective assets, except for leasehold improvements, which range from three to seven years.  Leasehold improvements are amortized on a straight-line basis over the shorter of the useful life of the improvements or the remaining lease term.

Leases:

The Company determines if an arrangement is a lease at inception. Operating leases are included as a component of Right-of-use (“ROU”) Assets and Lease Liabilities on the consolidated statements of financial condition. ROU assets represent the right to use an underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. The lease terms may include options to extend or terminate the lease. These options to extend or terminate are assessed on a lease-by-lease basis, and the ROU assets and lease liabilities are adjusted when it is reasonably certain that an option will be exercised. If a lease arrangement does not provide an implicit rate, the Company uses an incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. Lease expense for lease payments is recognized on a straight-line basis over the lease term.

Lease expense associated with leases that have a term of 12 months or less as of the commencement date are recognized as a component of general and administrative expenses on a straight-line basis over the lease term.

Share Repurchases:

Share repurchases may be made from time-to-time in open market transactions or through privately negotiated transactions under the authorization approved by the Board of Directors. The Company charges the entire excess of cost over par to additional paid-in capital. If the Company’s additional paid-in capital balance is reduced to zero, any additional amounts are recognized in retained earnings.

Business Segments:

The Company views its operations as comprising one operating segment.

Income Taxes:

The Company is organized as a “C” corporation under the Internal Revenue Code, and thus liable for federal, state, and local taxes on the income derived from its economic interest in its operating company.  The operating company is a limited liability company that has elected to be treated as a partnership for tax purposes.  It has not made a provision for federal or state income taxes because it is the individual responsibility of each of the operating company’s members (including the Company) to separately report their proportionate share of the operating company’s taxable income or loss.  The operating company has made a provision for New York City Unincorporated Business Tax (“UBT”) and its consolidated subsidiary Pzena Investment Management, LTD has made a provision for U.K. income taxes.  The effective tax rate for interim periods represents the Company’s best estimate of the effective tax rate expected to be applied to the full fiscal year, adjusted for discrete items recognized during the quarter.

Judgment is required in evaluating the Company's uncertain tax positions and determining its provision for income taxes. The Company establishes liabilities for tax-related uncertainties based on estimates of whether, and the extent to which, additional taxes will be due. These liabilities are established when the Company believes that certain positions might be challenged despite its belief that its tax return positions are in accordance with applicable tax laws. The Company adjusts these liabilities in light of changing facts and circumstances, such as the closing of a tax audit, new tax legislation or the change of an estimate. To the extent that the final tax outcome of these matters is different than the amounts recorded, such differences will affect the provision for income taxes in the period in which such determination is made. The provision for income taxes includes the effect of reserve provisions and changes to reserves that are considered appropriate.  It is also the Company’s

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policy to recognize accrued interest, and penalties associated with uncertain tax positions in Income Tax Expense on the consolidated statements of operations.

The Company and its consolidated subsidiaries account for all U.S. federal, state, local, and U.K. taxation pursuant to the asset and liability method, which requires deferred income tax assets and liabilities to be recorded for temporary differences between the carrying amount and tax bases of assets and liabilities that will result in taxable or deductible amounts in the future, based on enacted tax laws and rates applicable to the periods in which the temporary differences are expected to affect taxable income.  Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount more-likely-than-not to be realized.  At both March 31, 2021 and December 31, 2020, the Company did not have a valuation allowance recorded against its deferred tax assets.

The income tax expense, or benefit, is the tax payable or refundable for the period, plus or minus the change during the period in deferred tax assets and liabilities. The Company records its deferred tax liabilities as a component of other liabilities in the consolidated statements of financial condition. All excess tax benefits or tax deficiencies related to stock- and unit-transactions are reflected in the consolidated statements of operations as a component of the provision for income taxes.

Tax Receivable Agreement:

The Company’s purchase of membership units of the operating company concurrent with its initial public offering, and the subsequent and future exchanges by holders of Class B units of the operating company for shares of the Company’s Class A common stock (pursuant to the exchange rights provided for in the operating company’s operating agreement), have resulted in, and are expected to continue to result in, increases in the Company’s share of the tax basis of the tangible and intangible assets of the operating company, which will increase the tax depreciation and amortization deductions that otherwise would not have been available to the Company.  These increases in tax basis and tax depreciation and amortization are each deductible for tax purposes over a period of 15 years and have reduced, and are expected to continue to reduce, the amount of cash taxes that the Company would otherwise be required to pay in the future. The Company has entered into a tax receivable agreement with past, current, and future members of the operating company that requires the Company to pay to any member involved in any exchange transaction 85% of the amount of cash tax savings, if any, in U.S. federal, state and local income tax or foreign or franchise tax that it realizes as a result of these increases in tax basis and, in limited cases, transfers or prior increases in tax basis.  The Company expects to benefit from the remaining 15% of cash tax savings, if any, in income tax it realizes.  Payments under the tax receivable agreement will be based on the tax reporting positions that the Company will determine.  The Company will not be reimbursed for any payments previously made under the tax receivable agreement if a tax basis increase is successfully challenged by the Internal Revenue Service.  

The Company records an increase in deferred tax assets for the estimated income tax effects of the increases in tax basis based on enacted federal and state tax rates at the date of the exchange.  The Company records 85% of the estimated realizable tax benefit (which is the recorded deferred tax asset less any recorded valuation allowance) as an increase to the liability due under the tax receivable agreement, which is reflected as the liability to selling and converting shareholders in the accompanying consolidated financial statements.  The remaining 15% of the estimated realizable tax benefit is initially recorded as an increase to the Company’s additional paid-in capital.  All of the effects to the deferred tax asset of changes in any of the estimates after the tax year of the exchange will be reflected in the provision for income taxes.  Similarly, the effect of subsequent changes in the enacted tax rates will be reflected in the provision for income taxes.

If the Company exercises its right to terminate the tax receivable agreement early, the Company will be obligated to make an early termination payment to the selling and converting shareholders, based upon the net present value (based upon certain assumptions and deemed events set forth in the tax receivable agreement) of all payments that would be required to be paid by the Company under the tax receivable agreement.  If certain change of control events were to occur, the Company would be obligated to make an early termination payment.

Foreign Currency:

The functional and reporting currency of the Company is the U.S. Dollar.  Assets and liabilities of foreign operations whose functional currency is not the U.S. Dollar are translated at the exchange rate in effect at the applicable reporting date, and the consolidated statements of operations are translated at the average exchange rates in effect during the applicable period.  A charge or credit is recorded to other comprehensive income to reflect the translation of these amounts to the extent the non-U.S. currency is designated the functional currency of the subsidiary.  Non-functional currency related transaction gains and losses are immediately recorded in other income on the consolidated statements of operations.  For the three months ended March 31, 2021 and 2020, the Company recorded less than $0.1 million and $0.5 million, respectively, of other comprehensive loss associated with foreign currency translation adjustments.

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Investment securities and other assets and liabilities denominated in foreign currencies are remeasured into U.S. Dollar amounts at the date of valuation.  Purchases and sales of investment securities, and income and expense items denominated in foreign currencies, are remeasured into U.S. Dollar amounts on the respective dates of such transactions.

The Company does not isolate the portion of the results of its operations resulting from the impact of fluctuations in foreign exchange rates on its non-U.S. investments.  Such fluctuations are included in Net Realized and Unrealized Gains/ (Losses) from Investments in the consolidated statements of operations.

Reported net realized foreign exchange gains or losses arise from sales of foreign currencies, currency gains or losses realized between the trade and settlement dates on securities transactions, and the difference between the amounts of dividends, interest, foreign withholding taxes, and other receivables and payables recorded on the Company’s consolidated statements of financial condition and the U.S. Dollar equivalent of the amounts actually received or paid.  Net unrealized foreign exchange gains and losses arise from changes in the fair values of assets and liabilities resulting from changes in exchange rates.

Note 3—Compensation and Benefits

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

	For the Three Months Ended March 31,
	2021		2020
	(in thousands)
Cash Compensation and Other Benefits	$	15,346	$	16,250
Non-Cash Compensation		3,789		2,890
Total Compensation and Benefits Expense	$	19,135	$	19,140

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 non-cash compensation awards granted during the three months ended March 31, 2021 and 2020 are as follows:

	For the Three Months Ended March 31,
	2021				2020
	Amount		Fair Value1		Amount		Fair Value1
Class B-1 Units2		1,438,767	$	2.40		2,092,879	$	3.98
Options to Purchase Shares of Class A Common Stock3		—	$	—		146,804	$	2.03
Restricted Shares of Class A Common Stock4		—	$	—		16,806	$	4.74

1 Represents the weighted average grant date estimated fair value per share, unit, or option as of March 31, 2021 and 2020.

2 Represents 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. 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.

3 Represents 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.

4 Represents shares of Class A common stock issued under the 2007 Equity Incentive Plan.  These shares vest ratably over a period of four years from the date of grant.  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.

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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, 2020, $3.8 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, 2021 are as follows:

	January 1,
	2021
	Amount		Fair Value1
Delayed Exchange Class B Units2		805,987	$	4.67
Restricted Shares of Class A Common Stock3		12,353	$	4.67

1 Represents the weighted average grant date estimated fair value per share or unit as of December 31, 2020.

2 Represents 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.

3 Represents 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.

Pursuant to the 2006 Equity Incentive Plan, the operating company issues Class B units, phantom Class B units and options to purchase Class B units.  The operating company also issues Delayed Exchange Class B units pursuant to the 2006 Equity Incentive Plan.  These Delayed Exchange Class B units vest immediately upon grant, but may not be exchanged pursuant to the Amended and Restated Operating Agreement of the operating company until at least the seventh anniversary of the date of grant.  These Delayed Exchange Class B units are also not entitled to any benefit under the Tax Receivable Agreement between the Company and members of the operating company.  The operating company also issues phantom Delayed Exchange Class B units and options to purchase Delayed Exchange Class B units. Under the Pzena Investment Management, Inc. 2007 Equity Incentive Plan (“the 2007 Equity Incentive Plan”), the Company issues shares of restricted Class A common stock, Class B-1 units, options to purchase Class A common stock, options to purchase restricted Class A shares of common stock and contingently vesting options to acquire shares of Class A common stock.  During each of the three months ended March 31, 2021 and 2020, no contingently vesting options vested.  During the three months ended March 31, 2021 and 2020, 26,097 and 430,955 Delayed Exchange Class B units were issued to certain employee members, respectively, for approximately $0.1 million and $1.9 million in cash, respectively.

Under the Pzena Investment Management, LLC Amended and Restated Bonus Plan (the “Bonus Plan”), eligible employees whose compensation is in excess of certain thresholds are required to defer a portion of that excess.  These deferred amounts may be invested, at the employee’s discretion, in certain investment options designated by the Compensation Committee of the Company's Board of Directors.  Amounts deferred in any calendar year reduce that year’s compensation expense and are amortized and vest ratably over a four-year period commencing the following year.  The Company also issued to certain of its employees deferred compensation with certain investment options that also vest ratably over a four-year period. During the three months ended March 31, 2021 and 2020, no forfeitures occurred. As of March 31, 2021 and December 31, 2020, the liability associated with all employee deferred compensation investment accounts was $1.6 million and $5.0 million, respectively.

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Pursuant to the Pzena Investment Management, Inc. Non-Employee Director Deferred Compensation Plan (the “Director Plan”), non-employee directors may elect to have all or part of their compensation otherwise payable in cash, deferred in the form of phantom shares of Class A common stock of the Company issued under the 2007 Equity Incentive Plan.  Elections to defer compensation under the Director Plan are made on a year-to-year basis.  Distributions under the Director Plan are made in a single distribution of shares of Class A common stock at such time as elected by the participant when the deferral was made.  Since inception of the Director Plan in 2009, the majority of the Company’s directors have elected to defer 100% of their compensation in the form of phantom shares of Class A common stock. Director compensation amounts for any calendar year are amortized over the calendar year and reflected as General and Administrative Expense. As of March 31, 2021 and December 31, 2020, there were 591,640 and 533,444 phantom shares of Class A common stock outstanding, respectively.  During the three months ended March 31, 2021, the Company distributed 11,070 shares of Class A common stock pursuant to the Director Plan on such date specified by the participant as elected when the deferral was made. For the three months ended March 31, 2020, no distributions were made under the Director Plan. During the three months ended March 31, 2021, the Company issued 5,074 restricted shares of Class A common stock associated with non-deferred nonemployee director compensation. These restricted shares will vest quarterly of the calendar year.

As of March 31, 2021 and December 31, 2020, the Company had approximately $42.6 million and $34.8 million, respectively, in unrecorded compensation expense related to unvested awards issued pursuant to its Bonus Plan and certain agreements; Class B units, option grants, Delayed Exchange Class B units, phantom Delayed Exchange Class B units, and phantom Class B units issued under the 2006 Equity Incentive Plan; and restricted Class A common stock and contingently vesting option grants issued under the 2007 Equity Incentive Plan.  The Company anticipates that this unrecorded cost will amortize over the respective vesting periods of the awards.

Note 4 – Employee Benefit Plans

The operating company has a Profit Sharing and Savings Plan for the benefit of substantially all employees.  The Profit Sharing and Savings Plan is a defined contribution profit sharing plan with a 401(k) deferral component.  All full-time employees and certain part-time employees who have met the age and length of service requirements are eligible to participate in the plan.  The plan allows participating employees to make elective deferrals of compensation up to the annual limits which are set by law.  The plan provides for a discretionary annual contribution by the operating company which is determined by a formula based on the salaries of eligible employees as defined by the plan.  For the three months ended March 31, 2021 and 2020, the expense recognized in connection with this plan was $0.9 million and $0.8 million, respectively.

Note 5—Earnings per Share

Basic earnings per share is computed by dividing the Company’s net income attributable to its common stockholders by the weighted average number of shares outstanding during the reporting period.

Under the two-class method of computing basic earnings per share, basic earnings per share is calculated by dividing net income for basic earnings per share by the weighted average number of common shares outstanding during the period.  The two-class method includes an earnings allocation formula that determines earnings per share for each participating security according to dividends declared and undistributed earnings for the period.  The Company’s net income for basic earnings per share is reduced by the amount allocated to participating restricted shares of Class A common stock which participate for purposes of calculating earnings per share.

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For the three months ended March 31, 2021 and 2020, the Company’s basic earnings per share was determined as follows:

	For the Three Months Ended March 31,
	2021		2020
	(in thousands, except share and per share amounts)
Net Income for Basic Earnings per Share Allocated to:
Class A Common Stock	$	4,182	$	—
Participating Shares of Restricted Class A Common Stock		5	—
Total Net Income for Basic Earnings per Share	$	4,187	$	—
Basic Weighted-Average Shares Outstanding		17,220,424		17,790,184
Add: Participating Shares of Restricted Class A Common Stock1		19,988	—
Total Basic Weighted-Average Shares Outstanding		17,240,412		17,790,184
Basic Earnings per Share	$	0.24	$	—

1 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.

Diluted earnings per share adjusts this calculation to reflect the impact of all outstanding membership units of the operating company, phantom Class B units, phantom Delayed Exchange Class B units, phantom Class A common stock, outstanding options to purchase Class B units, options to purchase Delayed Exchange Class B units, options to purchase Class A common stock, and restricted Class A common stock, to the extent they would have a dilutive effect on net income per share for the reporting period.  Net income for diluted earnings per share assumes that all outstanding operating company membership units are converted into Company stock at the beginning of the reporting period and the resulting change to the Company's net income associated with its increased interest in the operating company is taxed at the Company’s effective tax rate, exclusive of one-time charges and adjustments associated with both the valuation allowance and the liability to selling and converting shareholders and other one-time charges. When this conversion results in an increase in earnings per share or a decrease in loss per share, diluted net income and diluted earnings per share are assumed to be equal to basic net income and basic earnings per share for the reporting period.

For the three months ended March 31, 2021 and 2020, the Company’s diluted net income was determined as follows: 

	For the Three Months Ended March 31,
	2021		2020
	(in thousands)
Net Income Attributable to Non-Controlling Interests of Pzena Investment Management, LLC	$	20,648	$	1,084
Less: Assumed Corporate Income Taxes		5,104		324
Assumed After-Tax Income of Pzena Investment Management, LLC		15,544		760
Net Income of Pzena Investment Management, Inc.		4,187		—
Diluted Net Income	$	19,731	$	760

Under the two-class method of computing diluted earnings per share, diluted earnings per share is calculated by dividing net income for diluted earnings per share by the weighted average number of common shares outstanding during the period, plus the dilutive effect of any potential common shares outstanding during the period using the more dilutive of the treasury method or two-class method.  The two-class method includes an earnings allocation formula that determines earnings per share for each participating security according to dividends declared and undistributed earnings for the period.  The Company’s net income for diluted earnings per share is reduced by the amount allocated to participating restricted Class B units and Class B-1 units for purposes of calculating earnings per share.  Dividend equivalent distributions paid per share on the operating company’s unvested restricted Class B units are equal to the dividends paid per share of Company Class A common stock.

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For the three months ended March 31, 2021 and 2020, the Company’s diluted earnings per share were determined as follows:

	For the Three Months Ended March 31,
	2021		2020
	(in thousands, except share and per share amounts)
Diluted Net Income Allocated to:
Class A Common Stock	$	17,938	$	701
Participating Shares of Restricted Class A Common Stock		5		—
Participating Class B Units		1,788		59
Total Diluted Net Income Attributable to Shareholders	$	19,731	$	760
Total Basic Weighted-Average Shares Outstanding		17,240,412		17,790,184
Dilutive Effect of Class B Units		55,425,613		53,885,546
Dilutive Effect of Options1		1,123,539		37,016
Dilutive Effect of Phantom Class B Units & Phantom Shares of Class A Common Stock		2,393,896		1,857,799
Dilutive Effect of Restricted Shares of Class A Common Stock2		29,240		21,686
Dilutive Weighted-Average Shares Outstanding		76,212,700		73,592,231
Add: Participating Class B Units and Class B-1 Units3		7,239,297		5,990,916
Total Dilutive Weighted-Average Shares Outstanding		83,451,997		79,583,147
Diluted Earnings per Share4	$	0.24	$	—

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

2 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.

3 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. Vested and unvested Class B-1 units are entitled to receive distributions for the duration of the holder’s employment with the operating company, will participate in additional value to the extent there has been appreciation subsequent to the issuance of the Class B-1 membership unit. Unvested Class B units and vested and unvested Class B-1 units are included in the computation of diluted earnings per share using the two-class method for participating securities.

4 During the three months ended March 31, 2020, the calculation of diluted earnings per share resulted in an increase in earnings per share. Therefore, diluted earnings per share is assumed to be equal to basic earnings per share.

Approximately 0.4 million options to purchase Class B units, 0.2 million options to purchase shares of Class A common stock, and 1.0 million contingent options to purchase shares of Class A common stock were excluded from the calculation of diluted earnings per share for the three months ended March 31, 2021, as their inclusion would have had an antidilutive effect based on current market prices or because the option had contingent vesting requirements that were not met. Approximately 2.9 million options to purchase Class B units, 0.1 million options to purchase shares of Class A common stock, and 1.0 million contingent options to purchase shares of Class A common stock were excluded from the calculation of diluted earnings per share for the three months ended March 31, 2020, as their inclusion would have had an antidilutive effect based on current market prices or because the option had contingent vesting requirements that were not met.  

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Note 6—Shareholders’ Equity

The Company functions as the sole managing member of the operating company.  As a result, the Company: (i) consolidates the financial results of the operating company and reflects the membership interest in it that it does not own as a non-controlling interest in its consolidated financial statements; and (ii) recognizes income generated from its economic interest in the operating company’s net income.  Class A and Class B units of the operating company have the same economic rights per unit. Class B-1 membership units are entitled to receive distributions for the duration of the holder’s employment with the operating company and will participate in additional value to the extent there has been appreciation in price of the Class A common stock subsequent to the issuance of the Class B-1 membership unit.  The percentages presented below are subject to continued changes, including but not limited to, the price of Class A common stock, issuance of awards, and exercise of options.  Based on the closing price of the Company’s Class A common stock as of March 31, 2021, the holders of Class A common stock (through the Company), the holders of Class B units of the operating company, and Class B-1 units of the operating company held approximately 23.0%, 74.6%, and 2.4% respectively, of the economic interest in the March 31, 2021 value of the operating company. As of March 31, 2021, the holders of Class A common stock (through the Company), the holders of Class B units of the operating company, and the holders of Class B-1 units of the operating company held 21.4%, 69.6%, and 9.0%, respectively, of the right to the future income and distributions. Based on the closing price of the Company’s Class A common stock as of December 31, 2020, the holders of Class A common stock of the Company, the holders of Class B units of the operating company, and the holders of Class B-1 units of the operating company held approximately 24.2%, 75.8% and 0.0%, respectively, of the December 31, 2020 economic interests in the value of the operating company. As of December 31, 2020 the holders of Class A common stock (through the Company), the holders of Class B units of the operating company, and the holders of Class B-1 units of the operating company held 22.4%, 70.1%, and 7.5%, respectively, of the right to the future income and distributions.

Each Class B unit of the operating company is issued with a corresponding share of the Company’s Class B common stock, par value $0.000001 per share.  Holders of Class B common stock have the right to receive the par value of the Class B common stock held by them upon our liquidation, dissolution or winding up, but do not share in dividends.  Each share of the Company’s Class B common stock entitles its holder to five votes, until the first time that the number of shares of Class B common stock outstanding constitutes less than 20% of the number of all shares of the Company’s common stock outstanding.  From such time and thereafter, each share of the Company’s Class B common stock entitles its holder to one vote.  When a Class B unit is exchanged for a share of the Company’s Class A common stock or forfeited, a corresponding share of the Company’s Class B common stock will automatically be redeemed and canceled.  Conversely, to the extent that the Company causes the operating company to issue additional Class B units to employees pursuant to its equity incentive plan, these additional holders of Class B units would be entitled to receive a corresponding number of shares of the Company’s Class B common stock (including if the Class B units awarded are subject to vesting). Class B-1 units have not been issued corresponding shares and do not have voting rights.

All holders of the Company’s Class B common stock have entered into a stockholders’ agreement, pursuant to which they agreed to vote all shares of Class B common stock then held by them, with the majority of votes of Class B common stockholders taken in a preliminary vote of the Class B common stockholders.

The outstanding shares of the Company’s Class A common stock represent 100% of the rights of the holders of all classes of the Company’s capital stock to receive distributions, except that holders of Class B common stock will have the right to receive the class’s par value upon the Company’s liquidation, dissolution or winding up.

Pursuant to the operating agreement of the operating company, each vested Class B unit is exchangeable for a share of the Company’s Class A common stock, subject to certain exchange timing and volume limitations.  

Pursuant to the operating agreement of the operating company, each vested Class B-1 unit, upon the end of the holder’s employment, is 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.

The Company’s share repurchase program was announced on April 24, 2012.  The Board of Directors authorized the Company to repurchase up to an aggregate of $10 million of the Company’s outstanding Class A common stock and the operating company’s Class B units on the open market and in private transactions in accordance with applicable securities laws.  On February 11, 2014, the Company announced that its Board of Directors approved an increase of $20 million in the aggregate amount authorized under the program.  On April 19, 2018, the Company announced that its Board of Directors approved an additional increase of $30 million in the aggregate amount authorized under the program.  The timing, number and value of common shares and units repurchased are subject to the Company’s discretion.  The Company’s share repurchase program is not subject to an expiration date and may be suspended, discontinued, or modified at any time, for any reason.

During the three months ended March 31, 2021, the Company purchased and retired 275,218 shares of Class A common stock and 18,476 Class B units under the current repurchase authorization at a weighted average price per share of $8.67 and $4.87, respectively.  During the three months ended March 31, 2020, the Company purchased and retired 823,792 shares of

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Class A common stock and 94,830 Class B units under the repurchase authorization at a weighted average price per unit of $6.86 and $5.97, respectively.  The Company records the repurchase of shares and units at cost based on the trade date of the transaction.

Note 7—Non-Controlling Interests

Net Income Attributable to Non-Controlling Interests in the operations of the Company’s operating company and consolidated subsidiaries is comprised of the following:

	For the Three Months Ended March 31,
	2021		2020
	(in thousands)
Non-Controlling Interests of Pzena Investment Management, LLC	$	20,648	$	1,084
Non-Controlling Interests of Consolidated Subsidiaries		194		(315	)
Net Income Attributable to Non-Controlling Interests	$	20,842	$	769

Distributions to non-controlling interests represent tax allocations and dividend equivalents paid to the members of the operating company, as well as withdrawals from the Company’s consolidated subsidiaries.  Contributions from non-controlling interests represent contributions to the Company's consolidated subsidiaries.

Note 8—Investments

The following is a summary of Investments:

	As of
	March 31, 2021		December 31, 2020
	(in thousands)
Equity Investments, at Fair Value
Equity Securities	$	24,208	$	18,739
Mutual Funds		7,317		7,314
Total Equity Investments, at Fair Value		31,525		26,053
Investments in Equity Method Investees		9,894		8,051
Total	$	41,419	$	34,104

Investment, at Fair Value

Investments, at Fair Value consisted of the following at March 31, 2021:

	Cost		Unrealized Gain/(Loss)		Fair Value
	(in thousands)
Equity Securities	$	19,648	$	4,560	$	24,208
Mutual Funds		7,304		13		7,317
Total Equity Investments, at Fair Value	$	26,952	$	4,573	$	31,525

       Securities Sold Short, at Fair Value consisted of the following at March 31, 2021:

	Proceeds		Unrealized (Gain)/Loss		Fair Value
	(in thousands)
Equity Securities	$	699	$	44	$	743
Total Securities Sold Short, at Fair Value	$	699	$	44	$	743

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Investments, at Fair Value consisted of the following at December 31, 2020:

	Cost		Unrealized Gain/(Loss)		Fair Value
	(in thousands)
Equity Securities	$	16,521	$	2,218	$	18,739
Mutual Funds		7,293		21		7,314
Total Equity Investments, at Fair Value	$	23,814	$	2,239	$	26,053

Securities Sold Short, at Fair Value consisted of the following at December 31, 2020:

	Proceeds		Unrealized (Gain)/Loss		Fair Value
	(in thousands)
Equity Securities	$	620	$	94	$	714
Total Securities Sold Short, at Fair Value	$	620	$	94	$	714

Equity Investments, at Fair Value

Equity investments, at fair value consist of equity securities held by the Company’s consolidated subsidiaries and individual investments held directly by the Company primarily for the purpose of satisfying certain of the Company’s obligations under its deferred compensation program. Equity investments, at fair value also includes investments in open-ended registered mutual funds for which the Company has neither control nor the ability to exercise significant influence. Equity investments are measured at fair value based on quoted market prices or published net asset values.

Trading Securities

Trading securities consists of fixed income investments held directly by the Company.  Fixed income investments are carried at fair value based on quoted market prices or market prices obtained from independent pricing services engaged by management.

Investments in Equity Method Investees

The operating company sponsors and provides investment management services to certain private investment partnerships and Pzena mutual funds through which it offers its investment strategies. The Company has made investments in certain of these private investment partnerships and mutual funds to satisfy its obligations under the Company's deferred compensation program and provide the initial cash investment in our mutual funds.  The Company holds a non-controlling interest and exercises significant influence in these entities, and accounts for its investments as equity method investments which are included in Equity Method Investments on the consolidated statements of financial condition. As of March 31, 2021, the Company's investments range between 1% and 7% of the capital of these entities and have an aggregate carrying value of $9.9 million.

Note 9—Fair Value Measurements

The Fair Value Measurements and Disclosures Topic of the FASB ASC defines fair value as the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date.  The Fair Value Measurements and Disclosures Topic of the FASB ASC also establishes a framework for measuring fair value and a valuation hierarchy based upon the observability of inputs used in the valuation of an asset or liability. Classification within the hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The valuation hierarchy contains three levels: (i) valuation inputs are unadjusted quoted market prices for identical assets or liabilities in active markets (Level 1); (ii) valuation inputs are quoted prices for identical assets or liabilities in markets that are not active, quoted market prices for similar assets and liabilities in active markets, and other observable inputs directly or indirectly related to the asset or liability being measured (Level 2); and (iii) valuation inputs are unobservable and significant to the fair value measurement (Level 3).

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Level 1 assets consist primarily of cash equivalents, equity investments at fair value, and securities sold short at fair value. Cash equivalent investments in actively traded money market funds are measured at amortized cost that approximates fair value. Equity securities and securities sold short are exchange-traded securities with quoted prices in active markets. The fair value of investments in mutual funds are based on a published net asset values.

Level 2 assets consist of debt securities for which the fair values are determined using independent third-party broker or dealer price quotes. U.S. Treasury bills are valued upon quoted market prices for similar assets in active markets, quoted prices for identical or similar assets that are not active and inputs other than quoted prices that are observable or corroborated by observable market data.  The fair value of corporate bonds is measured using various techniques, which consider recently executed transactions in securities of the issuer or comparable issuers, market price quotations (where observable), bond spreads and fundamental data relating to the issuer.

Also included in equity investments, at fair value, in the Company's consolidated statements of financial condition are investments in American Depositary Receipts (“ADRs”) and Global Depositary Receipts (“GDRs”). Certain of the Company’s ADRs and GDRs may not be listed on a public exchange and may be valued using an evaluated price based on a compilation of observable market information. Inputs used include currency factors, depositary receipt ratios, exchange prices of underlying and common stock of the same issuer, and adjustments for corporate actions. ADRs and GDRs valued using an evaluated price have been classified as Level 2.

The investments in equity method investees are held at their carrying value.

The following table presents these instruments’ fair value at March 31, 2021:

	Level 1		Level 2		Level 3		Total
Assets	(in thousands)
Cash Equivalents:
Money Market Funds	$	8	$	—	$	—	$	8
Equity Investments, at Fair Value:
Equity Securities		23,371		837		—		24,208
Mutual Funds		7,317		—		—		7,317
Total Assets	$	30,696	$	837	$	—	$	31,533
Liabilities
Securities Sold Short	$	743		—		—	$	743
Total Liabilities	$	743	$	—	$	—	$	743

The following table presents these instruments’ fair value at December 31, 2020:

	Level 1		Level 2		Level 3		Total
Assets	(in thousands)
Cash Equivalents:
Money Market Funds	$	8	$	—	$	—	$	8
Equity Investments, at Fair Value:
Equity Securities		18,006		733		—		18,739
Mutual Funds		7,314		—		—		7,314
Total Assets	$	25,328	$	733	$	—	$	26,061
Liabilities
Securities Sold Short		714		—		—		714
Total Liabilities	$	714	$	—	$	—	$	714

Transfers among levels, if any, are recorded as of the beginning of the reporting period. For each of the three months ended March 31, 2021 and 2020, there were no transfers between levels.  In addition, the Company did not hold any Level 3 securities during the three months ended March 31, 2021 or during the year ended December 31, 2020.

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Note 10—Property and Equipment

Property and Equipment, Net of Accumulated Depreciation is comprised of the following:

	As of
	March 31, 2021			December 31, 2020
	(in thousands)
Leasehold Improvements	$	6,929		$	6,929
Furniture and Fixtures		1,591			1,591
Computer Hardware		684			745
Computer Software		879			879
Office Equipment		212			212
Total		10,295			10,356
Less: Accumulated Depreciation and Amortization		(6,203	)		(5,980	)
Total	$	4,092		$	4,376

Depreciation is included in general and administrative expense and totaled approximately $0.3 million for both the three months ended March 31, 2021 and 2020.  .

Note 11—Related Party Transactions

For the three months ended March 31, 2021 and 2020, the Company earned $0.2 million and $0.3 million, respectively, in investment advisory fees, net of expense reimbursements from unconsolidated VIEs that receive investment management services from the Company.

The Company offers loans to employees, excluding executive officers, for the purpose of financing tax obligations associated with compensatory stock and unit vesting.  Loans are generally written for a seven-year period, at an interest rate equivalent to the Applicable Federal Rate, payable in annual installments, and collateralized by shares and units held by the employee.  As of March 31, 2021 and December 31, 2020, the Company had approximately $3.3 million and $2.6 million, respectively, of such loans outstanding.

The operating company, as investment adviser for certain Pzena branded SEC-registered mutual funds, private placement funds, and non-U.S. funds, has contractually agreed to waive a portion or all of its management fees and pay fund expenses to ensure that the annual operating expenses of the funds stay below certain established total expense ratio thresholds.  For both of the three months ended March 31, 2021 and 2020, the Company recognized $0.3 million in such expenses.

The operating company manages personal funds of certain of the Company’s employees, including the CEO, and its two Presidents.  The operating company also manages accounts beneficially owned by a private fund in which certain of the Company’s executive officers invest.  Investments by employees in individual accounts are permitted only at the discretion of the executive committee of the operating company, but are generally not subject to the same minimum investment levels that are required of outside investors.  The operating company also manages personal funds of some of its employees’ family members.  Pursuant to the respective investment management agreements, the operating company waives or reduces its regular advisory fees for these accounts and personal funds.  In addition, the operating company pays custody and administrative fees for certain of these accounts and personal funds in order to incubate products or preserve performance history.  The aggregate value of the fees that the Company waived related to the Company’s executive officers, other employees, and family members, was approximately $0.3 million and $0.2 million for the three months ended March 31, 2021 and 2020, respectively.

Note 12—Commitments and Contingencies

In the normal course of business, the Company enters into agreements that include indemnities in favor of third parties, such as engagement letters with advisers and consultants. In certain cases, the Company may have recourse against third parties with respect to these indemnities. The Company maintains insurance policies that may provide coverage against certain claims under these indemnities. The Company has had no claims or payments pursuant to these agreements, and it believes the likelihood of a claim being made is remote. Utilizing the methodology in the Guarantees Topic of the FASB ASC, the Company’s estimate of the value of such guarantees is de minimis, therefore, no accrual has been made in the consolidated financial statements.

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The Company leases office space under a non-cancelable operating lease agreement, which expires on December 31, 2025.  The Company recognizes minimum lease expense for its headquarters on a straight-line basis over the lease term.  The Company entered into a four-year sublease agreement commencing on October 1, 2016, which terminated on January 31, 2019. The Company entered into a new sublease agreement commencing on February 1, 2019, that expires on December 31, 2025. During October of 2020, the Company executed an amendment to the sublease agreement. The sublease agreement is cancelable by either the Company or sublessee upon at least six months prior written notice. Sublease income will continue to decrease annual lease expense by approximately $0.3 million per year.

During December 2018, the Company signed a non-cancellable amendment to the corporate headquarters lease to obtain additional space that expires on December 31, 2025. In accordance with ASC 842, Leases, the lease term commenced on February 1, 2019 and the Company recorded a Right-of-use Asset and Lease Liability on the consolidated statements of financial condition associated with the new lease.

During June 2019, the Company signed a non-cancellable lease to the business development and client service office in London to obtain additional space that expires on October 31, 2021.  In accordance with ASC 842, Leases, the lease term commenced on November 1, 2019 and the Company recorded a Right-of-use Asset and Lease Liability on the consolidated statements of financial condition associated with the new lease.

During each of the three months ended March 31, 2021 and 2020, lease expenses of $0.7 million are included in general and administrative expense.  This lease expense includes short-term lease expenses associated with the Company's office space in Australia. Short-term lease expense was $0.1 million for the three months ended March 31, 2021.  Lease expenses for both the three months ended March 31, 2021 and 2020, were net of $0.1 million of sublease income.

The following table presents the components of operating lease expense, as well as supplemental cash flow information, related to the Company’s leases:

	For the Three Months Ended March 31,
	2021
	(in thousands)
Operating lease expense1	$	589
Supplemental cash flow information:
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	601
Right-of-use assets obtained in exchange for lease obligations	$	—

1 Amounts have not been reduced by sublease income of $0.1 million recognized during the three months ended March 31, 2021.  

The following table presents information regarding the Company’s operating leases:

	As of
	March 31, 2021
	(in thousands)
Operating lease right-of-use assets	$	10,989
Operating lease liabilities	$	11,304
Weighted-average remaining lease term (in years)		4.7
Weighted-average discount rate		4.3	%

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The maturities of lease liabilities are as follows (in thousands):

Year Ending December 31,	Operating Leases
2021 (excluding the three months ended March 31, 2021)	$	2,134
2022		2,574
2023		2,574
2024		2,596
2025		2,607
2026 and thereafter		-
Total undiscounted lease payments	$	12,485
Less discount		(1,181	)
Total lease liabilities	$	11,304

Note 13—Income Taxes

The operating company is a limited liability company that has elected to be treated as a partnership for tax purposes.  The operating company has made a provision for New York City Unincorporated Business Tax (“UBT”) and its consolidated subsidiary Pzena Investment Management, LTD has made a provision for U.K. income taxes.  The Company's provision for income taxes reflects U.S. federal, state, and local incomes taxes on its allocable portion of the operating company's income.  The Company's effective tax rate for the three months ended March 31, 2021 and 2020 was 8.6% and 56.3%, respectively.  The effective tax rate includes a rate benefit attributable to the fact that approximately 78.4% and 77.1% of the operating company's earnings were not subject to corporate-level taxes for the three months ended March 31, 2021 and 2020, respectively.  Income before income taxes includes net income attributable to non-controlling interests and not taxable to the Company, which reduces the effective tax rate.

The Income Taxes Topic of the FASB ASC establishes the minimum threshold for recognizing, and a system for measuring, the benefits of tax return positions in financial statements.

As of March 31, 2021 and December 31, 2020, the Company had $8.1 million and $7.6 million in unrecognized tax benefits that, if recognized, would affect the provision for income taxes. As of March 31, 2021 and December 31, 2020, the Company had interest related to unrecognized tax benefits of $1.4 million and $1.2 million, respectively.  As of March 31, 2021 and December 31, 2020, no penalty accruals were recorded.

As of March 31, 2021 and December 31, 2020, the net values of all deferred tax assets were approximately $27.8 million and $29.8 million, respectively.  These deferred tax assets primarily reflect the future tax benefits associated with the Company's initial public offering, and the subsequent and future exchanges by holders of Class B units of the operating company for shares of Class A common stock.  At March 31, 2021 and December 31, 2020, the Company did not have a valuation allowance recorded against its deferred tax assets.

Note 14—Subsequent Events

On April 20, 2021, the Company’s Board of Directors approved and declared a quarterly dividend of $0.03 per share of its Class A common stock that will be paid on May 21, 2021 to holders of record on April 30, 2021.

No other subsequent events necessitated disclosures and/or adjustments.

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Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations

Overview

We are an investment management firm that utilizes a classic value investment approach across all of our investment strategies.  We currently manage assets in a variety of value-oriented investment strategies across a wide range of market capitalizations in both U.S. and non-U.S. capital markets.  At March 31, 2021, our assets under management, or AUM, was $49.2 billion.  We manage separate accounts on behalf of institutions, act as sub-investment adviser for a variety of SEC-registered mutual funds and non-U.S. funds, and act as investment adviser for the Pzena mutual funds, private placement funds and non-U.S. funds.

We function as the sole managing member of our operating company, Pzena Investment Management, LLC (the “operating company”).  As a result, we: (i) consolidate the financial results of our operating company with our own, and reflect the membership interest in it that we do not own as a non-controlling interest in our consolidated financial statements; and (ii) recognize income generated from our economic interest in our operating company’s net income.  The percentages presented below are subject to continued changes, including but not limited to, the price of Class A common stock, issuance of awards, and exercise of options.  Based on the closing price of the Company’s Class A common stock as of March 31, 2021, the holders of Class A common stock (through the Company), the holders of Class B units of the operating company, and Class B-1 units of the operating company held approximately 23.0%, 74.6%, and 2.4% respectively, of the economic interest in the March 31, 2021 value of the operating company. As of March 31, 2021, the holders of our Class A common stock and the holders of Class B and Class B-1 units of our operating company held approximately 21.4%, 69.6%, and 9.0%, respectively, of the future income and distributions.

The Company also serves as the general partner of Pzena Investment Management, LP, a partnership formed with the objective of aggregating employee ownership in one entity.

Our founders and certain of our employees have interests in Pzena Investment Management, LP and certain estate planning vehicles through which they indirectly own Class B and B-1 units of our operating company.  Based on the closing price of the Company’s Class A common stock as of March 31, 2021, through direct and indirect interests, our three founders, 52 other employee members, and certain other members of our operating company, including one of our directors, his related entities, and certain former employees, collectively held 49.0%, 9.1%, and 18.9% of the economic interests in our operating company, respectively. As of March 31, 2021, through direct and indirect interests, our three founders, 52 other employee members, and certain former employees, collectively held 45.6%, 15.3%, and 17.6% of the future income and distributions of our operating company.

Net Income

Diluted net income and diluted earnings per share were $19.7 million and $0.24, respectively, for the three months ended March 31, 2021, and $0.8 million and zero, respectively, for the three months ended March 31, 2020.

In evaluating our financial condition and results of operations, we also review non-GAAP measures of earnings, which are adjusted to exclude accounting adjustments related to our deferred tax asset generated by the Company's initial public offering and subsequent Class B unit conversions, as well as our tax receivable agreement and the associated liability to our selling and converting shareholders. No such adjustments were made to the GAAP results for the three months ended March 31, 2021 and 2020.

Net income for diluted earnings per share generally assumes all operating company membership units are converted into Company stock at the beginning of the reporting period, and the resulting change to our net income associated with our increased interest in the operating company is taxed at our historical effective tax rate, exclusive of the adjustments related to changes in the valuation allowance recorded against the deferred tax asset and other discrete and permanently non-deductible items. Our effective tax rate was 24.7% for the three months ended March 31, 2021, and 29.9% for the three months ended March 31, 2020, respectively. See “Operating Results - Income Tax Expense” below.

Revenue

We generate revenue primarily from management fees and performance fees, which we collectively refer to as our advisory fees, by managing assets on behalf of our separately managed and sub-advised accounts, as well as our Pzena funds. Our advisory fee income is primarily based on our AUM, as discussed below, and recognized over the period in which investment management services are provided. In accordance with the Revenue Recognition Topic of the Financial Accounting Standards

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Board Accounting Standards Codification (“FASB ASC”), income from performance fees is recorded at the conclusion of the contractual performance period, when it is probable that significant reversal of the performance fee will not occur. Advisory fee income also includes fund expense cap reimbursements which are required to be presented net against revenue rather than as a component of general and administrative expense.

Our advisory fees are primarily driven by the level of our AUM.  Our AUM increases or decreases with the net inflows or outflows of funds into our various investment strategies and with the investment performance thereof.  In order to increase our AUM and expand our business, we must develop and market investment strategies that suit the investment needs of our target clients, and provide attractive returns over the long term.  The value and composition of our AUM, and our ability to continue to attract clients depends on a variety of factors as described in "Item 1 — Risk Factors — Risks Related to Our Business — Our primary source of revenue is derived from management fees, which are directly tied to the levels of our assets under management.  Fluctuations in AUM therefore will directly impact our revenue" of our Annual Report on Form 10-K for the year ended December 31, 2020.

For our separately managed accounts, we are paid fees according to a schedule, which varies by investment strategy. The substantial majority of these accounts pay us management fees pursuant to a schedule by which the rate we earn on the AUM declines as the amount of AUM increases.

Pursuant to our sub-investment advisory agreements, we are generally paid a management fee according to a schedule in which the rate we earn on the AUM declines as the amount of AUM increases.  Certain of these funds pay us fixed-rate management fees.  Due to the substantially larger account size of certain of these accounts, the average advisory fees we earn on them, as a percentage of AUM, are lower than the advisory fees we earn on our separately managed accounts.

Advisory fees we earn on separately managed accounts are generally based on the value of AUM at a specific date on a quarterly basis. Certain of our separately managed accounts, and all of our sub-advised accounts, are calculated based on the average of the monthly or daily market value. Advisory fees are also generally adjusted for any cash flows into or out of a portfolio, where the cash flow represents greater than 10% of the value of the portfolio. While a specific group of accounts may use the same fee rate, the calculation methodology may differ as described above.

Certain of our clients pay us performance fees according to the performance of their accounts relative to certain agreed-upon benchmarks, which results in a lower base fee, but allows for us to earn higher fees if the relevant investment strategy outperforms the agreed-upon benchmark.  Some performance-based fee arrangements include high-water mark provisions, which generally provide that if a client account underperforms relative to its performance target, it must gain back such underperformance before we can collect future performance-based fees.  Fulcrum fee arrangements require a reduction in the base fee, or allow for a performance fee if the relevant investment strategy underperforms or outperforms, respectively, the agreed-upon benchmark.

Our advisory fees may fluctuate based on a number of factors, including the following:

• changes in AUM due to appreciation or depreciation of our investment portfolios, and the levels of the contribution and withdrawal of assets by new and existing clients;

• distribution of AUM among our investment strategies, which have differing fee schedules;

• distribution of AUM between separately managed accounts and sub-advised accounts, for which we generally earn lower overall advisory fees; and

• the level of our performance with respect to accounts on which we are paid performance fees or have fulcrum fee arrangements.

Expenses

Our expenses consist primarily of Compensation and Benefits Expense, as well as General and Administrative Expense.  Our largest expense is Compensation and Benefits, which includes the salaries, bonuses, equity-based compensation, and related benefits and payroll costs attributable to our employee members and employees.  Compensation and benefits packages are benchmarked against relevant industry and geographic peer groups in order to attract and retain qualified personnel.  General and Administrative Expense includes lease expenses, professional and outside services fees, depreciation, the costs associated with operating and maintaining our research, trading and portfolio accounting systems, the costs associated

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with being a public company, and other expenses.  Our occupancy-related costs and professional services expenses, in particular, generally increase or decrease in relative proportion to the overall size and scale of our business operations.

Our expenses may fluctuate due to a number of factors, including the following:

• variations in the level of total compensation expense due to, among other things, bonuses, awards of equity to our employees and employee members of our operating company, changes in our employee count and mix, and competitive factors; and

• general and administrative expenses, such as rent, professional service fees and data-related costs, incurred, as necessary, to run our business.

Other Income/ (Expense)

Other Income/ (Expense) is derived primarily from investment income or loss arising from our consolidated subsidiaries, income or loss generated by our investments, and interest income generated on our cash balances.  Other Income/ (Expense) is also affected by changes in our estimates of the liability due to our selling and converting shareholders associated with payments owed to them under the tax receivable agreement, which was executed in connection with our reorganization and initial public offering on October 30, 2007.  As discussed further below under “Tax Receivable Agreement,” this liability represents 85% of the amount of cash savings, if any, in U.S. federal, state, and local income tax that we realize as a result of the amortization of the increases in tax basis generated from our acquisitions of our operating company’s units from our selling and converting shareholders.  We expect the interest and investment components of Other Income/ (Expense), in the aggregate, to fluctuate based on market conditions and the performance of our consolidated entities and other investments.

Non-Controlling Interests

We are the sole managing member of our operating company and control its business and affairs and, therefore, consolidate its financial results with ours.  In light of our employees’ and outside investors’ direct and indirect interests in our operating company, we have reflected their membership interests as non-controlling interest in our consolidated financial statements.  As of March 31, 2021, the holders of Class A common stock of the Company and the holders of Class B units and Class B-1 units of the operating company held approximately 23.0%, 74.6%, and 2.4% respectively, of the economic interests in the operations of the business. In addition, our operating company consolidates the results of operations of the private investment partnerships over which we exercise a controlling influence.  Non-controlling interests recorded in our consolidated financial statements include the non-controlling interests of the outside investors in these consolidated subsidiaries.

Operating Results

General

Our earnings and cash flows are heavily dependent upon prevailing financial market conditions.  Significant increases or decreases in the various securities markets, particularly equities markets, can have a material impact on our results of operations, financial condition and cash flows.

The global effects of COVID-19 on the securities market caused a significant reduction in our AUM during the first quarter of 2020.  While many businesses have re-opened, vaccinations are underway (particularly in the U.S., the U.K. and Israel) and leading economic indicators are showing signs of improvement, the overall extent and duration of COVID-19's impact on businesses and economic activity generally remains uncertain. The economic impact of COVID-19 and any additional declines in the financial markets could have a significant adverse effect on our AUM and revenues, particularly if economic activity does not continue to recover. Although countries throughout the world continue to grapple with re-opening their economies, this will continue to be a gradual process, and there is a significant risk that the opening process may be further interrupted if infection rates increase.

We continue to consider, and in some cases are methodically implementing, return to office programs for our U.S., U.K., and Australian offices. In fact, we hope and expect to gradually bring our workforce back into the office during the second and third quarters of 2021. However, we continue to monitor the daily evolution of the pandemic and communications from the World Health Organization and the U.S. Centers for Disease Control and Prevention in order to ensure the health and safety of our employees, which remains our top priority. We will modify our return to office plans, as needed, to ensure the safety of our

27

employees and to ensure that the highest safety and cleanliness protocols are followed. We believe that our business continuity plan and technology platform will continue to support the effectiveness of our employees working remotely.

As most of our workforce continues working remotely, we are mindful of increased risk related to cybersecurity, which could significantly disrupt our business functions.

Assets Under Management and Flows

As of March 31, 2021 and 2020, our AUM of approximately $49.2 billion and $26.8 billion, respectively, was invested in a variety of value-oriented investment strategies, representing distinct market capitalization segments of U.S. and non-U.S. equity markets.  The assets under management and performance of our largest investment strategies as of March 31, 2021 are further described below.  We follow the same investment process for each of these strategies.  Our investment strategies are distinguished by the market capitalization ranges from which we select securities for their portfolios, which we refer to as each strategy’s investment universe, as well as the regions in which we invest and the degree to which we concentrate on a limited number of holdings.  While our investment process includes ongoing review of companies in the investment universes described below, our actual investments may include companies outside of the relevant market capitalization range at the time of our investment.  In addition, the number of holdings typically found in the portfolios of each of our investment strategies may vary, as described below.

The following tables describe the allocation of our AUM among our investment strategies and the domicile of our accounts, as of March 31, 2021 and 2020:

	AUM at March 31,
Strategy	2021		2020
	(in billions)
U.S. Value Strategies
Large Cap Value	$	10.5	$	6.5
Mid Cap Value		2.9		2.1
Small Cap Value		2.7		1.0
Value		0.7		0.5
Other U.S. Strategies		0.3		0.1
Total U.S. Value Strategies		17.1		10.2
Global and Non-U.S. Value Strategies
Global Value		14.1		5.9
Emerging Markets Value		7.4		3.8
International Value		7.1		4.9
European Value		3.0		1.7
Other Global and Non-U.S. Strategies		0.5		0.3
Total Global and Non-U.S. Value Strategies		32.1		16.6
Total	$	49.2	$	26.8

	AUM at March 31,
Account Domicile	2021		2020
	(in billions)
U.S.	$	29.4	$	17.5
Non-U.S.		19.8		9.3
Total	$	49.2	$	26.8

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The following table indicates the annualized returns, gross and net (which represents annualized returns prior to, and after, payment of advisory fees, respectively), of our largest investment strategies from their inception to March 31, 2021, and in the five-year, three-year, and one-year periods ended March 31, 2021, as well as the performance of the market index which is most commonly used by our clients to compare the performance of the relevant investment strategy.  

	Period Ended March 31, 20211
Investment Strategy (Inception Date)	Since Inception			5 Years			3 Years			1 Year
Large Cap Value (July 2012)
Annualized Gross Returns		13.0	%		12.4	%		8.1	%		81.7	%
Annualized Net Returns		12.8	%		12.3	%		8.0	%		81.5	%
Russell 1000® Value Index		12.3	%		11.7	%		11.0	%		56.1	%
International Value (November 2008)
Annualized Gross Returns		10.2	%		10.3	%		6.5	%		69.4	%
Annualized Net Returns		9.9	%		9.9	%		6.1	%		68.8	%
MSCI EAFE® Index—Net/U.S.$2		7.7	%		8.8	%		6.0	%		44.6	%
Global Value (January 2010)
Annualized Gross Returns		9.4	%		12.1	%		8.6	%		76.8	%
Annualized Net Returns		9.0	%		11.7	%		8.2	%		76.2	%
MSCI® World Index – Net/U.S.$2		10.3	%		13.4	%		12.8	%		54.0	%
Emerging Markets Focused Value (January 2008)
Annualized Gross Returns		4.8	%		13.5	%		7.7	%		79.8	%
Annualized Net Returns		4.0	%		12.6	%		6.9	%		78.5	%
MSCI® Emerging Markets Index—Net/U.S.$2		2.8	%		12.1	%		6.5	%		58.4	%
Large Cap Focused Value (October 2000)
Annualized Gross Returns		7.8	%		12.5	%		7.5	%		94.8	%
Annualized Net Returns		7.3	%		12.1	%		7.1	%		94.1	%
Russell 1000® Value Index		7.4	%		11.7	%		11.0	%		56.1	%
European Focused Value (August 2008)
Annualized Gross Returns		5.6	%		8.3	%		2.5	%		81.5	%
Annualized Net Returns		5.2	%		7.9	%		2.1	%		80.8	%
MSCI® Europe Index – Net/U.S.$2		3.5	%		8.2	%		5.6	%		44.9	%
Global Focused Value (January 2004)
Annualized Gross Returns		6.6	%		12.3	%		7.7	%		81.6	%
Annualized Net Returns		5.9	%		11.7	%		7.2	%		80.7	%
MSCI® All Country World Index – Net/U.S.$2		8.0	%		13.2	%		12.1	%		54.6	%
Mid Cap Value (April 2014)
Annualized Gross Returns		9.4	%		11.9	%		8.4	%		108.3	%
Annualized Net Returns		9.1	%		11.7	%		8.1	%		108.0	%
Russell Mid Cap® Value Index		9.3	%		11.6	%		10.7	%		73.8	%
Small Cap Focused Value (January 1996)
Annualized Gross Returns		13.6	%		13.0	%		11.0	%		115.6	%
Annualized Net Returns		12.4	%		11.9	%		10.0	%		113.7	%
Russell 2000® Value Index		10.1	%		13.6	%		11.6	%		97.1	%
Focused Value (January 1996)
Annualized Gross Returns		10.6	%		11.7	%		7.0	%		99.5	%
Annualized Net Returns		9.9	%		11.1	%		6.4	%		98.1	%
Russell 1000® Value Index		9.1	%		11.7	%		11.0	%		56.1	%
International Focused Value (January 2004)
Annualized Gross Returns		7.1	%		11.4	%		6.8	%		74.9	%
Annualized Net Returns		6.3	%		10.8	%		6.2	%		74.0	%
MSCI® All Country World ex-U.S. Index – Net/U.S.$2		6.5	%		9.8	%		6.5	%		49.4	%
Mid Cap Focused Value (September 1998)
Annualized Gross Returns		12.9	%		13.8	%		10.7	%		125.6	%
Annualized Net Returns		12.1	%		13.1	%		10.0	%		124.1	%
Russell Mid Cap® Value Index		10.5	%		11.6	%		10.7	%		73.8	%

1 The historical returns of these investment strategies are not necessarily indicative of their future performance, or the future performance of any of our other current or future investment strategies.

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2 Net of applicable withholding taxes and presented in U.S. Dollars

Large Cap Value. This strategy reflects a portfolio composed of approximately 50 to 80 stocks drawn from a universe of 500 of the largest U.S. listed companies, based on market capitalization.  This strategy was launched in July 2012.  At March 31, 2021, the Large Cap Value strategy generated a one-year annualized gross return of 81.7%, outperforming its benchmark.  The top contributing sectors included the financial services, consumer discretionary, and industrials sectors.

International Value. This strategy reflects a portfolio composed of approximately 60 to 80 stocks drawn from a universe of 1,500 of the largest companies across the world excluding the United States, based on market capitalization.  This strategy was launched in November 2008.  At March 31, 2021, the International Value strategy generated a one-year annualized gross return of 69.4%, outperforming its benchmark.  The top contributing sectors included the industrials, materials, and consumer staples sectors.

Global Value.  This strategy reflects a portfolio composed of approximately 60 to 95 stocks drawn from a universe of 2,000 of the largest companies across the world, based on market capitalization.  This strategy was launched in January 2010.  At March 31, 2021, the Global Value strategy generated a one-year annualized gross return of 76.8%, outperforming its benchmark.  The top contributing sectors included the industrials, financial services, and consumer discretionary sectors.

Emerging Markets Focused Value.  This strategy reflects a portfolio composed of approximately 40 to 80 stocks drawn from a universe of 1,500 of the largest emerging market companies, based on market capitalization.  This strategy was launched in January 2008.  At March 31, 2021, the Emerging Markets Focused Value strategy generated a one-year annualized gross return of 79.8%, outperforming its benchmark.  The top contributing sectors included the consumer discretionary, materials, and consumer staples sectors.

Large Cap Focused Value.  This strategy reflects a portfolio composed of approximately 30 to 40 stocks drawn from a universe of 500 of the largest U.S. listed companies, based on market capitalization.  This strategy was launched in October 2000.  At March 31, 2021, the Large Cap Focused Value strategy generated a one-year annualized gross return of 94.8%, outperforming its benchmark.  The top contributing sectors included the consumer discretionary, financial services, and energy sectors.  

European Focused Value.  This strategy reflects a portfolio composed of approximately 40 to 50 stocks drawn from a universe of 750 of the largest European companies, based on market capitalization. This strategy was launched in August 2008.  At March 31, 2021, the European Focused Value strategy generated a one-year annualized gross return of 81.5%, outperforming its benchmark.  The top contributing sectors included the industrials, materials, and energy sectors.

Global Focused Value.  This strategy reflects a portfolio composed of approximately 40 to 60 stocks drawn from a universe of 2,000 of the largest companies across the world, based on market capitalization.  This strategy was launched in January 2004.  At March 31, 2021, the Global Focused Value strategy generated a one-year annualized gross return of 81.6%, outperforming its benchmark.  The top contributing sectors included the financial services, industrials, and consumer discretionary sectors.

Mid Cap Value. This strategy reflects a portfolio composed of approximately 50 to 80 stocks drawn from a universe of U.S. listed companies ranked from the 201st to 1,200th largest, based on market capitalization.  This strategy was launched in April 2014.  At March 31, 2021, the Mid Cap Value strategy generated a one-year annualized gross return of 108.3%, outperforming its benchmark.  The top contributing sectors included the industrials, financial services, and real estate sectors.

Small Cap Focused Value.  This strategy reflects a portfolio composed of approximately 40 to 50 stocks drawn from a universe of U.S. listed companies ranked from the 1,001st to 3,000th largest, based on market capitalization.  This strategy was launched in January 1996.  At March 31, 2021, the Small Cap Focused Value strategy generated a one-year annualized gross return of 115.6%, outperforming its benchmark.  The top contributing sectors included the industrials, real estate, and utilities sectors, partially offset by the underperformance of the health care and consumer discretionary sectors.

Focused Value.  This strategy reflects a portfolio composed of a portfolio of approximately 30 to 40 stocks drawn from a universe of 1,000 of the largest U.S. listed companies, based on market capitalization.  This strategy was launched in January 1996.  At March 31, 2021, the Focused Value strategy generated a one-year annualized gross return of 99.5%, outperforming its benchmark.  The top contributing sectors included the industrials, financial services, and consumer discretionary sectors.

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International Focused Value. This strategy reflects a portfolio composed of approximately 30 to 50 stocks drawn from a universe of 1,500 of the largest companies across the world excluding the United States, based on market capitalization. This strategy was launched in January 2004.  At March 31, 2021, the International Focused Value strategy generated a one-year annualized gross return of 74.9%, outperforming its benchmark.  The top contributing sectors included the industrials, materials, and financial services sectors, partially offset by the underperformance of the information technology sector.

Mid Cap Focused Value.  This strategy reflects a portfolio composed of approximately 30 to 40 stocks drawn from a universe of U.S. listed companies ranked from the 201st to 1,200th largest, based on market capitalization.  This strategy was launched in September 1998.  At March 31, 2021, the Mid Cap Focused Value strategy generated a one-year annualized gross return of 125.6%, outperforming its benchmark.  The top contributing sectors included the industrials, financial services, and consumer discretionary sectors, partially offset by the underperformance of the technology sector.

Our earnings and cash flows are heavily dependent upon prevailing financial market conditions.  Significant increases or decreases in the various securities markets, particularly the equities markets, can have a material impact on our results of operations, financial condition, and cash flows.

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The change in AUM in our separately managed accounts, sub-advised accounts, and Pzena funds for the three months ended March 31, 2021 and 2020 is described below.  Inflows are composed of the investment of new or additional assets by new or existing clients.  Outflows consist of redemptions of assets by existing clients.

Assets Under Management
($ billions)
	For the Three Months Ended March 31,
	2021			2020
Separately Managed Accounts
Assets
Beginning of Period	$	17.3		$	16.4
Inflows		0.7			0.4
Outflows		(1.0	)		(0.3	)
Net Flows		(0.3	)		0.1
Market Appreciation/(Depreciation)		2.7			(5.4	)
Foreign Exchange1		(0.3	)		(0.3	)
End of Period	$	19.4		$	10.8
Sub-Advised Accounts
Assets
Beginning of Period	$	23.3		$	22.4
Inflows		1.5			0.8
Outflows		(1.3	)		(0.8	)
Net Flows		0.2			-
Market Appreciation/(Depreciation)		3.6			(8.0	)
Foreign Exchange1		(0.2	)		(0.1	)
End of Period	$	26.9		$	14.3
Pzena Funds
Assets
Beginning of Period	$	2.7		$	2.4
Inflows		0.2			0.2
Outflows		(0.3	)		(0.1	)
Net Flows		(0.1	)		0.1
Market Appreciation/(Depreciation)		0.4			(0.7	)
Foreign Exchange1		(0.1	)		(0.1	)
End of Period	$	2.9		$	1.7
Total
Assets
Beginning of Period	$	43.3		$	41.2
Inflows		2.4			1.4
Outflows		(2.6	)		(1.2	)
Net Flows		(0.2	)		0.2
Market Appreciation/(Depreciation)		6.7			(14.1	)
Foreign Exchange1		(0.6	)		(0.5	)
End of Period	$	49.2		$	26.8

^{1 Foreign exchange reflects the impact of translating non-U.S. dollar denominated AUM into U.S. dollars for reporting purposes.}

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Three Months Ended March 31, 2021 and March 31, 2020

At March 31, 2021, we managed $19.4 billion in separately managed accounts, $26.9 billion in sub-advised accounts, and $2.9 billion in Pzena funds, for a total of $49.2 billion in assets under management.  For the three months ended March 31, 2021, we experienced market appreciation of $6.7 billion and total gross inflows of $2.4 billion, partially offset by total gross outflows of $2.6 billion and a decrease associated with foreign exchange movements of $0.6 billion.  Assets in separately managed accounts increased by $2.1 billion, or 12.1%, from $17.3 billion at December 31, 2020, due to $2.7 billion in market appreciation and $0.7 billion in gross inflows, partially offset by $1.0 billion in gross outflows and a $0.3 billion decrease associated with foreign exchange movements.  Assets in sub-advised accounts increased by $3.6 billion, or 15.5%, from $23.3 billion at December 31, 2020, due to $3.6 billion in market appreciation and $1.5 billion in gross inflows, partially offset by $1.3 billion in gross outflows and a $0.2 billion decrease associated with foreign exchange movements.  Assets in Pzena funds increased by $0.2 billion, or 7.4%, from $2.7 billion at December 31, 2020, due to $0.4 billion in market appreciation and $0.2 billion in gross inflows, partially offset by $0.3 billion in gross outflows and a $0.1 billion decrease associated with foreign exchange movements.

At March 31, 2020, we managed $10.8 billion in separately managed accounts, $14.3 billion in sub-advised accounts, and $1.7 billion in Pzena funds, for a total of $26.8 billion in assets under management.  For the three months ended March 31, 2020, we experienced market depreciation of $14.6 billion and total gross outflows of $1.2 billion, partially offset by total gross inflows of $1.4 billion.  Assets in separately managed accounts decreased by $5.6 billion, or 34.1%, from $16.4 billion at December 31, 2019, due to $5.7 billion in market depreciation and $0.3 billion in gross outflows, partially offset by $0.4 billion in gross inflows.  Assets in sub-advised accounts decreased by $8.1 billion, or 36.2%, from $22.4 billion at December 31, 2019, due to $8.1 billion in market depreciation and $0.8 billion in gross outflows, partially offset by $0.8 billion in gross inflows.  Assets in Pzena funds decreased by $0.7 billion, or 29.2%, from $2.4 billion at December 31, 2019, due to $0.8 billion in market depreciation and $0.1 billion in gross outflows, partially offset by $0.2 billion in gross inflows.

Revenue

Our revenue from advisory fees earned on our separately managed accounts, sub-advised accounts, and Pzena funds for the three months ended March 31, 2021 and 2020 is described below:

	For the Three Months Ended March 31,
Revenue	2021		2020
	(in thousands)
Separately Managed Accounts	$	24,547	$	18,696
Sub-Advised Accounts		16,628		12,709
Pzena Funds		4,696		3,274
Total	$	45,871	$	34,679

Three Months Ended March 31, 2021 and March 31, 2020

Our total revenue increased by $11.2 million, or 32.3%, to $45.9 million for the three months ended March 31, 2021, from $34.7 million for the three months ended March 31, 2020.  This change was driven primarily by an increase in our average AUM due to market appreciation during the first quarter of 2021.  Average AUM increased 28.2% to $45.4 billion from $35.4 billion for the three months ended March 31, 2021 and 2020, respectively.  We recognized no performance fees during the three months ended March 31, 2021, similar compared to the three months ended March 31, 2020.   

Our weighted average fees were 0.404% and 0.391% for the three months ended March 31, 2021 and 2020, respectively.

Average assets in separately managed accounts increased 26.8% to $18.0 billion for the three months ended March 31, 2021, from $14.2 billion for the three months ended March 31, 2020, and had weighted average fees of 0.545% and 0.526% for the three months ended March 31, 2021 and 2020, respectively.  The increase from the first quarter of 2020 primarily reflects the addition of assets to certain strategies that typically carry higher fee rates.

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Average assets in sub-advised accounts increased 29.3% to $24.7 billion for the three months ended March 31, 2021, from $19.1 billion for the three months ended March 31, 2020, and had weighted average fees of 0.270% and 0.266% for the three months ended March 31, 2021 and 2020, respectively. Certain accounts related to one retail client relationship have fulcrum fee arrangements. These fee arrangements require a reduction in the base fee or allow for an increase in the base fee if the relevant investment strategy underperforms or outperforms, respectively, the agreed-upon benchmark over the contract's measurement period, which extends to three years.  During both the three months ended March 31, 2021 and 2020, we recognized a $1.0 million reduction in base fees, related to this client relationship. To the extent the three-year performance record of these accounts fluctuates relative to its relevant benchmark, the amount of base fees recognized may vary.

Average assets in Pzena funds increased 28.6% to $2.7 billion for the three months ended March 31, 2021, from $2.1 billion for the three months ended March 31, 2020, and had weighted average fees of 0.681% and 0.625% for the three months ended March 31, 2021 and 2020, respectively. The increase from the first quarter of 2020 reflects the shift in assets to certain strategies that typically carry higher fee rates.

Expenses

Our operating expenses are driven primarily by our compensation and benefits costs.  The table below describes the components of our operating expenses for the three months ended March 31, 2021 and 2020.

	For the Three Months Ended March 31,
	2021		2020
	(in thousands)
Cash Compensation and Other Benefits	$	15,346	$	16,250
Other Non-Cash Compensation		3,789		2,890
Total Compensation and Benefits Expense		19,135		19,140
General and Administrative Expense		3,696		4,422
Total Operating Expenses	$	22,831	$	23,562

Three Months Ended March 31, 2021 and March 31, 2020

Total operating expenses decreased by $0.8 million, or 3.5%, to $22.8 million for the three months ended March 31, 2021, from $23.6 million for the three months ended March 31, 2020.  This decrease reflects a decrease in general and administrative expenses, primarily driven by a decrease in travel and entertainment expense and professional fees.

Compensation and benefits expense remained flat at $19.1 million for the three months ended March 31, 2021, from $19.1 million for the three months ended March 31, 2020.

General and administrative expense decreased by $0.7 million, or 16.4%, to $3.7 million for the three months ended March 31, 2021 from $4.4 million for the three months ended March 31, 2020. The decrease in general and administrative expense reflects a decrease in travel costs and professional fees.

Other Income/ (Expense)

Three Months Ended March 31, 2021 and March 31, 2020

Other Income/ (Expense) was income of $4.4 million for the three months ended March 31, 2021, and consisted primarily of $1.5 million in equity in the earnings of affiliates, $2.6 million in net realized and unrealized gains from investments, and $0.1 million in interest income.  Other Income/ (Expense) was expense of $9.4 million for the three months ended March 31, 2020, and consisted primarily of $5.2 million in net realized and unrealized losses from investments, $4.3 million in equity in the losses of affiliates, $0.2 million in interest income, and $0.1 million in dividend income.

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Income Tax Expense

For the three months ended March 31, 2021 and 2020, components of our income tax expense are as follows:

	For the Three Months Ended March 31,
	2021		2020
	(in thousands)
Unincorporated and Other Business Tax Expenses	$	866	$	621
Total Corporate Tax Expense		1,500		371
Total Income Tax Expense	$	2,366	$	992

The operating company is a limited liability company that has elected to be treated as a partnership for tax purposes.  The operating company has made a provision for New York City Unincorporated Business Tax (“UBT”) and its consolidated subsidiary Pzena Investment Management, LTD has made a provision for U.K. income taxes.  The Company's provision for income taxes reflects its U.S. federal, state, and local incomes taxes on its allocable portion of the operating company's income.  The effective tax rate includes a rate benefit attributable to the fact that approximately 78.4% and 77.1% of the operating company's earnings were not subject to corporate-level taxes for the three months ended March 31, 2021 and 2020, respectively.  Income before income taxes includes net income attributable to non-controlling interests and not taxable to the Company, which reduces the effective tax rate.  This favorable impact is partially offset by the impact of certain permanently non-deductible items.  These factors are expected to continue to impact the effective tax rate for future years and to the extent the Company’s economic interest in the operating company changes, the effective tax rate will likewise change with variations in the level of income subject to corporate-level taxes. The effective tax rate will also be affected by the discrete tax impact of future dividends on unvested share-based awards and future vesting of restricted share-based awards based on fluctuations in the trading price of the Company's Class A common stock between grant date and vesting date.

Excluding discrete and permanently non-deductible items, which includes the net income attributable to non-controlling interest, the Company's effective tax rate was 24.7% for the three months ended March 31, 2021, and 29.9% for the three months ended March 31, 2020.

Three Months Ended March 31, 2021 and March 31, 2020

Income Tax Expense was $2.4 million for the three months ended March 31, 2021 and $1.0 million for the three months ended March 31, 2020.  Income tax expense for the three months ended March 31, 2021 consisted of $0.9 million in operating company unincorporated and other business taxes and $1.5 million of corporate income taxes.  Income tax expense for the three months ended March 31, 2020 consisted of $0.6 million in operating company unincorporated and other business taxes and $0.4 million of corporate income taxes.

Net Income Attributable to Non-Controlling Interests

Three Months Ended March 31, 2021 and March 31, 2020

Net income attributable to non-controlling interests was $20.8 million for the three months ended March 31, 2021, and consisted primarily of $20.6 million associated with our employees’ and outside investors’ approximately 78.0% weighted average interest in the income of the operating company and $0.2 million associated with the non-controlling interest in the income of our consolidated entities.  Net income attributable to non-controlling interests was $0.8 million for the three months ended March 31, 2020, and consisted of $1.1 million associated with our employees’ and outside investors’ approximately 77.1% weighted average interest in the income of the operating company.  The change in net income attributable to non-controlling interests primarily reflects the decrease in net income for the three months ended March 31, 2021, partially offset by an increase in our employees’ and outside investors’ weighted average interest in the income of the operating company.  We expect the interests in our operating company in subsequent periods to depend on changes in our shareholder’s equity and the size and composition of Class B and Class B-1 units awarded by our operating company’s compensation plans.

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Liquidity and Capital Resources

Historically, the working capital needs of our business have primarily been met through the cash generated by our operations.  Distributions to members of our operating company are our largest use of cash.  Other activities include purchases and sales of investments to fund our deferred compensation program, capital expenditures, and supporting strategic growth initiatives such as providing the initial cash investment in our mutual funds.

We expect to fund the liquidity needs of our business in the next twelve months, and over the long term, primarily through cash generated from operations.  As an investment management company, our business is materially affected by conditions in the global financial markets and economic conditions throughout the world.  Our liquidity is highly dependent on the revenue and income from our operations, which is directly related to our levels of AUM.  For the three months ended March 31, 2021, our average AUM and revenues increased by 28.2% and 32.3%, respectively, compared to our average AUM and revenues for the three months ended March 31, 2020.  At March 31, 2021, cash and cash equivalents was $29.7 million, inclusive of $3.0 million in cash held by our consolidated subsidiaries. We also had $7.3 million in an open-ended mutual fund that can be sold to meet future cash flow needs and approximately $17.2 million in investments set aside to satisfy our obligations under our deferred compensation programs. Advisory fees receivable was $40.8 million.

In determining the sufficiency of liquidity and capital resources to fund our business, we regularly monitor our liquidity position, including, among other things, cash, working capital, investments, long-term liabilities, lease commitments, and operating company distributions.  Compensation is our largest expense.  To the extent we deem necessary and appropriate to run our business, recognizing the need to retain our key personnel, we have the ability to change the absolute levels of our compensation packages, as well as change the mix of their cash and non-cash components.  Historically, we have not tied our level of compensation directly to revenue, as many Wall Street firms do.  Correspondingly, there is not a linear relationship between our compensation and the revenues we generate.  This generally has the effect of increasing operating margins in periods of increased revenues, but can reduce operating margins when revenue declines.

We regularly evaluate our staffing requirements and compensation levels with reference to our own liquidity position and external peer benchmarking data.  The result of this review directly influences management’s recommendations to our Board of Directors with respect to such staffing and compensation levels.

We anticipate that tax allocations and dividend equivalent payments to the members of our operating company, which consist of certain of our employees, unaffiliated persons, former employees, and us, will continue to be a material financing activity.  Cash distributions to operating company members for partnership tax allocations would increase should the taxable income of the operating company increase.  Dividend equivalent payments will depend on our dividend policy and the discretion of our Board of Directors, as discussed below.

We believe that our lack of long-term debt, and ability to vary cash compensation levels, have provided us with an appropriate degree of flexibility in providing for our liquidity needs.

Dividend Policy

We are a holding company and our primary investment is our ownership of membership interests in our operating company. As a result, we depend upon distributions from our operating company to pay any dividends that our Board of Directors may declare to be paid to our Class A common stockholders. When, and if, our Board of Directors declares any such dividends, we then cause our operating company to make distributions to us in an amount sufficient to cover the dividends declared. Our dividend policy has certain risks and limitations, particularly with respect to liquidity. We may not pay dividends to our Class A common stockholders in amounts that have been paid to them in the past, or at all, if, among other things, we do not have the cash necessary to pay our intended dividends. To the extent we do not have cash on hand sufficient to pay dividends in the future, we may decide not to pay dividends. By paying cash dividends rather than investing that cash in our future growth, we risk slowing the pace of our growth, or not having a sufficient amount of cash to fund our operations or unanticipated capital expenditures, should the need arise.

On an annual basis, our Board of Directors targets a cash dividend payout ratio of approximately 60% to 70% of our non-GAAP diluted net income, subject to growth initiatives and other funding needs.  Our ability to pay dividends is subject to the Board of Directors’ discretion and may be limited by our holding company structure and applicable provisions of Delaware law.

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Tax Receivable Agreement

Our purchase of membership units of our operating company concurrent with our initial public offering, and the subsequent and future exchanges by holders of Class B units of our operating company for shares of our Class A common stock (pursuant to the exchange rights provided for in the operating company’s operating agreement), has resulted in, and is expected to continue to result in, increases in our share of the tax basis of the tangible and intangible assets of our operating company, which will increase the tax depreciation and amortization deductions that otherwise would not have been available to us. These increases in tax basis and tax depreciation and amortization deductions have reduced, and are expected to continue to reduce, the amount of cash taxes that we would otherwise be required to pay in the future. We entered into a tax receivable agreement with the current members of our operating company, the one member of our operating company immediately prior to our initial public offering who sold all membership units to us in connection with our initial public offering and any future holders of Class B units.  This tax receivable agreement requires us to pay these members 85% of the amount of cash savings, if any, in U.S. federal, state and local income tax that we actually realize (or are deemed to realize in the case of an early termination payment by us, or a change in control, as described in the tax receivable agreement) as a result of the increases in tax basis described above and certain other tax benefits related to entering into the tax receivable agreement, including tax benefits attributable to payments under the tax receivable agreement.

Cash Flows

Three Months Ended March 31, 2021 and March 31, 2020

       Cash, cash equivalents and restricted cash decreased $35.9 million to $30.7 million during the three months ended March 31, 2021 compared to a $31.9 million decrease in cash, cash equivalents and restricted cash to $21.6 million during the three months ended March 31, 2020.  Net cash provided by operating activities was $4.1 million for the three months ended March 31, 2021, compared to net cash used in operating activities of $9.9 million for the three months ended March 31, 2020. The increase in cash provided was primarily due to an increase in net income and changes in operating assets and liabilities and working capital.

       Net cash used in investing activities decreased $27.1 million to $3.9 million for the three months ended March 31, 2021 from $23.2 million provided for the three months ended March 31, 2020.  The decrease in cash used in investing activities was primarily due to a $27.2 million decrease in net purchases of investments during the three months ended March 31, 2021.

       Net cash used in financing activities decreased by $9.2 million for the three months ended March 31, 2021 to $36.0 million from $45.2 million for the three months ended March 31, 2020.  The decrease in cash used is primarily due to a $3.6 million decrease in distributions to non-controlling interests and a $3.3 million decrease in the repurchase and retirement of shares of Class A common stock.

Contractual Obligations

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

Off-Balance Sheet Arrangements

We did not have any off-balance sheet arrangements as of March 31, 2021.

Critical Accounting Policies and Estimates

The preparation of our consolidated financial statements, in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP"), requires management to make estimates and judgments that affect our reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities.  We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under current circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily available from other sources.  We evaluate our estimates on an ongoing basis. Actual results may materially differ from these estimates under different assumptions or conditions.

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Accounting policies are an integral part of our financial statements.  A thorough understanding of these accounting policies is essential when reviewing our reported results of operations and our financial condition.  Management believes that the critical accounting policies discussed below involve additional management judgment due to the sensitivity of the methods and assumptions used.

Consolidation

Our policy is to consolidate all majority-owned subsidiaries in which we have a controlling financial interest and variable-interest entities of which we are deemed to be the primary beneficiary.  We assess our consolidation practices regularly, as circumstances dictate.  All significant inter-company transactions and balances have been eliminated.

Income Taxes

We are a “C” corporation under the Internal Revenue Code, and thus liable for federal, state and local taxes on the income derived from our economic interest in our operating company.  The operating company is a limited liability company that has elected to be treated as a partnership for tax purposes.  Our operating company has not made a provision for federal or state income taxes because it is the responsibility of each of the operating company’s members (including us) to separately report their proportionate share of the operating company’s taxable income or loss.  Similarly, the income of our consolidated subsidiaries is not subject to income taxes, as such income is allocated to each partnership’s individual partners.  The operating company has made a provision for New York City Unincorporated Business Tax.

We recognize deferred tax assets and liabilities for the future tax consequences attributable to differences between the carrying amounts of existing assets and liabilities and their respective tax bases, net operating loss carryforwards and tax credits.  A valuation allowance is recorded on our deferred tax assets when it is more-likely-than-not that all or a portion of such assets will not be realized. When evaluating the realizability of our deferred tax assets, all evidence, both positive and negative, is evaluated, which requires management to make significant judgments and assumptions. Items considered when evaluating the need for a valuation allowance include our forecast of future taxable income, future reversals of existing temporary differences, tax planning strategies and other relevant considerations.

We believe that the accounting estimate related to the valuation allowance is a critical accounting estimate because the underlying assumptions can change from period to period.  For example, tax law changes, or variances in future projected operating performance, could result in a change in the valuation allowance.  If we are not able to realize all or part of our net deferred tax assets in the future, an adjustment to our deferred tax asset valuation allowance would be charged to income tax expense in the period such determination was made.

Management's judgment is required in determining our provision for income taxes, evaluating our tax positions and establishing deferred tax assets and liabilities.  The calculation of our tax liabilities involves dealing with uncertainties in the application of complex tax regulations.  If the ultimate resolution of uncertainties is different from currently estimated, it could affect income tax expense and the effective tax rate.

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Recently Issued Accounting Pronouncements Not Yet Adopted

None.

U.S. Economic Relief Legislation

On March 27, 2020, the U.S. enacted the Coronavirus Aid, Relief and Economic Security (“CARES”) Act, followed by the American Rescue Plan Act of 2021 (“ARP”) on March 11, 2021. The CARES Act and ARP provide economic relief to eligible individuals and businesses impacted by the COVID-19 pandemic, including changes to tax policy.  We are currently assessing what impact, if any, the CARES Act’s or ARP’s provisions will have on our financial position, but we do not believe the impact will be material.

Item 4.   Controls and Procedures.

During the course of the review of our consolidated financial statements as of March 31, 2021, our management, including our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).  Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of March 31, 2021, our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) were effective to ensure that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

There have not been any changes in our internal control over financial reporting during the three months ended March 31, 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds.

The table below sets forth information regarding purchases of our Class A Common Stock on a monthly basis during the three months ended March 31, 2021.

Period	(a) Total Number of Shares of Class A Common Stock Purchased		(b) Average Price Paid per Share of Class A Common Stock		(c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs1		(d) Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs
							(in millions)
January 1, 2021 - January 31, 2021		167,343	$	8.13		167,343	$	9.1
February 1, 2021 - February 28, 2021		64,621		9.25		64,621		8.5
March 1, 2021 - March 31, 2021		43,254		9.90		43,254		8.0
Total		275,218	$	8.67		275,218	$	8.0

1 Our share repurchase program was announced on April 24, 2012. The Board of Directors authorized us to repurchase an aggregate of $10 million of our outstanding Class A common stock and the operating company's Class B units on the open market and in private transactions in accordance with applicable securities laws. In February 2014, the Company announced an increase of $20 million in the aggregate amount authorized under the repurchase program.  On April 19, 2018, the Company announced an additional increase of $30 million in the aggregate amount authorized under the current program to repurchase Class A common stock and Class B units. The timing, number and value of common shares and units repurchased are subject to the Company’s discretion. The Company’s share repurchase program is not subject to an expiration date and may be suspended, discontinued, or modified at any time, for any reason.

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Item 6.  Exhibits.

Exhibit	Description of Exhibit
10.1	Indemnification Agreement for Shavar Jeffries, dated as of January 26, 2021, by and among Pzena Investment Management, Inc. and Shavar Jeffries(1)
10.2	Form of Restricted Class A Common Stock Agreement (filed herewith)
31.1	Certification of Chief Executive Officer pursuant to Exchange Act Rule 13a-14(a)/15d-14(a) (filed herewith)
31.2	Certification of Chief Financial Officer pursuant to Exchange Act Rule 13a-14(a)/15d-14(a) (filed herewith)
32.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith)
32.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith)
101.INS	Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because iXBRL tags are embedded within the Inline XBRL document
101.SCH	Inline XBRL Taxonomy Extension Schema
101.CAL	Inline XBRL Taxonomy Calculation Linkbase
101.LAB	Inline XBRL Taxonomy Label Linkbase
101.PRE	Inline XBRL Taxonomy Presentation Linkbase
101.DEF	Inline XBRL Taxonomy Definition Linkbase
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained Exhibit 101)

(1) Previously filed as an exhibit to our current report on Form 8-K filed with the Securities and Exchange Commission on January 28, 2021 (SEC File No. 001-33761).

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Dated: May 6, 2021

PZENA INVESTMENT MANAGEMENT, INC.
By:	/s/ RICHARD S. PZENA
Name:	Richard S. Pzena
Title:	Chief Executive Officer
	(Principal Executive Officer)
By:	/s/ JESSICA R. DORAN
Name:	Jessica R. Doran
Title:	Chief Financial Officer
	(Principal Financial and Accounting Officer)

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EX-10.2

Exhibit 10.2

PZENA INVESTMENT MANAGEMENT, INC

Pzena Investment Management, Inc. Equity Incentive Plan

Form of Restricted Stock Agreement

This RESTRICTED STOCK Agreement (“Agreement”) is made this [___] day of [___], [__] by and between Pzena Investment Management, Inc., a corporation organized under the laws of the State of Delaware (and together with its subsidiaries or affiliates, the "Company"), and [___] (the “Grantee”).  

Whereas, the Grantee's service as a director to the Company is considered by the Company to be important for its growth; and

Whereas, the Pzena Investment Management, Inc. Equity Incentive Plan (the “Plan”) provides for the granting of Awards to Grantees in the form of Restricted Stock, as deemed by the Committee to be consistent with the purposes of the Plan; and

Whereas, the Committee wishes to provide a grant of Restricted Class A Common Stock to the Grantee, according to the terms and conditions hereof ;

Now, Therefore, in consideration of the promises and mutual covenants herein set forth, and for other good and valuable consideration, receipt of which is hereby acknowledged, the parties hereto hereby mutually covenant and agree as follows.  All capitalized terms used but not defined herein shall have the respective meanings given such terms in the Plan.

1.Grant of Restricted Class A Common Stock.  Pursuant and subject to the Plan, the Companygrants to the Grantee Restricted Class A Common Stock as set forth below.

Grantee	[___]
Date of Grant	[___]
Total Amount of Restricted Class A Common Stock	[___]

2.Forfeiture of Restricted Class A Common Stock.

Upon the date of termination of the Grantee’s provision of services to the Company for any reason during the restriction periods, all unvested Restricted Class A Common Stock shall be forfeited by the Grantee, unless and until, the Company, shall determine otherwise in its sole discretion and without requirement of notice or other action. The Company shall become the legal and beneficial owner of the unvested Restricted Class A Common Stock and all rights and interests therein or relating thereto, and the Company

shall have the right to retain and transfer to its own name such unvested Restricted Class A Common Stock for no consideration whatsoever.

3.Vesting of Restricted Class A Common Stock.

(a)This Restricted Class A Common Stock vests in four installments as set forth in the table below

Number of Restricted Class A Common Stock in Each Installment	Vesting Schedule of Restricted Class A Common Stock for Each Installment
[____]	[____]
[____]	[____]
[____]	[____]
[____]	[____]

4.Transfer of Restricted Class A Common Stock.  The Grantee may not transfer the Restricted Class A Common Stock, until the vesting date as specified in Section 3 above.

5.Rights as Stockholder. Unless otherwise determined by the Committee, the Company will retain possession of the records representing the unvested Restricted Class A Common Stock.  During the period the Restricted Class A Common Stock remains unvested, the Grantee shall receive any cash dividends with respect to the Restricted Class A Common Stock, may vote the Restricted Class A Common Stock and may participate in any distribution pursuant to a plan of dissolution or complete liquidation of the Company, each subject to any restrictions deemed appropriate by the Committee.  In the event of a dividend or distribution payable in stock or other property or a reclassification, split up or similar event, the shares or other property issued or declared with respect to the non-vested Restricted Class A Common Stock shall be subject to the same terms and conditions relating to vesting as the shares to which they relate.

6.Tax Consequences.  The Company makes no representation or warranty as to the tax treatment to the Grantee with respect to the Grantee’s receipt of or vesting in the Restricted Class A Common Stock or upon the Grantee’s sale or other disposition of the Restricted Class A Common Stock.  The Grantee should rely on the Grantee’s own tax advisors for such advice.  It is understood by the Company and the Grantee that the issuance of or vesting in the Restricted Class A Common Stock hereunder may be deemed compensatory in purpose and in effect and that as a result the Company may be obligated to pay withholding taxes in respect of such Restricted Class A Common Stock at the time the Grantee receives or becomes vested in the Restricted Class A Common Stock.  In the event that at the time such withholding tax obligations arise (i) the Grantee is no providing services to the Company or (ii) the Grantee’s other cash compensation from the Company is not sufficient to meet such withholding tax obligation, the Grantee hereby agrees to provide the Company with an amount sufficient to pay all withholding taxes required to be paid as and when such taxes become payable.  The Grantee agrees that in the event and to the extent any member of the Company determines that it is not obligated to withhold taxes payable by the Grantee with respect to the Restricted Class A Common Stock but a member of the Company is later held liable due to any non-payment of taxes on the part of the Grantee, the Grantee shall indemnify and hold the Company harmless from the amount of any payment made by the Company in respect of such liability.

7. General Provisions.

(a)This Agreement shall be governed and enforced in accordance with the laws of the State of Delaware, without regard to the conflict of laws principles thereof.

(b)This Restricted Class A Common Stock is granted pursuant to the Plan, and this Restricted Class A Common Stock and this Agreement are in all respects governed by the Plan and subject to all the terms and provisions thereof. By signing this Agreement, the Grantee acknowledges having received and read a copy of the Plan.  This Agreement and the applicable terms of the Plan embody the complete agreement and understanding among the parties hereto with respect to the subject matter hereof and thereof,

and supersede and preempt any prior understandings, agreements or representations by or among the parties, written or oral, which may have related to the subject matter hereof in any way.  Except as set forth in the Plan,this Agreement may only be modified or amended in writing signed by the Company and the Grantee.  

(c)The rights and obligations of each party under this Agreement shall inure to the benefit of and be binding upon such party's heirs, legal representatives, successors and permitted assigns.  The rights and obligations of the Company under this Agreement shall be assignable by the Company to any one or more persons or entities without the consent of the Grantee or any other person.  The rights and obligations of any person other than the Company under this Agreement may only be assigned in accordance with this Agreement and the Plan.

(d)No consent to or waiver of any breach or default in the performance of any obligations hereunder shall be deemed or construed to be a consent to or waiver of any other breach or default in the performance of any of the same or any other obligations hereunder.  Failure on the part of any party to complain of any act or failure to act of any other party or to declare any party in default, irrespective of the duration of such failure, shall not constitute a waiver of rights hereunder and no waiver hereunder shall be effective unless it is in writing, executed by the party waiving the breach or default hereunder.

(e)If any provision of this Agreement shall be held illegal, invalid or unenforceable, such illegality, invalidity or unenforceability shall attach only to such provision and shall not in any manner affect or render illegal, invalid or unenforceable any other severable provisions of this Agreement.

(f)The headings in this Agreement are for convenience of identification only, do not constitute a part hereof, and shall not affect the meaning or construction hereof.

(g)The Grantee agrees upon request to execute any further documents or instruments necessary or desirable to carry out the purposes or intent of this Agreement.

(h)All disputes relating to, arising from, or connected in any manner with this Agreement or the Grantee’s provision of services with the Company shall be resolved exclusively through final and binding arbitration under the rules and auspices of JAMS pursuant to its Arbitration Rules & Procedures.  The arbitration shall be held in the Borough of Manhattan, New York, New York and the costs of such arbitration shall be borne by the Company.  The arbitrator shall have jurisdiction to determine any claim, including the arbitrability of any claim, submitted to him/her.  The arbitrator may grant any relief authorized by law for any properly established claim. The interpretation and enforceability of this Section 7(h) shall be governed and construed in accordance with the United States Federal Arbitration Act, 9 U.S.C. § 1, et seq.  The parties acknowledge that the purpose and effect of this Section 7(h) is solely to elect private mediation and arbitration in lieu of any judicial proceeding either party might otherwise have available in the event of a dispute, controversy or claim between the parties.  Therefore, the parties hereby waive the right to have any such dispute heard by a court or jury, as the case may be, and agrees that the

exclusive procedure to redress any and all disputes, controversies and claims will be mediation and arbitration.  Nothing contained in this Section 7(h) shall be construed to limit or otherwise interfere in any respect with the authorities granted the Committee under the Plan, including without limitation, its sole and exclusive discretion to interpret the Plan and all awards granted thereunder (including pursuant to this Agreement).

(i)Nothing contained in this Agreement shall confer upon the Grantee any right with respect to the continuation of his provision of services to the Company, or interfere in any way with the right of the Company, or provision of law or the Company's certificate of formation, as amended from time to time.

(j)This Agreement may be executed in one or more counterparts, each of which when executed shall be deemed an original and all of which, taken together, shall constitute one and the same instrument.  In making proof of this Agreement it shall not be necessary to produce or account for more than one such counterpart.

(k)Where the context requires, pronouns and modifiers in the masculine, feminine or neuter gender shall be deemed to refer to or include the other genders.

In Witness Whereof, the parties have duly executed this Agreement as of the month, day and year first set forth above.

PZENA INVESTMENT MANAGEMENT, INC.

By: ____________________________

Name: Richard S. Pzena

Title: Chief Executive Officer

GRANTEE

________________________________

Name: [____]

EX-31.1

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO EXCHANGE ACT RULE 13a-14(a)/15d-14(a)

I, Richard S. Pzena, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Pzena Investment Management, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: May 6, 2021	/s/ Richard S. Pzena
	Name: Richard S. Pzena
	Title: Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO EXCHANGE ACT RULE 13a-14(a)/15d-14(a)

I, Jessica R. Doran, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Pzena Investment Management, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: May 6, 2021	/s/ Jessica R. Doran
	Name: Jessica R. Doran
	Title: Chief Financial Officer          (Principal Financial and Accounting Officer)

EX-32.1

Exhibit 32.1

Certification of Chief Executive Officer pursuant to

18 U.S.C. Section 1350,

as adopted pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report on Form 10-Q of Pzena Investment Management, Inc. (the “Company”) for the quarter ended March 31, 2021, as filed with the Securities and Exchange Commission (the “Report”), Richard S. Pzena, as Chief Executive Officer of the Company certifies, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1)The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: May 6, 2021	/s/ Richard S. Pzena
	Name: Richard S. Pzena
	Title: Chief Executive Officer

EX-32.2

Exhibit 32.2

Certification of Acting Principal Financial Officer pursuant to

18 U.S.C. Section 1350,

as adopted pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report on Form 10-Q of Pzena Investment Management, Inc. (the “Company”) for the quarter ended March 31, 2021, as filed with the Securities and Exchange Commission (the “Report”), Jessica R. Doran, as Chief Financial and Accounting Officer of the Company certifies, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1)The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: May 6, 2021	/s/ Jessica R. Doran
	Name: Jessica R. Doran
	Title: Chief Financial Officer          (Principal Financial and Accounting Officer)

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Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2021	May 05, 2021
Document Information [Line Items]
Entity Registrant Name	PZENA INVESTMENT MANAGEMENT, INC.
Entity Central Index Key	0001399249
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Accelerated Filer
Entity Small Business	true
Entity Shell Company	false
Entity Emerging Growth Company	false
Title of 12(b) Security	Class A common stock, par value $0.01 per share
Document Type	10-Q
Document Period End Date	Mar. 31, 2021
Document Fiscal Year Focus	2021
Document Fiscal Period Focus	Q1
Trading Symbol	PZN
Security Exchange Name	NYSE
Entity File Number	001-33761
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	20-8999751
Entity Address, Address Line One	320 Park Avenue
Entity Address, City or Town	New York
Entity Address, State or Province	NY
Entity Address, Postal Zip Code	10022
City Area Code	212
Local Phone Number	355-1600
Document Quarterly Report	true
Document Transition Report	false
Amendment Flag	false
Common Class A
Document Information [Line Items]
Entity Common Stock, Shares Outstanding		17,089,896
Common Class B
Document Information [Line Items]
Entity Common Stock, Shares Outstanding		55,477,623

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CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION - USD ($) $ in Thousands		Mar. 31, 2021	Dec. 31, 2020
ASSETS
Cash and Cash Equivalents ($2,050 and $2,201)	[1]	$ 29,650	$ 65,534
Restricted Cash		1,054	1,050
Due from Broker ($25 and $0)	[1]	268	87
Advisory Fees Receivable		40,798	36,524
Investments ($5,646 and $1,131)	[1]	41,419	34,104
Receivable from Related Parties		3,727	2,880
Other Receivables ($15 and $8)	[1]	151	154
Prepaid Expenses and Other Assets		2,185	2,569
Right-of-use Assets		10,989	11,578
Deferred Tax Asset		27,825	29,831
Property and Equipment, Net of Accumulated Depreciation of $6,203 and $5,980, respectively		4,092	4,376
TOTAL ASSETS		162,158	188,687
Liabilities:
Accounts Payable and Accrued Expenses ($30 and $28)	[1]	19,111	36,317
Due to Broker ($0 and $2)	[1]	0	56
Securities Sold Short, at Fair Value		743	714
Liability to Selling and Converting Shareholders		25,701	25,701
Lease Liabilities		11,304	11,905
Deferred Compensation Liability		1,644	5,039
TOTAL LIABILITIES		58,503	79,732
Commitments and Contingencies (see Note 12)
Equity:
Preferred Stock (Par Value $0.01; 200,000,000 Shares Authorized; None Outstanding)
Additional Paid-In Capital		5,042	5,190
Retained Earnings		25,496	25,611
Accumulated Other Comprehensive Income		127	132
Total Pzena Investment Management, Inc.'s Equity		30,835	31,106
Non-Controlling Interests		72,820	77,849
TOTAL EQUITY		103,655	108,955
TOTAL LIABILITIES AND EQUITY		162,158	188,687
Common Class A
Equity:
Common Stock		170	173
TOTAL EQUITY		170	173
Common Class B
Equity:
Common Stock		$ 0	$ 0

[1] Asset and liability amounts in parentheses represent the aggregated balances at March 31, 2021 and December 31, 2020 attributable to Pzena Investment Management Special Situations, LLC, Pzena U.S. Best Ideas (GP), LLC, Pzena Global Best Ideas (GP), LLC, and Pzena Global Focus Value Fund which were variable interest entities as of March 31, 2021 and December 31, 2020, respectively.

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CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (Parenthetical) - USD ($) $ in Thousands		Mar. 31, 2021	Dec. 31, 2020
ASSETS
Cash	[1]	$ 29,650	$ 65,534
Due from Broker	[1]	268	87
Investments	[1]	41,419	34,104
Other Receivables	[1]	151	154
Property and equipment, accumulated depreciation		6,203	5,980
LIABILITIES AND EQUITY
Accounts Payable and Accrued Expenses	[1]	19,111	36,317
Due to Broker	[1]	$ 0	$ 56
Equity:
Preferred Stock, Par Value (in dollars per share)		$ 0.01	$ 0.01
Preferred Stock, Shares Authorized (in shares)		200,000,000	200,000,000
Preferred Stock, Shares Outstanding (in shares)		0	0
Common Class A
Equity:
Common Stock, Par Value (in dollars per share)		$ 0.01	$ 0.01
Common Stock, Shares Authorized (in shares)		750,000,000	750,000,000
Common Stock, Shares Issued (in shares)		17,092,573	17,328,899
Common Stock, Shares Outstanding (in shares)		17,092,573	17,328,899
Common Class B
Equity:
Common Stock, Par Value (in dollars per share)		$ 0.000001	$ 0.000001
Common Stock, Shares Authorized (in shares)		750,000,000	750,000,000
Common Stock, Shares Issued (in shares)		55,447,723	54,313,620
Common Stock, Shares Outstanding (in shares)		55,447,723	54,313,620
Variable Interest Entity, Primary Beneficiary
ASSETS
Cash		$ 2,050	$ 2,201
Due from Broker		25	0
Investments		5,646	1,131
Other Receivables		15	8
LIABILITIES AND EQUITY
Accounts Payable and Accrued Expenses		30	28
Due to Broker		$ 0	$ 2

[1] Asset and liability amounts in parentheses represent the aggregated balances at March 31, 2021 and December 31, 2020 attributable to Pzena Investment Management Special Situations, LLC, Pzena U.S. Best Ideas (GP), LLC, Pzena Global Best Ideas (GP), LLC, and Pzena Global Focus Value Fund which were variable interest entities as of March 31, 2021 and December 31, 2020, respectively.

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UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands		3 Months Ended
		Mar. 31, 2021	Mar. 31, 2020
Income Statement [Abstract]
REVENUE		$ 45,871	$ 34,679
EXPENSES
Compensation and Benefits Expense		19,135	19,140
General and Administrative Expense		3,696	4,422
Total Operating Expenses		22,831	23,562
Operating Income		23,040	11,117
OTHER INCOME
Interest Income		55	159
Dividend Income		142	81
Net Realized and Unrealized Gains/ (Losses) from Investments		2,563	(5,247)
Equity in Earnings/ (Losses) of Affiliates		1,537	(4,262)
Other Income/ (Expense)		58	(87)
Total Other Income/ (Expense)		4,355	(9,356)
Income Before Income Taxes		27,395	1,761
Income Tax Expense		2,366	992
Net Income		25,029	769
Less: Net Income Attributable to Non-Controlling Interests		20,842	$ 769
Net Income Attributable to Pzena Investment Management, Inc.		4,187
Supplemental Income Statement Elements [Abstract]
Net Income for Basic Earnings per Share		$ 4,187
Basic Earnings per Share		$ 0.24
Basic Weighted Average Shares Outstanding	[1]	17,240,412	17,790,184
Net Income for Diluted Earnings per Share		$ 19,731	$ 760
Diluted Earnings per Share		$ 0.24
Diluted Weighted Average Shares Outstanding	[1]	83,451,997	79,583,147
Cash Dividends per Share of Class A Common Stock		$ 0.25	$ 0.46

[1] ^{The Company issues restricted shares of Class A common stock and restricted Class B units that have non-forfeitable dividend rights.  Under the "two-class method," these shares and units are considered participating securities and are required to be included in the computation of basic and diluted earnings per share.}

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UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Statement Of Income And Comprehensive Income [Abstract]
NET INCOME	$ 25,029	$ 769
OTHER COMPREHENSIVE GAIN
Foreign Currency Translation Adjustment	(12)	(505)
Total Other Comprehensive Gain/ (Loss)	(12)	(505)
Comprehensive Income	25,017	264
Less: Comprehensive Income Attributable to Non-Controlling Interests	20,835	142
Total Comprehensive Income Attributable to Pzena Investment Management, Inc.	$ 4,182	$ 122

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UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY - USD ($) $ in Thousands	Total	Common Class A	Common Class B	Additional Paid-In Capital	Accumulated Other Comprehensive Income (Loss)	Retained Earnings	Non-Controlling Interests
Beginning Balance at Dec. 31, 2019	$ 108,210	$ 179		$ 4,829	$ (3)	$ 26,439	$ 76,766
Beginning Balance (in shares) at Dec. 31, 2019		18,009,350	52,879,323
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Amortization of Non-Cash Compensation	2,052			479			1,573
Amortization of Non-Cash Compensation (in shares)		10,000	321,949
Issuance of Shares under Equity Incentive Plan	3,842			890			2,952
Issuance of Shares under Equity Incentive Plan (in shares)			637,349
Sale of Shares under Equity Incentive Plan	1,902			436			1,466
Sale of Shares under Equity Incentive Plan (in shares)			430,955
Directors' Share Grants	331			76			255
Net Income	769						769
Foreign Currency Translation Adjustments	(505)				122		(627)
Repurchase and Retirement of Class A Common Stock	(5,648)	$ (8)		(1,283)			(4,357)
Repurchase and Retirement Shares/Units (in shares)		(823,792)	(94,830)
Repurchase and Retirement of Class B Units	(565)			(131)			(434)
Class A Cash Dividends Declared and Paid	(8,172)					(8,172)
Tax Impact of Transactions with Non-Controlling Shareholders	(717)			(717)
Effect of Deconsolidation	(1,685)						(1,685)
Contributions from Non-Controlling Interests	641						641
Distributions to Non-Controlling Interests	(33,327)						(33,327)
Other				(1,224)			1,224
Ending Balance at Mar. 31, 2020	67,128	$ 171		3,355	119	18,267	45,216
Ending Balance (in shares) at Mar. 31, 2020		17,195,558	54,174,746
Beginning Balance at Dec. 31, 2020	108,955	$ 173		5,190	132	25,611	77,849
Beginning Balance (in shares) at Dec. 31, 2020		17,328,899	54,313,620
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Amortization of Non-Cash Compensation	2,145			462			1,683
Amortization of Non-Cash Compensation (in shares)		14,201	320,495
Issuance of Shares under Equity Incentive Plan	3,822			872			2,950
Issuance of Shares under Equity Incentive Plan (in shares)		12,353	805,987
Sale of Shares under Equity Incentive Plan	167			36			131
Sale of Shares under Equity Incentive Plan (in shares)			26,097
Directors' Share Grants	247			53			194
Directors' Share Grants (in shares)		12,338
Net Income	25,029					4,187	20,842
Foreign Currency Translation Adjustments	(12)				(5)		(7)
Repurchase and Retirement of Class A Common Stock	(2,390)	$ (3)		(516)			(1,871)
Repurchase and Retirement Shares/Units (in shares)		(275,218)	(18,476)
Repurchase and Retirement of Class B Units	(90)			(20)			(70)
Class A Cash Dividends Declared and Paid	(4,302)					(4,302)
Tax Impact of Transactions with Non-Controlling Shareholders	(494)			(494)
Contributions from Non-Controlling Interests	303						303
Distributions to Non-Controlling Interests	(29,725)						(29,725)
Other				(541)			541
Ending Balance at Mar. 31, 2021	$ 103,655	$ 170		$ 5,042	$ 127	$ 25,496	$ 72,820
Ending Balance (in shares) at Mar. 31, 2021		17,092,573	55,447,723

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UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Parenthetical) - $ / shares	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Statement Of Stockholders Equity [Abstract]
Class A Cash Dividends Declared and Paid (in USD per share)	$ 0.25	$ 0.46

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UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
OPERATING ACTIVITIES
Net Income	$ 25,029	$ 769
Adjustments to Reconcile Net Income to Cash Provided by Operating Activities:
Depreciation	296	306
Non-Cash Compensation	3,789	2,890
Directors' Share Grants	247	331
Net Realized and Unrealized (Gains)/ Losses from Investments	(2,563)	5,247
Equity in (Earnings)/ Losses of Affiliates	(1,537)	4,262
Noncash Lease Expense	589	596
Foreign Currency Translation Adjustments	(12)	(505)
Deferred Income Taxes	1,513	360
Changes in Operating Assets and Liabilities:
Advisory Fees Receivable	(4,274)	3,646
Due from Broker	(181)	19
Prepaid Expenses and Other Assets	387	(175)
Due to Broker	(56)	(34)
Accounts Payable, Accrued Expenses, and Other Liabilities	(18,424)	(23,267)
Lease Liabilities	(601)	(608)
Purchases of Equity Securities	(10,892)	(9,479)
Proceeds from Equity Securities	10,792	5,759
Net Cash Provided by/ (Used in) Operating Activities	4,102	(9,883)
INVESTING ACTIVITIES
Purchases of Investments	(5,790)	(21,590)
Proceeds from Sale of Investments	2,704	45,735
Payments from/ (to) Related Parties	(847)	(886)
Purchases of Property and Equipment	(12)	(33)
Net Cash Provided by/ (Used in) Investing Activities	(3,945)	23,226
FINANCING ACTIVITIES
Repurchase and Retirement of Class A Common Stock	(2,390)	(5,648)
Repurchase and Retirement of Class B Units	(90)	(565)
Sale of Shares under Equity Incentive Plan	167	1,902
Distributions to Non-Controlling Interests	(29,725)	(33,327)
Contributions from Non-Controlling Interests	303	641
Dividends	(4,302)	(8,172)
Net Cash Provided by/ (Used in) Financing Activities	(36,037)	(45,169)
NET CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH	(35,880)	(31,826)
CASH, CASH EQUIVALENTS AND RESTRICTED CASH - Beginning of Period	66,584	53,516
Effect of (Deconsolidation)/ Consolidation of Affiliates		(123)
Net Change in Cash, Cash Equivalents and Restricted Cash	(35,880)	(31,826)
CASH, CASH EQUIVALENTS AND RESTRICTED CASH - End of Period	30,704	21,567
Supplementary Cash Flow Information:
Issuances of Shares under Equity Incentive Plan	3,822	3,842
Income Taxes Paid	$ 121	$ 98

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Organization

3 Months Ended

Mar. 31, 2021

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Organization

Note 1—Organization

Pzena Investment Management, Inc. (the “Company”) is the sole managing member of its operating company, Pzena Investment Management, LLC (the “operating company”).  As a result, the Company: (i) consolidates the financial results of the operating company and reflects the membership interests in the operating company that it does not own as a non-controlling interest in its consolidated financial statements; and (ii) recognizes income generated from its economic interest in the operating company’s net income.

The operating company is an investment adviser registered under the Investment Advisers Act of 1940 and is headquartered in New York, New York.  As of March 31, 2021, the operating company managed assets in a variety of value-oriented investment strategies across a wide range of market capitalizations in both U.S. and non-U.S. capital markets.

The Company also serves as the general partner of Pzena Investment Management, LP, a partnership formed with the objective of aggregating employee ownership in the operating company into one entity.

The Company, through its interest in the operating company, has consolidated the results of operations and financial condition of the following entities as of March 31, 2021: 

		Ownership at
Legal Entity	Type of Entity (Date of Formation)	March 31, 2021
Pzena Investment Management, Pty	Australian Proprietary Limited Company (12/16/2009)	100.0%
Pzena Financial Services, LLC	Delaware Limited Liability Company (10/15/2013)	100.0%
Pzena Investment Management, LTD	England and Wales Private Limited Company (01/08/2015)	100.0%
Pzena U.S. Best Ideas (GP), LLC	Delaware Limited Liability Company (11/16/2017)	100.0%
Pzena Global Best Ideas (GP), LLC	Delaware Limited Liability Company (2/15/2018)	100.0%
Pzena Investment Management International 2, LLC	Delaware Limited Liability Company (1/21/2020)	100.0%
Pzena Investment Management Special Situations, LLC	Delaware Limited Liability Company (12/01/2010)	99.9%
Pzena Global Focused Value Fund	Australian Registered Investment Scheme (6/10/2016)	98.7%
Pzena International Small Cap Value Fund, a series of Advisors Series Trust	Open-end Management Investment Company, series of Delaware Statutory Trust (6/28/2018)	58.1%

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Significant Accounting Policies

3 Months Ended

Mar. 31, 2021

Accounting Policies [Abstract]

Significant Accounting Policies

Note 2—Significant Accounting Policies

Basis of Presentation:

The consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and related Securities and Exchange Commission (“SEC”) rules and regulations.  

Principles of Consolidation:

The Company’s policy is to consolidate those entities in which it has a direct or indirect controlling financial interest based on either the voting interest model or the variable interest model.  As such, the Company consolidates majority-owned subsidiaries in which it has a controlling financial interest, and certain investment vehicles the operating company sponsors for which it is the investment adviser that are considered to be variable-interest entities (“VIEs”), and for which the Company is deemed to be the primary beneficiary.

Pursuant to the Consolidation Topic of the FASB Accounting Standards Codification (“FASB ASC”), for legal entities evaluated for consolidation, the Company determines whether interests it holds and fees paid to the entity qualify as a variable interest.  If it is determined that the Company does not have a variable interest in the entity, no further analysis is required and the Company does not consolidate the entity.  If it is determined that the Company has a variable interest, it considers its direct interests and the proportionate indirect interests through related parties to determine if it is the primary beneficiary of the VIE.

For equity investments where the Company does not control the investee, and where it is not the primary beneficiary of a VIE, but can exert significant influence over the financial and operating policies of the investee, the Company follows the equity method of accounting.  The evaluation of whether the Company exerts control or significant influence over the financial and operating policies of the investee requires significant judgment based on the facts and circumstances surrounding each investment.  Factors considered in these evaluations may include the type of investment, the legal structure of the investee, the terms of the investment agreement, or other agreements with the investee.

The Company analyzes entities structured as series funds which comply with the requirements included in the Investment Company Act of 1940 for registered mutual funds as voting interest entities because the shareholders are deemed to have the ability to direct the activities of the fund that most significantly impact the fund's economic performance.

Consolidated Entities

The Company consolidates the financial results of the operating company and records in its own equity its pro-rata share of transactions that impact the operating company’s net equity, including unit and option issuances, repurchases, and retirements.  The operating company’s pro-rata share of such transactions are recorded as an adjustment to additional paid-in capital or non-controlling interests, as applicable, on the consolidated statements of financial condition.

The majority-owned subsidiaries in which the Company, through its interest in the operating company, has a controlling financial interest and the VIEs for which the Company is deemed to be the primary beneficiary are collectively referred to as “consolidated subsidiaries.”  Non-controlling interests recorded on the consolidated financial statements of the Company include the non-controlling interests of the outside investors in each of these entities, as well as those of the operating company.  All significant inter-company transactions and balances have been eliminated through consolidation.

On January 1, 2020, the Company redeemed its investment in the Pzena International Value Service (a series of Pzena Investment Management International, LLC). As the Company was no longer deemed the primary beneficiary of this entity, it deconsolidated the entity and removed the related assets, liabilities and non-controlling interest from the Company’s Consolidated Statements of Financial Condition.

During 2020, the Company provided the initial cash investment for a Pzena-branded Australian Registered Investment Scheme, Pzena Global Focused Value Fund, in an effort to generate an investment performance track record to attract third-party investors. The Company is considered the primary beneficiary of this entity. At March 31, 2021, Pzena Global Focused Value Fund’s $4.1 million in net assets were included in the Company’s Consolidated Statements of Financial Condition.

These consolidated investment partnerships are investment companies and apply specialized industry accounting for investment companies. The Company has retained this specialized accounting for these investment partnerships pursuant to U.S. GAAP.

Non-Consolidated Variable Interest Entities

VIEs that are not consolidated receive investment management services from the operating company and are generally private investment partnerships sponsored by the operating company.  The total net assets of these VIEs was approximately $308.9 million and $265.9 million at March 31, 2021 and December 31, 2020, respectively.  

As of March 31, 2021 and December 31, 2020, the operating company had $4.0 million and $3.2 million in investments in certain of these firm-sponsored vehicles, the majority of which are primarily held to satisfy certain of the Company’s obligations under its deferred compensation programs, for which the Company was not deemed to be the primary beneficiary.  The Company's exposure to risk of loss in the non-consolidated VIEs is generally limited to any equity investment and any uncollected management fees. As of March 31, 2021 and December 31, 2020, the Company's maximum exposure to loss as a result of its involvement with the non-consolidated VIEs was $4.2 million and $3.6 million, respectively.

Accounting Pronouncements Adopted in 2021:

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The amendments simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. The amendments also improve consistent application of and simplify US GAAP for other areas of Topic 740 by clarifying and amending the existing guidance. We adopted this standard prospectively on January 1, 2021. The adoption of this standard did not have a material impact on our financial condition or results of operations.

Management’s Use of Estimates:

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses for the period.  Actual results could materially differ from those estimates.

Revenue Recognition:

Revenue, comprised of advisory fee income, is recognized over the period in which advisory services are provided. Advisory fee income includes management fees that are calculated based on percentages of assets under management (“AUM”), generally billed quarterly, either in arrears or advance, depending on the applicable contractual terms. Advisory fee income also includes performance fees that may be earned by the Company depending on the investment return of the AUM, as well as fulcrum fee arrangements. Performance fee arrangements generally entitle the Company to participate, on a fixed-percentage basis, in any returns generated in excess of an agreed-upon benchmark. The Company’s participation percentage in such return differentials is then multiplied by AUM to determine the performance fees earned. In general, returns are calculated on an annualized basis over the contract’s measurement period, which usually extends to three years. Performance fees are generally payable annually or quarterly. Fulcrum fee arrangements require a reduction in the base fee or allow for an increase in the base fee if the relevant investment strategy underperforms or outperforms, respectively, the agreed-upon benchmark over the contract's measurement period, which extends to three years. Fulcrum fees are generally payable quarterly. Following the Revenue Recognition Topic of the FASB ASC, performance fee income is recorded at the conclusion of the contractual performance period, when it is probable that significant reversal of the performance fee will not occur. Advisory fee income also includes fund expense cap reimbursements which are required to be presented net against Revenue rather than as a component of General and Administrative Expense.

Revenue from advisory fees is disaggregated into categories based on the composition of the Company's client base and advisory fee structure for the three months ended March 31, 2021 and 2020:

	For the Three Months Ended March 31,
Revenue	2021			2020
	(in thousands)
Separately Managed Accounts
Asset-Based Fees	$	24,547		$	18,696
Total Separately Managed Fees		24,547			18,696
Sub-Advised Accounts
Asset-Based Fees	$	17,623		$	13,723
Impact of Fulcrum Fees1		(995	)		(1,014	)
Performance-Based Fees		—			—
Total Sub-Advised Fees		16,628			12,709
Pzena Funds
Asset-Based Fees	$	4,951		$	3,600
Expense Cap Reimbursements		(255	)		(326	)
Performance-Based Fees		—		—
Total Pzena Funds Fees		4,696			3,274
Total	$	45,871		$	34,679

1 Represents the net impact of fulcrum fee arrangements which require a reduction in the base fee or allow for an increase in the base fee if the relevant investment strategy underperforms or outperforms, respectively, the agreed-upon benchmark over the contract's measurement period.

Cash and Cash Equivalents:

At March 31, 2021 and December 31, 2020, Cash and Cash Equivalents was $29.7 million and $65.5 million, respectively.  The Company considers all money market funds and highly-liquid debt instruments with an original maturity of three months or less at the time of purchase to be cash equivalents. The Company maintains its cash in bank deposits, other accounts whose balances often exceed federally insured limits and treasury money market funds. Cash is stated at cost, which approximates fair value.

Interest on cash and cash equivalents is recorded as Interest Income on an accrual basis in the consolidated statements of operations.

Restricted Cash:

At both March 31, 2021 and December 31, 2020, the Company had $1.1 million of compensating balances recorded in Restricted Cash in the consolidated statements of financial condition. These balances reflect a letter of credit issued by a third party in lieu of a cash security deposit, as required by the Company’s lease for its corporate headquarters.

The following table reconciles cash, cash equivalents, and restricted cash per the consolidated statements of cash flows to the consolidated statements of financial condition.

	March 31, 2021		December 31, 2020		March 31, 2020		December 31, 2019
	(in thousands)
Cash and Cash Equivalents	$	29,650	$	65,534	$	20,527	$	52,480
Restricted Cash		1,054		1,050		1,040		1,036
Total	$	30,704	$	66,584	$	21,567	$	53,516

Due to/from Broker:

Due to/from Broker consists primarily of amounts payable/receivable for unsettled securities transactions held/initiated at the clearing brokers of the Company and its consolidated subsidiaries.

Non-Cash Compensation:

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.  Expenses associated with these awards are recognized over the period during which employees are required to provide service.  The Company accounts for forfeitures as they occur.

Investments:

Investments, at Fair Value

Investments, at Fair Value consist of equity securities at fair value held by the Company and its consolidated subsidiaries, as well as investments in open-ended registered mutual funds.  Management determines the appropriate classification of its investments at the time of purchase and re-evaluates such determination on an ongoing basis. Dividends and interest income associated with the Company's investments and the investments of the Company's consolidated subsidiaries are recognized as Dividend Income on an ex-dividend basis and Interest Income, respectively, in the consolidated statements of operations.

Securities Sold Short represents securities sold short at fair value, not yet purchased by the Company. Dividend expense associated with these investments is recognized in Other Income/ (Expense) on an ex-dividend basis in the consolidated statements of operations.

All such investments are recorded at fair value, with net realized and unrealized gains and losses recognized as a component of Net Realized and Unrealized Gains/ (Losses) from Investments in the consolidated statements of operations.

Investments in equity method investees

The Company accounts for its investments in certain private investment partnerships in which the Company has non-controlling interests and exercises significant influence, using the equity method.  These investments are included in Investments in the Company's consolidated statements of financial condition.  The carrying value of these investments is recorded at the amount of capital reported by the private investment partnership or mutual fund.  The capital account for each entity reflects any contributions paid to, distributions received from, and equity earnings of, the relevant entity.  The earnings of these investments are recognized as Equity in Earnings/ (Losses) of Affiliates in the consolidated statements of operations.

Investments in equity method investees are evaluated for impairment as events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable.  If the carrying amounts of the assets exceed their respective fair values, additional impairment tests are performed to measure the amounts of impairment losses, if any.  During the three months ended March 31, 2021 and 2020, no impairment losses were recognized.

Securities Valuation:

Investments in equity securities and securities sold short for which market quotations are available are valued at the last reported price or closing price on the primary market or exchange on which they trade. If no reported equity sales occurred on the valuation date, equity investments are valued at the bid price. Investments in registered mutual funds are carried at fair value at their respective net asset values as of the valuation date. Otherwise, fair values for investment securities are based on Level 2 or Level 3 inputs detailed in Note 9. Transactions are recorded on a trade date basis.

The net realized gain or loss on sales of equity securities and securities sold short is determined on a specific identification basis and is included in Net Realized and Unrealized Gains/ (Losses) from Investments in the consolidated statements of operations.

Concentrations of Credit Risk:

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents, amounts due from brokers, and advisory fees receivable.  The Company maintains its cash in bank deposits and other accounts whose balances often exceed federally insured limits.

The concentration of credit risk with respect to advisory fees receivable is generally limited due to the short payment terms extended to clients by the Company.  On a periodic basis, the Company evaluates its advisory fees receivable and establishes an allowance for doubtful accounts, if necessary, based on a history of past write-offs, collections, and current credit conditions.  At both March 31, 2021 and December 31, 2020, there was no allowance for doubtful accounts.

Property and Equipment:

Property and equipment is carried at cost, less accumulated depreciation and amortization.  Depreciation is provided on a straight-line basis over the estimated useful lives of the respective assets, except for leasehold improvements, which range from three to seven years.  Leasehold improvements are amortized on a straight-line basis over the shorter of the useful life of the improvements or the remaining lease term.

Leases:

The Company determines if an arrangement is a lease at inception. Operating leases are included as a component of Right-of-use (“ROU”) Assets and Lease Liabilities on the consolidated statements of financial condition. ROU assets represent the right to use an underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. The lease terms may include options to extend or terminate the lease. These options to extend or terminate are assessed on a lease-by-lease basis, and the ROU assets and lease liabilities are adjusted when it is reasonably certain that an option will be exercised. If a lease arrangement does not provide an implicit rate, the Company uses an incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. Lease expense for lease payments is recognized on a straight-line basis over the lease term.

Lease expense associated with leases that have a term of 12 months or less as of the commencement date are recognized as a component of general and administrative expenses on a straight-line basis over the lease term.

Share Repurchases:

Share repurchases may be made from time-to-time in open market transactions or through privately negotiated transactions under the authorization approved by the Board of Directors. The Company charges the entire excess of cost over par to additional paid-in capital. If the Company’s additional paid-in capital balance is reduced to zero, any additional amounts are recognized in retained earnings.

Business Segments:

The Company views its operations as comprising one operating segment.

Income Taxes:

The Company is organized as a “C” corporation under the Internal Revenue Code, and thus liable for federal, state, and local taxes on the income derived from its economic interest in its operating company.  The operating company is a limited liability company that has elected to be treated as a partnership for tax purposes.  It has not made a provision for federal or state income taxes because it is the individual responsibility of each of the operating company’s members (including the Company) to separately report their proportionate share of the operating company’s taxable income or loss.  The operating company has made a provision for New York City Unincorporated Business Tax (“UBT”) and its consolidated subsidiary Pzena Investment Management, LTD has made a provision for U.K. income taxes.  The effective tax rate for interim periods represents the Company’s best estimate of the effective tax rate expected to be applied to the full fiscal year, adjusted for discrete items recognized during the quarter.

Judgment is required in evaluating the Company's uncertain tax positions and determining its provision for income taxes. The Company establishes liabilities for tax-related uncertainties based on estimates of whether, and the extent to which, additional taxes will be due. These liabilities are established when the Company believes that certain positions might be challenged despite its belief that its tax return positions are in accordance with applicable tax laws. The Company adjusts these liabilities in light of changing facts and circumstances, such as the closing of a tax audit, new tax legislation or the change of an estimate. To the extent that the final tax outcome of these matters is different than the amounts recorded, such differences will affect the provision for income taxes in the period in which such determination is made. The provision for income taxes includes the effect of reserve provisions and changes to reserves that are considered appropriate.  It is also the Company’s

policy to recognize accrued interest, and penalties associated with uncertain tax positions in Income Tax Expense on the consolidated statements of operations.

The Company and its consolidated subsidiaries account for all U.S. federal, state, local, and U.K. taxation pursuant to the asset and liability method, which requires deferred income tax assets and liabilities to be recorded for temporary differences between the carrying amount and tax bases of assets and liabilities that will result in taxable or deductible amounts in the future, based on enacted tax laws and rates applicable to the periods in which the temporary differences are expected to affect taxable income.  Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount more-likely-than-not to be realized.  At both March 31, 2021 and December 31, 2020, the Company did not have a valuation allowance recorded against its deferred tax assets.

The income tax expense, or benefit, is the tax payable or refundable for the period, plus or minus the change during the period in deferred tax assets and liabilities. The Company records its deferred tax liabilities as a component of other liabilities in the consolidated statements of financial condition. All excess tax benefits or tax deficiencies related to stock- and unit-transactions are reflected in the consolidated statements of operations as a component of the provision for income taxes.

Tax Receivable Agreement:

The Company’s purchase of membership units of the operating company concurrent with its initial public offering, and the subsequent and future exchanges by holders of Class B units of the operating company for shares of the Company’s Class A common stock (pursuant to the exchange rights provided for in the operating company’s operating agreement), have resulted in, and are expected to continue to result in, increases in the Company’s share of the tax basis of the tangible and intangible assets of the operating company, which will increase the tax depreciation and amortization deductions that otherwise would not have been available to the Company.  These increases in tax basis and tax depreciation and amortization are each deductible for tax purposes over a period of 15 years and have reduced, and are expected to continue to reduce, the amount of cash taxes that the Company would otherwise be required to pay in the future. The Company has entered into a tax receivable agreement with past, current, and future members of the operating company that requires the Company to pay to any member involved in any exchange transaction 85% of the amount of cash tax savings, if any, in U.S. federal, state and local income tax or foreign or franchise tax that it realizes as a result of these increases in tax basis and, in limited cases, transfers or prior increases in tax basis.  The Company expects to benefit from the remaining 15% of cash tax savings, if any, in income tax it realizes.  Payments under the tax receivable agreement will be based on the tax reporting positions that the Company will determine.  The Company will not be reimbursed for any payments previously made under the tax receivable agreement if a tax basis increase is successfully challenged by the Internal Revenue Service.  

The Company records an increase in deferred tax assets for the estimated income tax effects of the increases in tax basis based on enacted federal and state tax rates at the date of the exchange.  The Company records 85% of the estimated realizable tax benefit (which is the recorded deferred tax asset less any recorded valuation allowance) as an increase to the liability due under the tax receivable agreement, which is reflected as the liability to selling and converting shareholders in the accompanying consolidated financial statements.  The remaining 15% of the estimated realizable tax benefit is initially recorded as an increase to the Company’s additional paid-in capital.  All of the effects to the deferred tax asset of changes in any of the estimates after the tax year of the exchange will be reflected in the provision for income taxes.  Similarly, the effect of subsequent changes in the enacted tax rates will be reflected in the provision for income taxes.

If the Company exercises its right to terminate the tax receivable agreement early, the Company will be obligated to make an early termination payment to the selling and converting shareholders, based upon the net present value (based upon certain assumptions and deemed events set forth in the tax receivable agreement) of all payments that would be required to be paid by the Company under the tax receivable agreement.  If certain change of control events were to occur, the Company would be obligated to make an early termination payment.

Foreign Currency:

The functional and reporting currency of the Company is the U.S. Dollar.  Assets and liabilities of foreign operations whose functional currency is not the U.S. Dollar are translated at the exchange rate in effect at the applicable reporting date, and the consolidated statements of operations are translated at the average exchange rates in effect during the applicable period.  A charge or credit is recorded to other comprehensive income to reflect the translation of these amounts to the extent the non-U.S. currency is designated the functional currency of the subsidiary.  Non-functional currency related transaction gains and losses are immediately recorded in other income on the consolidated statements of operations.  For the three months ended March 31, 2021 and 2020, the Company recorded less than $0.1 million and $0.5 million, respectively, of other comprehensive loss associated with foreign currency translation adjustments.

Investment securities and other assets and liabilities denominated in foreign currencies are remeasured into U.S. Dollar amounts at the date of valuation.  Purchases and sales of investment securities, and income and expense items denominated in foreign currencies, are remeasured into U.S. Dollar amounts on the respective dates of such transactions.

The Company does not isolate the portion of the results of its operations resulting from the impact of fluctuations in foreign exchange rates on its non-U.S. investments.  Such fluctuations are included in Net Realized and Unrealized Gains/ (Losses) from Investments in the consolidated statements of operations.

Reported net realized foreign exchange gains or losses arise from sales of foreign currencies, currency gains or losses realized between the trade and settlement dates on securities transactions, and the difference between the amounts of dividends, interest, foreign withholding taxes, and other receivables and payables recorded on the Company’s consolidated statements of financial condition and the U.S. Dollar equivalent of the amounts actually received or paid.  Net unrealized foreign exchange gains and losses arise from changes in the fair values of assets and liabilities resulting from changes in exchange rates.

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Compensation and Benefits

3 Months Ended

Mar. 31, 2021

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Compensation and Benefits

Note 3—Compensation and Benefits

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

	For the Three Months Ended March 31,
	2021		2020
	(in thousands)
Cash Compensation and Other Benefits	$	15,346	$	16,250
Non-Cash Compensation		3,789		2,890
Total Compensation and Benefits Expense	$	19,135	$	19,140

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 non-cash compensation awards granted during the three months ended March 31, 2021 and 2020 are as follows:

	For the Three Months Ended March 31,
	2021				2020
	Amount		Fair Value1		Amount		Fair Value1
Class B-1 Units2		1,438,767	$	2.40		2,092,879	$	3.98
Options to Purchase Shares of Class A Common Stock3		—	$	—		146,804	$	2.03
Restricted Shares of Class A Common Stock4		—	$	—		16,806	$	4.74

1 Represents the weighted average grant date estimated fair value per share, unit, or option as of March 31, 2021 and 2020.

2 Represents 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. 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.

3 Represents 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.

4 Represents shares of Class A common stock issued under the 2007 Equity Incentive Plan.  These shares vest ratably over a period of four years from the date of grant.  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, 2020, $3.8 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, 2021 are as follows:

	January 1,
	2021
	Amount		Fair Value1
Delayed Exchange Class B Units2		805,987	$	4.67
Restricted Shares of Class A Common Stock3		12,353	$	4.67

1 Represents the weighted average grant date estimated fair value per share or unit as of December 31, 2020.

2 Represents 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.

3 Represents 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.

Pursuant to the 2006 Equity Incentive Plan, the operating company issues Class B units, phantom Class B units and options to purchase Class B units.  The operating company also issues Delayed Exchange Class B units pursuant to the 2006 Equity Incentive Plan.  These Delayed Exchange Class B units vest immediately upon grant, but may not be exchanged pursuant to the Amended and Restated Operating Agreement of the operating company until at least the seventh anniversary of the date of grant.  These Delayed Exchange Class B units are also not entitled to any benefit under the Tax Receivable Agreement between the Company and members of the operating company.  The operating company also issues phantom Delayed Exchange Class B units and options to purchase Delayed Exchange Class B units. Under the Pzena Investment Management, Inc. 2007 Equity Incentive Plan (“the 2007 Equity Incentive Plan”), the Company issues shares of restricted Class A common stock, Class B-1 units, options to purchase Class A common stock, options to purchase restricted Class A shares of common stock and contingently vesting options to acquire shares of Class A common stock.  During each of the three months ended March 31, 2021 and 2020, no contingently vesting options vested.  During the three months ended March 31, 2021 and 2020, 26,097 and 430,955 Delayed Exchange Class B units were issued to certain employee members, respectively, for approximately $0.1 million and $1.9 million in cash, respectively.

Under the Pzena Investment Management, LLC Amended and Restated Bonus Plan (the “Bonus Plan”), eligible employees whose compensation is in excess of certain thresholds are required to defer a portion of that excess.  These deferred amounts may be invested, at the employee’s discretion, in certain investment options designated by the Compensation Committee of the Company's Board of Directors.  Amounts deferred in any calendar year reduce that year’s compensation expense and are amortized and vest ratably over a four-year period commencing the following year.  The Company also issued to certain of its employees deferred compensation with certain investment options that also vest ratably over a four-year period. During the three months ended March 31, 2021 and 2020, no forfeitures occurred. As of March 31, 2021 and December 31, 2020, the liability associated with all employee deferred compensation investment accounts was $1.6 million and $5.0 million, respectively.

Pursuant to the Pzena Investment Management, Inc. Non-Employee Director Deferred Compensation Plan (the “Director Plan”), non-employee directors may elect to have all or part of their compensation otherwise payable in cash, deferred in the form of phantom shares of Class A common stock of the Company issued under the 2007 Equity Incentive Plan.  Elections to defer compensation under the Director Plan are made on a year-to-year basis.  Distributions under the Director Plan are made in a single distribution of shares of Class A common stock at such time as elected by the participant when the deferral was made.  Since inception of the Director Plan in 2009, the majority of the Company’s directors have elected to defer 100% of their compensation in the form of phantom shares of Class A common stock. Director compensation amounts for any calendar year are amortized over the calendar year and reflected as General and Administrative Expense. As of March 31, 2021 and December 31, 2020, there were 591,640 and 533,444 phantom shares of Class A common stock outstanding, respectively.  During the three months ended March 31, 2021, the Company distributed 11,070 shares of Class A common stock pursuant to the Director Plan on such date specified by the participant as elected when the deferral was made. For the three months ended March 31, 2020, no distributions were made under the Director Plan. During the three months ended March 31, 2021, the Company issued 5,074 restricted shares of Class A common stock associated with non-deferred nonemployee director compensation. These restricted shares will vest quarterly of the calendar year.

As of March 31, 2021 and December 31, 2020, the Company had approximately $42.6 million and $34.8 million, respectively, in unrecorded compensation expense related to unvested awards issued pursuant to its Bonus Plan and certain agreements; Class B units, option grants, Delayed Exchange Class B units, phantom Delayed Exchange Class B units, and phantom Class B units issued under the 2006 Equity Incentive Plan; and restricted Class A common stock and contingently vesting option grants issued under the 2007 Equity Incentive Plan.  The Company anticipates that this unrecorded cost will amortize over the respective vesting periods of the awards.

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Employee Benefit Plans

3 Months Ended

Mar. 31, 2021

Compensation And Retirement Disclosure [Abstract]

Employee Benefit Plans

Note 4 – Employee Benefit Plans

The operating company has a Profit Sharing and Savings Plan for the benefit of substantially all employees.  The Profit Sharing and Savings Plan is a defined contribution profit sharing plan with a 401(k) deferral component.  All full-time employees and certain part-time employees who have met the age and length of service requirements are eligible to participate in the plan.  The plan allows participating employees to make elective deferrals of compensation up to the annual limits which are set by law.  The plan provides for a discretionary annual contribution by the operating company which is determined by a formula based on the salaries of eligible employees as defined by the plan.  For the three months ended March 31, 2021 and 2020, the expense recognized in connection with this plan was $0.9 million and $0.8 million, respectively.

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Earnings per Share

3 Months Ended

Mar. 31, 2021

Earnings Per Share [Abstract]

Earnings per Share

Note 5—Earnings per Share

Basic earnings per share is computed by dividing the Company’s net income attributable to its common stockholders by the weighted average number of shares outstanding during the reporting period.

Under the two-class method of computing basic earnings per share, basic earnings per share is calculated by dividing net income for basic earnings per share by the weighted average number of common shares outstanding during the period.  The two-class method includes an earnings allocation formula that determines earnings per share for each participating security according to dividends declared and undistributed earnings for the period.  The Company’s net income for basic earnings per share is reduced by the amount allocated to participating restricted shares of Class A common stock which participate for purposes of calculating earnings per share.

For the three months ended March 31, 2021 and 2020, the Company’s basic earnings per share was determined as follows:

	For the Three Months Ended March 31,
	2021		2020
	(in thousands, except share and per share amounts)
Net Income for Basic Earnings per Share Allocated to:
Class A Common Stock	$	4,182	$	—
Participating Shares of Restricted Class A Common Stock		5	—
Total Net Income for Basic Earnings per Share	$	4,187	$	—
Basic Weighted-Average Shares Outstanding		17,220,424		17,790,184
Add: Participating Shares of Restricted Class A Common Stock1		19,988	—
Total Basic Weighted-Average Shares Outstanding		17,240,412		17,790,184
Basic Earnings per Share	$	0.24	$	—

1 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.

Diluted earnings per share adjusts this calculation to reflect the impact of all outstanding membership units of the operating company, phantom Class B units, phantom Delayed Exchange Class B units, phantom Class A common stock, outstanding options to purchase Class B units, options to purchase Delayed Exchange Class B units, options to purchase Class A common stock, and restricted Class A common stock, to the extent they would have a dilutive effect on net income per share for the reporting period.  Net income for diluted earnings per share assumes that all outstanding operating company membership units are converted into Company stock at the beginning of the reporting period and the resulting change to the Company's net income associated with its increased interest in the operating company is taxed at the Company’s effective tax rate, exclusive of one-time charges and adjustments associated with both the valuation allowance and the liability to selling and converting shareholders and other one-time charges. When this conversion results in an increase in earnings per share or a decrease in loss per share, diluted net income and diluted earnings per share are assumed to be equal to basic net income and basic earnings per share for the reporting period.

For the three months ended March 31, 2021 and 2020, the Company’s diluted net income was determined as follows: 

	For the Three Months Ended March 31,
	2021		2020
	(in thousands)
Net Income Attributable to Non-Controlling Interests of Pzena Investment Management, LLC	$	20,648	$	1,084
Less: Assumed Corporate Income Taxes		5,104		324
Assumed After-Tax Income of Pzena Investment Management, LLC		15,544		760
Net Income of Pzena Investment Management, Inc.		4,187		—
Diluted Net Income	$	19,731	$	760

Under the two-class method of computing diluted earnings per share, diluted earnings per share is calculated by dividing net income for diluted earnings per share by the weighted average number of common shares outstanding during the period, plus the dilutive effect of any potential common shares outstanding during the period using the more dilutive of the treasury method or two-class method.  The two-class method includes an earnings allocation formula that determines earnings per share for each participating security according to dividends declared and undistributed earnings for the period.  The Company’s net income for diluted earnings per share is reduced by the amount allocated to participating restricted Class B units and Class B-1 units for purposes of calculating earnings per share.  Dividend equivalent distributions paid per share on the operating company’s unvested restricted Class B units are equal to the dividends paid per share of Company Class A common stock.

For the three months ended March 31, 2021 and 2020, the Company’s diluted earnings per share were determined as follows:

	For the Three Months Ended March 31,
	2021		2020
	(in thousands, except share and per share amounts)
Diluted Net Income Allocated to:
Class A Common Stock	$	17,938	$	701
Participating Shares of Restricted Class A Common Stock		5		—
Participating Class B Units		1,788		59
Total Diluted Net Income Attributable to Shareholders	$	19,731	$	760
Total Basic Weighted-Average Shares Outstanding		17,240,412		17,790,184
Dilutive Effect of Class B Units		55,425,613		53,885,546
Dilutive Effect of Options1		1,123,539		37,016
Dilutive Effect of Phantom Class B Units & Phantom Shares of Class A Common Stock		2,393,896		1,857,799
Dilutive Effect of Restricted Shares of Class A Common Stock2		29,240		21,686
Dilutive Weighted-Average Shares Outstanding		76,212,700		73,592,231
Add: Participating Class B Units and Class B-1 Units3		7,239,297		5,990,916
Total Dilutive Weighted-Average Shares Outstanding		83,451,997		79,583,147
Diluted Earnings per Share4	$	0.24	$	—

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

2 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.

3 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. Vested and unvested Class B-1 units are entitled to receive distributions for the duration of the holder’s employment with the operating company, will participate in additional value to the extent there has been appreciation subsequent to the issuance of the Class B-1 membership unit. Unvested Class B units and vested and unvested Class B-1 units are included in the computation of diluted earnings per share using the two-class method for participating securities.

4 During the three months ended March 31, 2020, the calculation of diluted earnings per share resulted in an increase in earnings per share. Therefore, diluted earnings per share is assumed to be equal to basic earnings per share.

Approximately 0.4 million options to purchase Class B units, 0.2 million options to purchase shares of Class A common stock, and 1.0 million contingent options to purchase shares of Class A common stock were excluded from the calculation of diluted earnings per share for the three months ended March 31, 2021, as their inclusion would have had an antidilutive effect based on current market prices or because the option had contingent vesting requirements that were not met. Approximately 2.9 million options to purchase Class B units, 0.1 million options to purchase shares of Class A common stock, and 1.0 million contingent options to purchase shares of Class A common stock were excluded from the calculation of diluted earnings per share for the three months ended March 31, 2020, as their inclusion would have had an antidilutive effect based on current market prices or because the option had contingent vesting requirements that were not met.  

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Shareholders' Equity

3 Months Ended

Mar. 31, 2021

Stockholders Equity Note [Abstract]

Shareholders' Equity

Note 6—Shareholders’ Equity

The Company functions as the sole managing member of the operating company.  As a result, the Company: (i) consolidates the financial results of the operating company and reflects the membership interest in it that it does not own as a non-controlling interest in its consolidated financial statements; and (ii) recognizes income generated from its economic interest in the operating company’s net income.  Class A and Class B units of the operating company have the same economic rights per unit. Class B-1 membership units are entitled to receive distributions for the duration of the holder’s employment with the operating company and will participate in additional value to the extent there has been appreciation in price of the Class A common stock subsequent to the issuance of the Class B-1 membership unit.  The percentages presented below are subject to continued changes, including but not limited to, the price of Class A common stock, issuance of awards, and exercise of options.  Based on the closing price of the Company’s Class A common stock as of March 31, 2021, the holders of Class A common stock (through the Company), the holders of Class B units of the operating company, and Class B-1 units of the operating company held approximately 23.0%, 74.6%, and 2.4% respectively, of the economic interest in the March 31, 2021 value of the operating company. As of March 31, 2021, the holders of Class A common stock (through the Company), the holders of Class B units of the operating company, and the holders of Class B-1 units of the operating company held 21.4%, 69.6%, and 9.0%, respectively, of the right to the future income and distributions. Based on the closing price of the Company’s Class A common stock as of December 31, 2020, the holders of Class A common stock of the Company, the holders of Class B units of the operating company, and the holders of Class B-1 units of the operating company held approximately 24.2%, 75.8% and 0.0%, respectively, of the December 31, 2020 economic interests in the value of the operating company. As of December 31, 2020 the holders of Class A common stock (through the Company), the holders of Class B units of the operating company, and the holders of Class B-1 units of the operating company held 22.4%, 70.1%, and 7.5%, respectively, of the right to the future income and distributions.

Each Class B unit of the operating company is issued with a corresponding share of the Company’s Class B common stock, par value $0.000001 per share.  Holders of Class B common stock have the right to receive the par value of the Class B common stock held by them upon our liquidation, dissolution or winding up, but do not share in dividends.  Each share of the Company’s Class B common stock entitles its holder to five votes, until the first time that the number of shares of Class B common stock outstanding constitutes less than 20% of the number of all shares of the Company’s common stock outstanding.  From such time and thereafter, each share of the Company’s Class B common stock entitles its holder to one vote.  When a Class B unit is exchanged for a share of the Company’s Class A common stock or forfeited, a corresponding share of the Company’s Class B common stock will automatically be redeemed and canceled.  Conversely, to the extent that the Company causes the operating company to issue additional Class B units to employees pursuant to its equity incentive plan, these additional holders of Class B units would be entitled to receive a corresponding number of shares of the Company’s Class B common stock (including if the Class B units awarded are subject to vesting). Class B-1 units have not been issued corresponding shares and do not have voting rights.

All holders of the Company’s Class B common stock have entered into a stockholders’ agreement, pursuant to which they agreed to vote all shares of Class B common stock then held by them, with the majority of votes of Class B common stockholders taken in a preliminary vote of the Class B common stockholders.

The outstanding shares of the Company’s Class A common stock represent 100% of the rights of the holders of all classes of the Company’s capital stock to receive distributions, except that holders of Class B common stock will have the right to receive the class’s par value upon the Company’s liquidation, dissolution or winding up.

Pursuant to the operating agreement of the operating company, each vested Class B unit is exchangeable for a share of the Company’s Class A common stock, subject to certain exchange timing and volume limitations.  

Pursuant to the operating agreement of the operating company, each vested Class B-1 unit, upon the end of the holder’s employment, is 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.

The Company’s share repurchase program was announced on April 24, 2012.  The Board of Directors authorized the Company to repurchase up to an aggregate of $10 million of the Company’s outstanding Class A common stock and the operating company’s Class B units on the open market and in private transactions in accordance with applicable securities laws.  On February 11, 2014, the Company announced that its Board of Directors approved an increase of $20 million in the aggregate amount authorized under the program.  On April 19, 2018, the Company announced that its Board of Directors approved an additional increase of $30 million in the aggregate amount authorized under the program.  The timing, number and value of common shares and units repurchased are subject to the Company’s discretion.  The Company’s share repurchase program is not subject to an expiration date and may be suspended, discontinued, or modified at any time, for any reason.

During the three months ended March 31, 2021, the Company purchased and retired 275,218 shares of Class A common stock and 18,476 Class B units under the current repurchase authorization at a weighted average price per share of $8.67 and $4.87, respectively.  During the three months ended March 31, 2020, the Company purchased and retired 823,792 shares of

Class A common stock and 94,830 Class B units under the repurchase authorization at a weighted average price per unit of $6.86 and $5.97, respectively.  The Company records the repurchase of shares and units at cost based on the trade date of the transaction.

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Non-Controlling Interests

3 Months Ended

Mar. 31, 2021

Noncontrolling Interest [Abstract]

Non-Controlling Interests

Note 7—Non-Controlling Interests

Net Income Attributable to Non-Controlling Interests in the operations of the Company’s operating company and consolidated subsidiaries is comprised of the following:

	For the Three Months Ended March 31,
	2021		2020
	(in thousands)
Non-Controlling Interests of Pzena Investment Management, LLC	$	20,648	$	1,084
Non-Controlling Interests of Consolidated Subsidiaries		194		(315	)
Net Income Attributable to Non-Controlling Interests	$	20,842	$	769

Distributions to non-controlling interests represent tax allocations and dividend equivalents paid to the members of the operating company, as well as withdrawals from the Company’s consolidated subsidiaries.  Contributions from non-controlling interests represent contributions to the Company's consolidated subsidiaries.

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Investments

3 Months Ended

Mar. 31, 2021

Investments Debt And Equity Securities [Abstract]

Investments

Note 8—Investments

The following is a summary of Investments:

	As of
	March 31, 2021		December 31, 2020
	(in thousands)
Equity Investments, at Fair Value
Equity Securities	$	24,208	$	18,739
Mutual Funds		7,317		7,314
Total Equity Investments, at Fair Value		31,525		26,053
Investments in Equity Method Investees		9,894		8,051
Total	$	41,419	$	34,104

Investment, at Fair Value

Investments, at Fair Value consisted of the following at March 31, 2021:

	Cost		Unrealized Gain/(Loss)		Fair Value
	(in thousands)
Equity Securities	$	19,648	$	4,560	$	24,208
Mutual Funds		7,304		13		7,317
Total Equity Investments, at Fair Value	$	26,952	$	4,573	$	31,525

       Securities Sold Short, at Fair Value consisted of the following at March 31, 2021:

	Proceeds		Unrealized (Gain)/Loss		Fair Value
	(in thousands)
Equity Securities	$	699	$	44	$	743
Total Securities Sold Short, at Fair Value	$	699	$	44	$	743

Investments, at Fair Value consisted of the following at December 31, 2020:

	Cost		Unrealized Gain/(Loss)		Fair Value
	(in thousands)
Equity Securities	$	16,521	$	2,218	$	18,739
Mutual Funds		7,293		21		7,314
Total Equity Investments, at Fair Value	$	23,814	$	2,239	$	26,053

Securities Sold Short, at Fair Value consisted of the following at December 31, 2020:

	Proceeds		Unrealized (Gain)/Loss		Fair Value
	(in thousands)
Equity Securities	$	620	$	94	$	714
Total Securities Sold Short, at Fair Value	$	620	$	94	$	714

Equity Investments, at Fair Value

Equity investments, at fair value consist of equity securities held by the Company’s consolidated subsidiaries and individual investments held directly by the Company primarily for the purpose of satisfying certain of the Company’s obligations under its deferred compensation program. Equity investments, at fair value also includes investments in open-ended registered mutual funds for which the Company has neither control nor the ability to exercise significant influence. Equity investments are measured at fair value based on quoted market prices or published net asset values.

Trading Securities

Trading securities consists of fixed income investments held directly by the Company.  Fixed income investments are carried at fair value based on quoted market prices or market prices obtained from independent pricing services engaged by management.

Investments in Equity Method Investees

The operating company sponsors and provides investment management services to certain private investment partnerships and Pzena mutual funds through which it offers its investment strategies. The Company has made investments in certain of these private investment partnerships and mutual funds to satisfy its obligations under the Company's deferred compensation program and provide the initial cash investment in our mutual funds.  The Company holds a non-controlling interest and exercises significant influence in these entities, and accounts for its investments as equity method investments which are included in Equity Method Investments on the consolidated statements of financial condition. As of March 31, 2021, the Company's investments range between 1% and 7% of the capital of these entities and have an aggregate carrying value of $9.9 million.

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Fair Value Measurements

3 Months Ended

Mar. 31, 2021

Fair Value Disclosures [Abstract]

Fair Value Measurements

Note 9—Fair Value Measurements

The Fair Value Measurements and Disclosures Topic of the FASB ASC defines fair value as the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date.  The Fair Value Measurements and Disclosures Topic of the FASB ASC also establishes a framework for measuring fair value and a valuation hierarchy based upon the observability of inputs used in the valuation of an asset or liability. Classification within the hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The valuation hierarchy contains three levels: (i) valuation inputs are unadjusted quoted market prices for identical assets or liabilities in active markets (Level 1); (ii) valuation inputs are quoted prices for identical assets or liabilities in markets that are not active, quoted market prices for similar assets and liabilities in active markets, and other observable inputs directly or indirectly related to the asset or liability being measured (Level 2); and (iii) valuation inputs are unobservable and significant to the fair value measurement (Level 3).

Level 1 assets consist primarily of cash equivalents, equity investments at fair value, and securities sold short at fair value. Cash equivalent investments in actively traded money market funds are measured at amortized cost that approximates fair value. Equity securities and securities sold short are exchange-traded securities with quoted prices in active markets. The fair value of investments in mutual funds are based on a published net asset values.

Level 2 assets consist of debt securities for which the fair values are determined using independent third-party broker or dealer price quotes. U.S. Treasury bills are valued upon quoted market prices for similar assets in active markets, quoted prices for identical or similar assets that are not active and inputs other than quoted prices that are observable or corroborated by observable market data.  The fair value of corporate bonds is measured using various techniques, which consider recently executed transactions in securities of the issuer or comparable issuers, market price quotations (where observable), bond spreads and fundamental data relating to the issuer.

Also included in equity investments, at fair value, in the Company's consolidated statements of financial condition are investments in American Depositary Receipts (“ADRs”) and Global Depositary Receipts (“GDRs”). Certain of the Company’s ADRs and GDRs may not be listed on a public exchange and may be valued using an evaluated price based on a compilation of observable market information. Inputs used include currency factors, depositary receipt ratios, exchange prices of underlying and common stock of the same issuer, and adjustments for corporate actions. ADRs and GDRs valued using an evaluated price have been classified as Level 2.

The investments in equity method investees are held at their carrying value.

The following table presents these instruments’ fair value at March 31, 2021:

	Level 1		Level 2		Level 3		Total
Assets	(in thousands)
Cash Equivalents:
Money Market Funds	$	8	$	—	$	—	$	8
Equity Investments, at Fair Value:
Equity Securities		23,371		837		—		24,208
Mutual Funds		7,317		—		—		7,317
Total Assets	$	30,696	$	837	$	—	$	31,533
Liabilities
Securities Sold Short	$	743		—		—	$	743
Total Liabilities	$	743	$	—	$	—	$	743

The following table presents these instruments’ fair value at December 31, 2020:

	Level 1		Level 2		Level 3		Total
Assets	(in thousands)
Cash Equivalents:
Money Market Funds	$	8	$	—	$	—	$	8
Equity Investments, at Fair Value:
Equity Securities		18,006		733		—		18,739
Mutual Funds		7,314		—		—		7,314
Total Assets	$	25,328	$	733	$	—	$	26,061
Liabilities
Securities Sold Short		714		—		—		714
Total Liabilities	$	714	$	—	$	—	$	714

Transfers among levels, if any, are recorded as of the beginning of the reporting period. For each of the three months ended March 31, 2021 and 2020, there were no transfers between levels.  In addition, the Company did not hold any Level 3 securities during the three months ended March 31, 2021 or during the year ended December 31, 2020.

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Property and Equipment

3 Months Ended

Mar. 31, 2021

Property Plant And Equipment [Abstract]

Property and Equipment

Note 10—Property and Equipment

Property and Equipment, Net of Accumulated Depreciation is comprised of the following:

	As of
	March 31, 2021			December 31, 2020
	(in thousands)
Leasehold Improvements	$	6,929		$	6,929
Furniture and Fixtures		1,591			1,591
Computer Hardware		684			745
Computer Software		879			879
Office Equipment		212			212
Total		10,295			10,356
Less: Accumulated Depreciation and Amortization		(6,203	)		(5,980	)
Total	$	4,092		$	4,376

Depreciation is included in general and administrative expense and totaled approximately $0.3 million for both the three months ended March 31, 2021 and 2020.  .

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Related Party Transactions

3 Months Ended

Mar. 31, 2021

Related Party Transactions [Abstract]

Related Party Transactions

Note 11—Related Party Transactions

For the three months ended March 31, 2021 and 2020, the Company earned $0.2 million and $0.3 million, respectively, in investment advisory fees, net of expense reimbursements from unconsolidated VIEs that receive investment management services from the Company.

The Company offers loans to employees, excluding executive officers, for the purpose of financing tax obligations associated with compensatory stock and unit vesting.  Loans are generally written for a seven-year period, at an interest rate equivalent to the Applicable Federal Rate, payable in annual installments, and collateralized by shares and units held by the employee.  As of March 31, 2021 and December 31, 2020, the Company had approximately $3.3 million and $2.6 million, respectively, of such loans outstanding.

The operating company, as investment adviser for certain Pzena branded SEC-registered mutual funds, private placement funds, and non-U.S. funds, has contractually agreed to waive a portion or all of its management fees and pay fund expenses to ensure that the annual operating expenses of the funds stay below certain established total expense ratio thresholds.  For both of the three months ended March 31, 2021 and 2020, the Company recognized $0.3 million in such expenses.

The operating company manages personal funds of certain of the Company’s employees, including the CEO, and its two Presidents.  The operating company also manages accounts beneficially owned by a private fund in which certain of the Company’s executive officers invest.  Investments by employees in individual accounts are permitted only at the discretion of the executive committee of the operating company, but are generally not subject to the same minimum investment levels that are required of outside investors.  The operating company also manages personal funds of some of its employees’ family members.  Pursuant to the respective investment management agreements, the operating company waives or reduces its regular advisory fees for these accounts and personal funds.  In addition, the operating company pays custody and administrative fees for certain of these accounts and personal funds in order to incubate products or preserve performance history.  The aggregate value of the fees that the Company waived related to the Company’s executive officers, other employees, and family members, was approximately $0.3 million and $0.2 million for the three months ended March 31, 2021 and 2020, respectively.

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Commitments and Contingencies

3 Months Ended

Mar. 31, 2021

Commitments And Contingencies Disclosure [Abstract]

Commitments and Contingencies

Note 12—Commitments and Contingencies

In the normal course of business, the Company enters into agreements that include indemnities in favor of third parties, such as engagement letters with advisers and consultants. In certain cases, the Company may have recourse against third parties with respect to these indemnities. The Company maintains insurance policies that may provide coverage against certain claims under these indemnities. The Company has had no claims or payments pursuant to these agreements, and it believes the likelihood of a claim being made is remote. Utilizing the methodology in the Guarantees Topic of the FASB ASC, the Company’s estimate of the value of such guarantees is de minimis, therefore, no accrual has been made in the consolidated financial statements.

The Company leases office space under a non-cancelable operating lease agreement, which expires on December 31, 2025.  The Company recognizes minimum lease expense for its headquarters on a straight-line basis over the lease term.  The Company entered into a four-year sublease agreement commencing on October 1, 2016, which terminated on January 31, 2019. The Company entered into a new sublease agreement commencing on February 1, 2019, that expires on December 31, 2025. During October of 2020, the Company executed an amendment to the sublease agreement. The sublease agreement is cancelable by either the Company or sublessee upon at least six months prior written notice. Sublease income will continue to decrease annual lease expense by approximately $0.3 million per year.

During December 2018, the Company signed a non-cancellable amendment to the corporate headquarters lease to obtain additional space that expires on December 31, 2025. In accordance with ASC 842, Leases, the lease term commenced on February 1, 2019 and the Company recorded a Right-of-use Asset and Lease Liability on the consolidated statements of financial condition associated with the new lease.

During June 2019, the Company signed a non-cancellable lease to the business development and client service office in London to obtain additional space that expires on October 31, 2021.  In accordance with ASC 842, Leases, the lease term commenced on November 1, 2019 and the Company recorded a Right-of-use Asset and Lease Liability on the consolidated statements of financial condition associated with the new lease.

During each of the three months ended March 31, 2021 and 2020, lease expenses of $0.7 million are included in general and administrative expense.  This lease expense includes short-term lease expenses associated with the Company's office space in Australia. Short-term lease expense was $0.1 million for the three months ended March 31, 2021.  Lease expenses for both the three months ended March 31, 2021 and 2020, were net of $0.1 million of sublease income.

The following table presents the components of operating lease expense, as well as supplemental cash flow information, related to the Company’s leases:

	For the Three Months Ended March 31,
	2021
	(in thousands)
Operating lease expense1	$	589
Supplemental cash flow information:
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	601
Right-of-use assets obtained in exchange for lease obligations	$	—

1 Amounts have not been reduced by sublease income of $0.1 million recognized during the three months ended March 31, 2021.  

The following table presents information regarding the Company’s operating leases:

	As of
	March 31, 2021
	(in thousands)
Operating lease right-of-use assets	$	10,989
Operating lease liabilities	$	11,304
Weighted-average remaining lease term (in years)		4.7
Weighted-average discount rate		4.3	%

The maturities of lease liabilities are as follows (in thousands):

Year Ending December 31,	Operating Leases
2021 (excluding the three months ended March 31, 2021)	$	2,134
2022		2,574
2023		2,574
2024		2,596
2025		2,607
2026 and thereafter		-
Total undiscounted lease payments	$	12,485
Less discount		(1,181	)
Total lease liabilities	$	11,304

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Income Taxes

3 Months Ended

Mar. 31, 2021

Income Tax Disclosure [Abstract]

Income Taxes

Note 13—Income Taxes

The operating company is a limited liability company that has elected to be treated as a partnership for tax purposes.  The operating company has made a provision for New York City Unincorporated Business Tax (“UBT”) and its consolidated subsidiary Pzena Investment Management, LTD has made a provision for U.K. income taxes.  The Company's provision for income taxes reflects U.S. federal, state, and local incomes taxes on its allocable portion of the operating company's income.  The Company's effective tax rate for the three months ended March 31, 2021 and 2020 was 8.6% and 56.3%, respectively.  The effective tax rate includes a rate benefit attributable to the fact that approximately 78.4% and 77.1% of the operating company's earnings were not subject to corporate-level taxes for the three months ended March 31, 2021 and 2020, respectively.  Income before income taxes includes net income attributable to non-controlling interests and not taxable to the Company, which reduces the effective tax rate.

The Income Taxes Topic of the FASB ASC establishes the minimum threshold for recognizing, and a system for measuring, the benefits of tax return positions in financial statements.

As of March 31, 2021 and December 31, 2020, the Company had $8.1 million and $7.6 million in unrecognized tax benefits that, if recognized, would affect the provision for income taxes. As of March 31, 2021 and December 31, 2020, the Company had interest related to unrecognized tax benefits of $1.4 million and $1.2 million, respectively.  As of March 31, 2021 and December 31, 2020, no penalty accruals were recorded.

As of March 31, 2021 and December 31, 2020, the net values of all deferred tax assets were approximately $27.8 million and $29.8 million, respectively.  These deferred tax assets primarily reflect the future tax benefits associated with the Company's initial public offering, and the subsequent and future exchanges by holders of Class B units of the operating company for shares of Class A common stock.  At March 31, 2021 and December 31, 2020, the Company did not have a valuation allowance recorded against its deferred tax assets.

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Subsequent Events

3 Months Ended

Mar. 31, 2021

Subsequent Events [Abstract]

Subsequent Events

Note 14—Subsequent Events

On April 20, 2021, the Company’s Board of Directors approved and declared a quarterly dividend of $0.03 per share of its Class A common stock that will be paid on May 21, 2021 to holders of record on April 30, 2021.

No other subsequent events necessitated disclosures and/or adjustments.

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Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2021

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation:

The consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and related Securities and Exchange Commission (“SEC”) rules and regulations.  

Principles of Consolidation:

The Company’s policy is to consolidate those entities in which it has a direct or indirect controlling financial interest based on either the voting interest model or the variable interest model.  As such, the Company consolidates majority-owned subsidiaries in which it has a controlling financial interest, and certain investment vehicles the operating company sponsors for which it is the investment adviser that are considered to be variable-interest entities (“VIEs”), and for which the Company is deemed to be the primary beneficiary.

Pursuant to the Consolidation Topic of the FASB Accounting Standards Codification (“FASB ASC”), for legal entities evaluated for consolidation, the Company determines whether interests it holds and fees paid to the entity qualify as a variable interest.  If it is determined that the Company does not have a variable interest in the entity, no further analysis is required and the Company does not consolidate the entity.  If it is determined that the Company has a variable interest, it considers its direct interests and the proportionate indirect interests through related parties to determine if it is the primary beneficiary of the VIE.

For equity investments where the Company does not control the investee, and where it is not the primary beneficiary of a VIE, but can exert significant influence over the financial and operating policies of the investee, the Company follows the equity method of accounting.  The evaluation of whether the Company exerts control or significant influence over the financial and operating policies of the investee requires significant judgment based on the facts and circumstances surrounding each investment.  Factors considered in these evaluations may include the type of investment, the legal structure of the investee, the terms of the investment agreement, or other agreements with the investee.

The Company analyzes entities structured as series funds which comply with the requirements included in the Investment Company Act of 1940 for registered mutual funds as voting interest entities because the shareholders are deemed to have the ability to direct the activities of the fund that most significantly impact the fund's economic performance.

Consolidated Entities

The Company consolidates the financial results of the operating company and records in its own equity its pro-rata share of transactions that impact the operating company’s net equity, including unit and option issuances, repurchases, and retirements.  The operating company’s pro-rata share of such transactions are recorded as an adjustment to additional paid-in capital or non-controlling interests, as applicable, on the consolidated statements of financial condition.

The majority-owned subsidiaries in which the Company, through its interest in the operating company, has a controlling financial interest and the VIEs for which the Company is deemed to be the primary beneficiary are collectively referred to as “consolidated subsidiaries.”  Non-controlling interests recorded on the consolidated financial statements of the Company include the non-controlling interests of the outside investors in each of these entities, as well as those of the operating company.  All significant inter-company transactions and balances have been eliminated through consolidation.

On January 1, 2020, the Company redeemed its investment in the Pzena International Value Service (a series of Pzena Investment Management International, LLC). As the Company was no longer deemed the primary beneficiary of this entity, it deconsolidated the entity and removed the related assets, liabilities and non-controlling interest from the Company’s Consolidated Statements of Financial Condition.

During 2020, the Company provided the initial cash investment for a Pzena-branded Australian Registered Investment Scheme, Pzena Global Focused Value Fund, in an effort to generate an investment performance track record to attract third-party investors. The Company is considered the primary beneficiary of this entity. At March 31, 2021, Pzena Global Focused Value Fund’s $4.1 million in net assets were included in the Company’s Consolidated Statements of Financial Condition.

These consolidated investment partnerships are investment companies and apply specialized industry accounting for investment companies. The Company has retained this specialized accounting for these investment partnerships pursuant to U.S. GAAP.

Non-Consolidated Variable Interest Entities

VIEs that are not consolidated receive investment management services from the operating company and are generally private investment partnerships sponsored by the operating company.  The total net assets of these VIEs was approximately $308.9 million and $265.9 million at March 31, 2021 and December 31, 2020, respectively.  

As of March 31, 2021 and December 31, 2020, the operating company had $4.0 million and $3.2 million in investments in certain of these firm-sponsored vehicles, the majority of which are primarily held to satisfy certain of the Company’s obligations under its deferred compensation programs, for which the Company was not deemed to be the primary beneficiary.  The Company's exposure to risk of loss in the non-consolidated VIEs is generally limited to any equity investment and any uncollected management fees. As of March 31, 2021 and December 31, 2020, the Company's maximum exposure to loss as a result of its involvement with the non-consolidated VIEs was $4.2 million and $3.6 million, respectively.

Accounting Pronouncements Adopted in 2021

Accounting Pronouncements Adopted in 2021:

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The amendments simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. The amendments also improve consistent application of and simplify US GAAP for other areas of Topic 740 by clarifying and amending the existing guidance. We adopted this standard prospectively on January 1, 2021. The adoption of this standard did not have a material impact on our financial condition or results of operations.

Management's Use of Estimates

Management’s Use of Estimates:

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses for the period.  Actual results could materially differ from those estimates.

Revenue Recognition

Revenue Recognition:

Revenue, comprised of advisory fee income, is recognized over the period in which advisory services are provided. Advisory fee income includes management fees that are calculated based on percentages of assets under management (“AUM”), generally billed quarterly, either in arrears or advance, depending on the applicable contractual terms. Advisory fee income also includes performance fees that may be earned by the Company depending on the investment return of the AUM, as well as fulcrum fee arrangements. Performance fee arrangements generally entitle the Company to participate, on a fixed-percentage basis, in any returns generated in excess of an agreed-upon benchmark. The Company’s participation percentage in such return differentials is then multiplied by AUM to determine the performance fees earned. In general, returns are calculated on an annualized basis over the contract’s measurement period, which usually extends to three years. Performance fees are generally payable annually or quarterly. Fulcrum fee arrangements require a reduction in the base fee or allow for an increase in the base fee if the relevant investment strategy underperforms or outperforms, respectively, the agreed-upon benchmark over the contract's measurement period, which extends to three years. Fulcrum fees are generally payable quarterly. Following the Revenue Recognition Topic of the FASB ASC, performance fee income is recorded at the conclusion of the contractual performance period, when it is probable that significant reversal of the performance fee will not occur. Advisory fee income also includes fund expense cap reimbursements which are required to be presented net against Revenue rather than as a component of General and Administrative Expense.

Revenue from advisory fees is disaggregated into categories based on the composition of the Company's client base and advisory fee structure for the three months ended March 31, 2021 and 2020:

	For the Three Months Ended March 31,
Revenue	2021			2020
	(in thousands)
Separately Managed Accounts
Asset-Based Fees	$	24,547		$	18,696
Total Separately Managed Fees		24,547			18,696
Sub-Advised Accounts
Asset-Based Fees	$	17,623		$	13,723
Impact of Fulcrum Fees1		(995	)		(1,014	)
Performance-Based Fees		—			—
Total Sub-Advised Fees		16,628			12,709
Pzena Funds
Asset-Based Fees	$	4,951		$	3,600
Expense Cap Reimbursements		(255	)		(326	)
Performance-Based Fees		—		—
Total Pzena Funds Fees		4,696			3,274
Total	$	45,871		$	34,679

1 Represents the net impact of fulcrum fee arrangements which require a reduction in the base fee or allow for an increase in the base fee if the relevant investment strategy underperforms or outperforms, respectively, the agreed-upon benchmark over the contract's measurement period.

Cash and Cash Equivalents

Cash and Cash Equivalents:

At March 31, 2021 and December 31, 2020, Cash and Cash Equivalents was $29.7 million and $65.5 million, respectively.  The Company considers all money market funds and highly-liquid debt instruments with an original maturity of three months or less at the time of purchase to be cash equivalents. The Company maintains its cash in bank deposits, other accounts whose balances often exceed federally insured limits and treasury money market funds. Cash is stated at cost, which approximates fair value.

Interest on cash and cash equivalents is recorded as Interest Income on an accrual basis in the consolidated statements of operations.

Restricted Cash

Restricted Cash:

At both March 31, 2021 and December 31, 2020, the Company had $1.1 million of compensating balances recorded in Restricted Cash in the consolidated statements of financial condition. These balances reflect a letter of credit issued by a third party in lieu of a cash security deposit, as required by the Company’s lease for its corporate headquarters.

The following table reconciles cash, cash equivalents, and restricted cash per the consolidated statements of cash flows to the consolidated statements of financial condition.

	March 31, 2021		December 31, 2020		March 31, 2020		December 31, 2019
	(in thousands)
Cash and Cash Equivalents	$	29,650	$	65,534	$	20,527	$	52,480
Restricted Cash		1,054		1,050		1,040		1,036
Total	$	30,704	$	66,584	$	21,567	$	53,516

Due to/from Broker

Due to/from Broker:

Due to/from Broker consists primarily of amounts payable/receivable for unsettled securities transactions held/initiated at the clearing brokers of the Company and its consolidated subsidiaries.

Non-Cash Compensation

Non-Cash Compensation:

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.  Expenses associated with these awards are recognized over the period during which employees are required to provide service.  The Company accounts for forfeitures as they occur.

Investments

Investments:

Investments, at Fair Value

Investments, at Fair Value consist of equity securities at fair value held by the Company and its consolidated subsidiaries, as well as investments in open-ended registered mutual funds.  Management determines the appropriate classification of its investments at the time of purchase and re-evaluates such determination on an ongoing basis. Dividends and interest income associated with the Company's investments and the investments of the Company's consolidated subsidiaries are recognized as Dividend Income on an ex-dividend basis and Interest Income, respectively, in the consolidated statements of operations.

Securities Sold Short represents securities sold short at fair value, not yet purchased by the Company. Dividend expense associated with these investments is recognized in Other Income/ (Expense) on an ex-dividend basis in the consolidated statements of operations.

All such investments are recorded at fair value, with net realized and unrealized gains and losses recognized as a component of Net Realized and Unrealized Gains/ (Losses) from Investments in the consolidated statements of operations.

Investments in equity method investees

The Company accounts for its investments in certain private investment partnerships in which the Company has non-controlling interests and exercises significant influence, using the equity method.  These investments are included in Investments in the Company's consolidated statements of financial condition.  The carrying value of these investments is recorded at the amount of capital reported by the private investment partnership or mutual fund.  The capital account for each entity reflects any contributions paid to, distributions received from, and equity earnings of, the relevant entity.  The earnings of these investments are recognized as Equity in Earnings/ (Losses) of Affiliates in the consolidated statements of operations.

Investments in equity method investees are evaluated for impairment as events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable.  If the carrying amounts of the assets exceed their respective fair values, additional impairment tests are performed to measure the amounts of impairment losses, if any.  During the three months ended March 31, 2021 and 2020, no impairment losses were recognized.

Securities Valuation

Securities Valuation:

Investments in equity securities and securities sold short for which market quotations are available are valued at the last reported price or closing price on the primary market or exchange on which they trade. If no reported equity sales occurred on the valuation date, equity investments are valued at the bid price. Investments in registered mutual funds are carried at fair value at their respective net asset values as of the valuation date. Otherwise, fair values for investment securities are based on Level 2 or Level 3 inputs detailed in Note 9. Transactions are recorded on a trade date basis.

The net realized gain or loss on sales of equity securities and securities sold short is determined on a specific identification basis and is included in Net Realized and Unrealized Gains/ (Losses) from Investments in the consolidated statements of operations.

Concentrations of Credit Risk

Concentrations of Credit Risk:

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents, amounts due from brokers, and advisory fees receivable.  The Company maintains its cash in bank deposits and other accounts whose balances often exceed federally insured limits.

The concentration of credit risk with respect to advisory fees receivable is generally limited due to the short payment terms extended to clients by the Company.  On a periodic basis, the Company evaluates its advisory fees receivable and establishes an allowance for doubtful accounts, if necessary, based on a history of past write-offs, collections, and current credit conditions.  At both March 31, 2021 and December 31, 2020, there was no allowance for doubtful accounts.

Property and Equipment

Property and Equipment:

Property and equipment is carried at cost, less accumulated depreciation and amortization.  Depreciation is provided on a straight-line basis over the estimated useful lives of the respective assets, except for leasehold improvements, which range from three to seven years.  Leasehold improvements are amortized on a straight-line basis over the shorter of the useful life of the improvements or the remaining lease term.

Leases

Leases:

The Company determines if an arrangement is a lease at inception. Operating leases are included as a component of Right-of-use (“ROU”) Assets and Lease Liabilities on the consolidated statements of financial condition. ROU assets represent the right to use an underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. The lease terms may include options to extend or terminate the lease. These options to extend or terminate are assessed on a lease-by-lease basis, and the ROU assets and lease liabilities are adjusted when it is reasonably certain that an option will be exercised. If a lease arrangement does not provide an implicit rate, the Company uses an incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. Lease expense for lease payments is recognized on a straight-line basis over the lease term.

Lease expense associated with leases that have a term of 12 months or less as of the commencement date are recognized as a component of general and administrative expenses on a straight-line basis over the lease term.

Share Repurchases

Share Repurchases:

Share repurchases may be made from time-to-time in open market transactions or through privately negotiated transactions under the authorization approved by the Board of Directors. The Company charges the entire excess of cost over par to additional paid-in capital. If the Company’s additional paid-in capital balance is reduced to zero, any additional amounts are recognized in retained earnings.

Business Segments

Business Segments:

The Company views its operations as comprising one operating segment.

Income Taxes

Income Taxes:

The Company is organized as a “C” corporation under the Internal Revenue Code, and thus liable for federal, state, and local taxes on the income derived from its economic interest in its operating company.  The operating company is a limited liability company that has elected to be treated as a partnership for tax purposes.  It has not made a provision for federal or state income taxes because it is the individual responsibility of each of the operating company’s members (including the Company) to separately report their proportionate share of the operating company’s taxable income or loss.  The operating company has made a provision for New York City Unincorporated Business Tax (“UBT”) and its consolidated subsidiary Pzena Investment Management, LTD has made a provision for U.K. income taxes.  The effective tax rate for interim periods represents the Company’s best estimate of the effective tax rate expected to be applied to the full fiscal year, adjusted for discrete items recognized during the quarter.

Judgment is required in evaluating the Company's uncertain tax positions and determining its provision for income taxes. The Company establishes liabilities for tax-related uncertainties based on estimates of whether, and the extent to which, additional taxes will be due. These liabilities are established when the Company believes that certain positions might be challenged despite its belief that its tax return positions are in accordance with applicable tax laws. The Company adjusts these liabilities in light of changing facts and circumstances, such as the closing of a tax audit, new tax legislation or the change of an estimate. To the extent that the final tax outcome of these matters is different than the amounts recorded, such differences will affect the provision for income taxes in the period in which such determination is made. The provision for income taxes includes the effect of reserve provisions and changes to reserves that are considered appropriate.  It is also the Company’s

policy to recognize accrued interest, and penalties associated with uncertain tax positions in Income Tax Expense on the consolidated statements of operations.

The Company and its consolidated subsidiaries account for all U.S. federal, state, local, and U.K. taxation pursuant to the asset and liability method, which requires deferred income tax assets and liabilities to be recorded for temporary differences between the carrying amount and tax bases of assets and liabilities that will result in taxable or deductible amounts in the future, based on enacted tax laws and rates applicable to the periods in which the temporary differences are expected to affect taxable income.  Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount more-likely-than-not to be realized.  At both March 31, 2021 and December 31, 2020, the Company did not have a valuation allowance recorded against its deferred tax assets.

The income tax expense, or benefit, is the tax payable or refundable for the period, plus or minus the change during the period in deferred tax assets and liabilities. The Company records its deferred tax liabilities as a component of other liabilities in the consolidated statements of financial condition. All excess tax benefits or tax deficiencies related to stock- and unit-transactions are reflected in the consolidated statements of operations as a component of the provision for income taxes.

Tax Receivable Agreement

Tax Receivable Agreement:

The Company’s purchase of membership units of the operating company concurrent with its initial public offering, and the subsequent and future exchanges by holders of Class B units of the operating company for shares of the Company’s Class A common stock (pursuant to the exchange rights provided for in the operating company’s operating agreement), have resulted in, and are expected to continue to result in, increases in the Company’s share of the tax basis of the tangible and intangible assets of the operating company, which will increase the tax depreciation and amortization deductions that otherwise would not have been available to the Company.  These increases in tax basis and tax depreciation and amortization are each deductible for tax purposes over a period of 15 years and have reduced, and are expected to continue to reduce, the amount of cash taxes that the Company would otherwise be required to pay in the future. The Company has entered into a tax receivable agreement with past, current, and future members of the operating company that requires the Company to pay to any member involved in any exchange transaction 85% of the amount of cash tax savings, if any, in U.S. federal, state and local income tax or foreign or franchise tax that it realizes as a result of these increases in tax basis and, in limited cases, transfers or prior increases in tax basis.  The Company expects to benefit from the remaining 15% of cash tax savings, if any, in income tax it realizes.  Payments under the tax receivable agreement will be based on the tax reporting positions that the Company will determine.  The Company will not be reimbursed for any payments previously made under the tax receivable agreement if a tax basis increase is successfully challenged by the Internal Revenue Service.  

The Company records an increase in deferred tax assets for the estimated income tax effects of the increases in tax basis based on enacted federal and state tax rates at the date of the exchange.  The Company records 85% of the estimated realizable tax benefit (which is the recorded deferred tax asset less any recorded valuation allowance) as an increase to the liability due under the tax receivable agreement, which is reflected as the liability to selling and converting shareholders in the accompanying consolidated financial statements.  The remaining 15% of the estimated realizable tax benefit is initially recorded as an increase to the Company’s additional paid-in capital.  All of the effects to the deferred tax asset of changes in any of the estimates after the tax year of the exchange will be reflected in the provision for income taxes.  Similarly, the effect of subsequent changes in the enacted tax rates will be reflected in the provision for income taxes.

If the Company exercises its right to terminate the tax receivable agreement early, the Company will be obligated to make an early termination payment to the selling and converting shareholders, based upon the net present value (based upon certain assumptions and deemed events set forth in the tax receivable agreement) of all payments that would be required to be paid by the Company under the tax receivable agreement.  If certain change of control events were to occur, the Company would be obligated to make an early termination payment.

Foreign Currency

Foreign Currency:

The functional and reporting currency of the Company is the U.S. Dollar.  Assets and liabilities of foreign operations whose functional currency is not the U.S. Dollar are translated at the exchange rate in effect at the applicable reporting date, and the consolidated statements of operations are translated at the average exchange rates in effect during the applicable period.  A charge or credit is recorded to other comprehensive income to reflect the translation of these amounts to the extent the non-U.S. currency is designated the functional currency of the subsidiary.  Non-functional currency related transaction gains and losses are immediately recorded in other income on the consolidated statements of operations.  For the three months ended March 31, 2021 and 2020, the Company recorded less than $0.1 million and $0.5 million, respectively, of other comprehensive loss associated with foreign currency translation adjustments.

Investment securities and other assets and liabilities denominated in foreign currencies are remeasured into U.S. Dollar amounts at the date of valuation.  Purchases and sales of investment securities, and income and expense items denominated in foreign currencies, are remeasured into U.S. Dollar amounts on the respective dates of such transactions.

The Company does not isolate the portion of the results of its operations resulting from the impact of fluctuations in foreign exchange rates on its non-U.S. investments.  Such fluctuations are included in Net Realized and Unrealized Gains/ (Losses) from Investments in the consolidated statements of operations.

Reported net realized foreign exchange gains or losses arise from sales of foreign currencies, currency gains or losses realized between the trade and settlement dates on securities transactions, and the difference between the amounts of dividends, interest, foreign withholding taxes, and other receivables and payables recorded on the Company’s consolidated statements of financial condition and the U.S. Dollar equivalent of the amounts actually received or paid.  Net unrealized foreign exchange gains and losses arise from changes in the fair values of assets and liabilities resulting from changes in exchange rates.

Fair Value Measurements

The Fair Value Measurements and Disclosures Topic of the FASB ASC defines fair value as the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date.  The Fair Value Measurements and Disclosures Topic of the FASB ASC also establishes a framework for measuring fair value and a valuation hierarchy based upon the observability of inputs used in the valuation of an asset or liability. Classification within the hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The valuation hierarchy contains three levels: (i) valuation inputs are unadjusted quoted market prices for identical assets or liabilities in active markets (Level 1); (ii) valuation inputs are quoted prices for identical assets or liabilities in markets that are not active, quoted market prices for similar assets and liabilities in active markets, and other observable inputs directly or indirectly related to the asset or liability being measured (Level 2); and (iii) valuation inputs are unobservable and significant to the fair value measurement (Level 3).

Level 1 assets consist primarily of cash equivalents, equity investments at fair value, and securities sold short at fair value. Cash equivalent investments in actively traded money market funds are measured at amortized cost that approximates fair value. Equity securities and securities sold short are exchange-traded securities with quoted prices in active markets. The fair value of investments in mutual funds are based on a published net asset values.

Level 2 assets consist of debt securities for which the fair values are determined using independent third-party broker or dealer price quotes. U.S. Treasury bills are valued upon quoted market prices for similar assets in active markets, quoted prices for identical or similar assets that are not active and inputs other than quoted prices that are observable or corroborated by observable market data.  The fair value of corporate bonds is measured using various techniques, which consider recently executed transactions in securities of the issuer or comparable issuers, market price quotations (where observable), bond spreads and fundamental data relating to the issuer.

Also included in equity investments, at fair value, in the Company's consolidated statements of financial condition are investments in American Depositary Receipts (“ADRs”) and Global Depositary Receipts (“GDRs”). Certain of the Company’s ADRs and GDRs may not be listed on a public exchange and may be valued using an evaluated price based on a compilation of observable market information. Inputs used include currency factors, depositary receipt ratios, exchange prices of underlying and common stock of the same issuer, and adjustments for corporate actions. ADRs and GDRs valued using an evaluated price have been classified as Level 2.

The investments in equity method investees are held at their carrying value.

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Organization (Tables)

3 Months Ended

Mar. 31, 2021

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Summary of entities

The Company, through its interest in the operating company, has consolidated the results of operations and financial condition of the following entities as of March 31, 2021: 

		Ownership at
Legal Entity	Type of Entity (Date of Formation)	March 31, 2021
Pzena Investment Management, Pty	Australian Proprietary Limited Company (12/16/2009)	100.0%
Pzena Financial Services, LLC	Delaware Limited Liability Company (10/15/2013)	100.0%
Pzena Investment Management, LTD	England and Wales Private Limited Company (01/08/2015)	100.0%
Pzena U.S. Best Ideas (GP), LLC	Delaware Limited Liability Company (11/16/2017)	100.0%
Pzena Global Best Ideas (GP), LLC	Delaware Limited Liability Company (2/15/2018)	100.0%
Pzena Investment Management International 2, LLC	Delaware Limited Liability Company (1/21/2020)	100.0%
Pzena Investment Management Special Situations, LLC	Delaware Limited Liability Company (12/01/2010)	99.9%
Pzena Global Focused Value Fund	Australian Registered Investment Scheme (6/10/2016)	98.7%
Pzena International Small Cap Value Fund, a series of Advisors Series Trust	Open-end Management Investment Company, series of Delaware Statutory Trust (6/28/2018)	58.1%

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Significant Accounting Policies (Tables)

3 Months Ended

Mar. 31, 2021

Accounting Policies [Abstract]

Disaggregation of Revenue

Revenue from advisory fees is disaggregated into categories based on the composition of the Company's client base and advisory fee structure for the three months ended March 31, 2021 and 2020:

	For the Three Months Ended March 31,
Revenue	2021			2020
	(in thousands)
Separately Managed Accounts
Asset-Based Fees	$	24,547		$	18,696
Total Separately Managed Fees		24,547			18,696
Sub-Advised Accounts
Asset-Based Fees	$	17,623		$	13,723
Impact of Fulcrum Fees1		(995	)		(1,014	)
Performance-Based Fees		—			—
Total Sub-Advised Fees		16,628			12,709
Pzena Funds
Asset-Based Fees	$	4,951		$	3,600
Expense Cap Reimbursements		(255	)		(326	)
Performance-Based Fees		—		—
Total Pzena Funds Fees		4,696			3,274
Total	$	45,871		$	34,679

1 Represents the net impact of fulcrum fee arrangements which require a reduction in the base fee or allow for an increase in the base fee if the relevant investment strategy underperforms or outperforms, respectively, the agreed-upon benchmark over the contract's measurement period.

Schedule of Cash and Cash Equivalents

The following table reconciles cash, cash equivalents, and restricted cash per the consolidated statements of cash flows to the consolidated statements of financial condition.

	March 31, 2021		December 31, 2020		March 31, 2020		December 31, 2019
	(in thousands)
Cash and Cash Equivalents	$	29,650	$	65,534	$	20,527	$	52,480
Restricted Cash		1,054		1,050		1,040		1,036
Total	$	30,704	$	66,584	$	21,567	$	53,516

Schedule of Restricted Cash

The following table reconciles cash, cash equivalents, and restricted cash per the consolidated statements of cash flows to the consolidated statements of financial condition.

	March 31, 2021		December 31, 2020		March 31, 2020		December 31, 2019
	(in thousands)
Cash and Cash Equivalents	$	29,650	$	65,534	$	20,527	$	52,480
Restricted Cash		1,054		1,050		1,040		1,036
Total	$	30,704	$	66,584	$	21,567	$	53,516

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Compensation and Benefits (Tables)

3 Months Ended

Mar. 31, 2021

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Summary of compensation and benefits expense to employees and members

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

	For the Three Months Ended March 31,
	2021		2020
	(in thousands)
Cash Compensation and Other Benefits	$	15,346	$	16,250
Non-Cash Compensation		3,789		2,890
Total Compensation and Benefits Expense	$	19,135	$	19,140

Schedule of share based compensation activity

Details of non-cash compensation awards granted during the three months ended March 31, 2021 and 2020 are as follows:

	For the Three Months Ended March 31,
	2021				2020
	Amount		Fair Value1		Amount		Fair Value1
Class B-1 Units2		1,438,767	$	2.40		2,092,879	$	3.98
Options to Purchase Shares of Class A Common Stock3		—	$	—		146,804	$	2.03
Restricted Shares of Class A Common Stock4		—	$	—		16,806	$	4.74

1 Represents the weighted average grant date estimated fair value per share, unit, or option as of March 31, 2021 and 2020.

2 Represents 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. 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.

3 Represents 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.

4 Represents shares of Class A common stock issued under the 2007 Equity Incentive Plan.  These shares vest ratably over a period of four years from the date of grant.  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.

Details of these awards issued on January 1, 2021 are as follows:

	January 1,
	2021
	Amount		Fair Value1
Delayed Exchange Class B Units2		805,987	$	4.67
Restricted Shares of Class A Common Stock3		12,353	$	4.67

1 Represents the weighted average grant date estimated fair value per share or unit as of December 31, 2020.

2 Represents 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.

3 Represents 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.

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Earnings per Share (Tables)

3 Months Ended

Mar. 31, 2021

Earnings Per Share [Abstract]

Summary of basic earnings per share

For the three months ended March 31, 2021 and 2020, the Company’s basic earnings per share was determined as follows:

	For the Three Months Ended March 31,
	2021		2020
	(in thousands, except share and per share amounts)
Net Income for Basic Earnings per Share Allocated to:
Class A Common Stock	$	4,182	$	—
Participating Shares of Restricted Class A Common Stock		5	—
Total Net Income for Basic Earnings per Share	$	4,187	$	—
Basic Weighted-Average Shares Outstanding		17,220,424		17,790,184
Add: Participating Shares of Restricted Class A Common Stock1		19,988	—
Total Basic Weighted-Average Shares Outstanding		17,240,412		17,790,184
Basic Earnings per Share	$	0.24	$	—

1 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 months ended March 31, 2021 and 2020, the Company’s diluted net income was determined as follows: 

	For the Three Months Ended March 31,
	2021		2020
	(in thousands)
Net Income Attributable to Non-Controlling Interests of Pzena Investment Management, LLC	$	20,648	$	1,084
Less: Assumed Corporate Income Taxes		5,104		324
Assumed After-Tax Income of Pzena Investment Management, LLC		15,544		760
Net Income of Pzena Investment Management, Inc.		4,187		—
Diluted Net Income	$	19,731	$	760

Summary of diluted earnings per share

For the three months ended March 31, 2021 and 2020, the Company’s diluted earnings per share were determined as follows:

	For the Three Months Ended March 31,
	2021		2020
	(in thousands, except share and per share amounts)
Diluted Net Income Allocated to:
Class A Common Stock	$	17,938	$	701
Participating Shares of Restricted Class A Common Stock		5		—
Participating Class B Units		1,788		59
Total Diluted Net Income Attributable to Shareholders	$	19,731	$	760
Total Basic Weighted-Average Shares Outstanding		17,240,412		17,790,184
Dilutive Effect of Class B Units		55,425,613		53,885,546
Dilutive Effect of Options1		1,123,539		37,016
Dilutive Effect of Phantom Class B Units & Phantom Shares of Class A Common Stock		2,393,896		1,857,799
Dilutive Effect of Restricted Shares of Class A Common Stock2		29,240		21,686
Dilutive Weighted-Average Shares Outstanding		76,212,700		73,592,231
Add: Participating Class B Units and Class B-1 Units3		7,239,297		5,990,916
Total Dilutive Weighted-Average Shares Outstanding		83,451,997		79,583,147
Diluted Earnings per Share4	$	0.24	$	—

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

2 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.

3 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. Vested and unvested Class B-1 units are entitled to receive distributions for the duration of the holder’s employment with the operating company, will participate in additional value to the extent there has been appreciation subsequent to the issuance of the Class B-1 membership unit. Unvested Class B units and vested and unvested Class B-1 units are included in the computation of diluted earnings per share using the two-class method for participating securities.

4 During the three months ended March 31, 2020, the calculation of diluted earnings per share resulted in an increase in earnings per share. Therefore, diluted earnings per share is assumed to be equal to basic earnings per share.

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Non-Controlling Interests (Tables)

3 Months Ended

Mar. 31, 2021

Noncontrolling Interest [Abstract]

Non-controlling interest income

Net Income Attributable to Non-Controlling Interests in the operations of the Company’s operating company and consolidated subsidiaries is comprised of the following:

	For the Three Months Ended March 31,
	2021		2020
	(in thousands)
Non-Controlling Interests of Pzena Investment Management, LLC	$	20,648	$	1,084
Non-Controlling Interests of Consolidated Subsidiaries		194		(315	)
Net Income Attributable to Non-Controlling Interests	$	20,842	$	769

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Investments (Tables)

3 Months Ended

Mar. 31, 2021

Investments Debt And Equity Securities [Abstract]

Summary of investments

The following is a summary of Investments:

	As of
	March 31, 2021		December 31, 2020
	(in thousands)
Equity Investments, at Fair Value
Equity Securities	$	24,208	$	18,739
Mutual Funds		7,317		7,314
Total Equity Investments, at Fair Value		31,525		26,053
Investments in Equity Method Investees		9,894		8,051
Total	$	41,419	$	34,104

Investments, at Fair Value

Investments, at Fair Value consisted of the following at March 31, 2021:

	Cost		Unrealized Gain/(Loss)		Fair Value
	(in thousands)
Equity Securities	$	19,648	$	4,560	$	24,208
Mutual Funds		7,304		13		7,317
Total Equity Investments, at Fair Value	$	26,952	$	4,573	$	31,525

       Securities Sold Short, at Fair Value consisted of the following at March 31, 2021:

	Proceeds		Unrealized (Gain)/Loss		Fair Value
	(in thousands)
Equity Securities	$	699	$	44	$	743
Total Securities Sold Short, at Fair Value	$	699	$	44	$	743

Investments, at Fair Value consisted of the following at December 31, 2020:

	Cost		Unrealized Gain/(Loss)		Fair Value
	(in thousands)
Equity Securities	$	16,521	$	2,218	$	18,739
Mutual Funds		7,293		21		7,314
Total Equity Investments, at Fair Value	$	23,814	$	2,239	$	26,053

Securities Sold Short, at Fair Value consisted of the following at December 31, 2020:

	Proceeds		Unrealized (Gain)/Loss		Fair Value
	(in thousands)
Equity Securities	$	620	$	94	$	714
Total Securities Sold Short, at Fair Value	$	620	$	94	$	714

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Fair Value Measurements (Tables)

3 Months Ended

Mar. 31, 2021

Fair Value Disclosures [Abstract]

Schedule of Fair Value Measurements

The following table presents these instruments’ fair value at March 31, 2021:

	Level 1		Level 2		Level 3		Total
Assets	(in thousands)
Cash Equivalents:
Money Market Funds	$	8	$	—	$	—	$	8
Equity Investments, at Fair Value:
Equity Securities		23,371		837		—		24,208
Mutual Funds		7,317		—		—		7,317
Total Assets	$	30,696	$	837	$	—	$	31,533
Liabilities
Securities Sold Short	$	743		—		—	$	743
Total Liabilities	$	743	$	—	$	—	$	743

The following table presents these instruments’ fair value at December 31, 2020:

	Level 1		Level 2		Level 3		Total
Assets	(in thousands)
Cash Equivalents:
Money Market Funds	$	8	$	—	$	—	$	8
Equity Investments, at Fair Value:
Equity Securities		18,006		733		—		18,739
Mutual Funds		7,314		—		—		7,314
Total Assets	$	25,328	$	733	$	—	$	26,061
Liabilities
Securities Sold Short		714		—		—		714
Total Liabilities	$	714	$	—	$	—	$	714

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Property and Equipment (Tables)

3 Months Ended

Mar. 31, 2021

Property Plant And Equipment [Abstract]

Property and equipment

Property and Equipment, Net of Accumulated Depreciation is comprised of the following:

	As of
	March 31, 2021			December 31, 2020
	(in thousands)
Leasehold Improvements	$	6,929		$	6,929
Furniture and Fixtures		1,591			1,591
Computer Hardware		684			745
Computer Software		879			879
Office Equipment		212			212
Total		10,295			10,356
Less: Accumulated Depreciation and Amortization		(6,203	)		(5,980	)
Total	$	4,092		$	4,376

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Commitments and Contingencies (Tables)

3 Months Ended

Mar. 31, 2021

Commitments And Contingencies Disclosure [Abstract]

Components of Operating Lease Expense and Supplemental Cash Flow Information

The following table presents the components of operating lease expense, as well as supplemental cash flow information, related to the Company’s leases:

	For the Three Months Ended March 31,
	2021
	(in thousands)
Operating lease expense1	$	589
Supplemental cash flow information:
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	601
Right-of-use assets obtained in exchange for lease obligations	$	—

1 Amounts have not been reduced by sublease income of $0.1 million recognized during the three months ended March 31, 2021.  

Information Regarding Operating Leases

The following table presents information regarding the Company’s operating leases:

	As of
	March 31, 2021
	(in thousands)
Operating lease right-of-use assets	$	10,989
Operating lease liabilities	$	11,304
Weighted-average remaining lease term (in years)		4.7
Weighted-average discount rate		4.3	%

Maturities of Lease Liabilities

The maturities of lease liabilities are as follows (in thousands):

Year Ending December 31,	Operating Leases
2021 (excluding the three months ended March 31, 2021)	$	2,134
2022		2,574
2023		2,574
2024		2,596
2025		2,607
2026 and thereafter		-
Total undiscounted lease payments	$	12,485
Less discount		(1,181	)
Total lease liabilities	$	11,304

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Organization (Details)	3 Months Ended
	Mar. 31, 2021
Pzena Investment Management, Pty
Entity Information [Line Items]
Type of Entity (Date of Formation)	Australian Proprietary Limited Company (12/16/2009)
Operating company's ownership	100.00%
Pzena Financial Services, LLC
Entity Information [Line Items]
Type of Entity (Date of Formation)	Delaware Limited Liability Company (10/15/2013)
Operating company's ownership	100.00%
Pzena Investment Management, LTD
Entity Information [Line Items]
Type of Entity (Date of Formation)	England and Wales Private Limited Company (01/08/2015)
Operating company's ownership	100.00%
Pzena U.S. Best Ideas (GP), LLC
Entity Information [Line Items]
Type of Entity (Date of Formation)	Delaware Limited Liability Company (11/16/2017)
Operating company's ownership	100.00%
Pzena Global Best Ideas (GP), LLC
Entity Information [Line Items]
Type of Entity (Date of Formation)	Delaware Limited Liability Company (2/15/2018)
Operating company's ownership	100.00%
Pzena Investment Management International 2, LLC
Entity Information [Line Items]
Type of Entity (Date of Formation)	Delaware Limited Liability Company (1/21/2020)
Operating company's ownership	100.00%
Pzena Investment Management Special Situations, LLC
Entity Information [Line Items]
Type of Entity (Date of Formation)	Delaware Limited Liability Company (12/01/2010)
Operating company's ownership	99.90%
Pzena Global Focused Value Fund
Entity Information [Line Items]
Type of Entity (Date of Formation)	Australian Registered Investment Scheme (6/10/2016)
Operating company's ownership	98.70%
Pzena International Small Cap Value Fund, a Series of Advisors Series Trust
Entity Information [Line Items]
Type of Entity (Date of Formation)	Open-end Management Investment Company, series of Delaware Statutory Trust (6/28/2018)
Operating company's ownership	58.10%

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Significant Accounting Policies - Basis of Presentation (Details) - USD ($)	Mar. 31, 2021	Dec. 31, 2020
Variable Interest Entity [Line Items]
Equity method investment, assets	$ 162,158,000	$ 188,687,000
Maximum loss exposure	4,200,000	3,600,000
Variable Interest Entity, Not Primary Beneficiary
Variable Interest Entity [Line Items]
Equity method investment, assets	4,000,000.0	3,200,000
Equity Method Investment, Nonconsolidated Investee or Group of Investees | Pzena Global Focused Value Fund
Variable Interest Entity [Line Items]
Equity method investment, assets	4,100,000
Equity Method Investment, Nonconsolidated Investee or Group of Investees | VIEs that are not consolidated
Variable Interest Entity [Line Items]
Equity method investment, assets	$ 308,900,000	$ 265,900,000

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Significant Accounting Policies - Additional Information (Details)	3 Months Ended
	Mar. 31, 2021 USD ($) segment		Mar. 31, 2020 USD ($)	Dec. 31, 2020 USD ($)		Dec. 31, 2019 USD ($)
Revenue Recognition
Contract measurement period (in years)	3 years
Cash and Cash Equivalents
Cash	$ 29,650,000	[1]	$ 20,527,000	$ 65,534,000	[1]	$ 52,480,000
Restricted Cash	1,054,000		1,040,000	1,050,000		$ 1,036,000
Investments
Impairment losses recognized	0		0
Concentration of Credit Risk
Allowance for doubtful accounts receivable	$ 0			0
Leases
Lease term	12 months
Business Segments
Number of operating segments (in segments) | segment	1
Income Taxes
Valuation allowance on deferred tax assets	$ 0			$ 0
Section 754 election tax deduction period	15 years
Cash savings generated by this election will be distributed to selling and converting shareholders upon realization (in hundredth)	85.00%
Percentage of cash tax savings in income tax if realizes company expects to benefit	15.00%
Percentage of estimated realizable tax benefit added to liability due under tax receivable agreement	85.00%
Cash savings generated by this election will increase additional paid-in capital	15.00%
Foreign Currency
Other comprehensive loss associated with foreign currency translation adjustments	$ 12,000		505,000
Maximum
Foreign Currency
Other comprehensive loss associated with foreign currency translation adjustments	$ 100,000		$ 500,000
Equipment | Minimum
Property Plant and Equipment
Property and equipment, useful life (years)	3 years
Equipment | Maximum
Property Plant and Equipment
Property and equipment, useful life (years)	7 years

[1] Asset and liability amounts in parentheses represent the aggregated balances at March 31, 2021 and December 31, 2020 attributable to Pzena Investment Management Special Situations, LLC, Pzena U.S. Best Ideas (GP), LLC, Pzena Global Best Ideas (GP), LLC, and Pzena Global Focus Value Fund which were variable interest entities as of March 31, 2021 and December 31, 2020, respectively.

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Significant Accounting Policies - Disaggregation of Revenue (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Disaggregation of Revenue [Line Items]
Revenues	$ 45,871	$ 34,679
Asset-Based Fees
Disaggregation of Revenue [Line Items]
Revenues	24,547	18,696
Separately Managed Accounts
Disaggregation of Revenue [Line Items]
Revenues	24,547	18,696
Asset-Based Fees
Disaggregation of Revenue [Line Items]
Revenues	17,623	13,723
Impact of Fulcrum Fees
Disaggregation of Revenue [Line Items]
Revenues	(995)	(1,014)
Performance-Based Fees
Disaggregation of Revenue [Line Items]
Revenues		0
Sub-Advised Accounts
Disaggregation of Revenue [Line Items]
Revenues	16,628	12,709
Asset-Based Fees
Disaggregation of Revenue [Line Items]
Revenues	4,951	3,600
Expense Cap Reimbursements
Disaggregation of Revenue [Line Items]
Revenues	(255)	(326)
Performance-Based Fees
Disaggregation of Revenue [Line Items]
Revenues		0
Pzena Funds
Disaggregation of Revenue [Line Items]
Revenues	$ 4,696	$ 3,274

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Significant Accounting Policies - Cash, Cash Equivalents, and Restricted Cash (Details) - USD ($) $ in Thousands	Mar. 31, 2021		Dec. 31, 2020		Mar. 31, 2020	Dec. 31, 2019
Cash and Cash Equivalents
Cash	$ 29,650	[1]	$ 65,534	[1]	$ 20,527	$ 52,480
Restricted Cash	1,054		1,050		1,040	1,036
Total	$ 30,704		$ 66,584		$ 21,567	$ 53,516

[1] Asset and liability amounts in parentheses represent the aggregated balances at March 31, 2021 and December 31, 2020 attributable to Pzena Investment Management Special Situations, LLC, Pzena U.S. Best Ideas (GP), LLC, Pzena Global Best Ideas (GP), LLC, and Pzena Global Focus Value Fund which were variable interest entities as of March 31, 2021 and December 31, 2020, respectively.

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Compensation and Benefits - Schedule Compensation and Benefits Expense (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]
Cash Compensation and Other Benefits	$ 15,346	$ 16,250
Non-Cash Compensation	3,789	2,890
Total Compensation and Benefits Expense	$ 19,135	$ 19,140

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Compensation and Benefits - Non-cash Compensation Awards (Details) - $ / shares			3 Months Ended
	Jan. 01, 2021	May 01, 2020	Mar. 31, 2021	Mar. 31, 2020
2007 Equity Incentive Plan | Options to Purchase Shares of Class A Common Stock
Compensation Arrangements [Line Items]
Grants in period (in shares)			0	146,804
Grants in period, weighted average grant date fair value (USD per share)			$ 0	$ 2.03
Vesting period for units (in years)		5 years
Shares available for future issuance		146,804
2007 Equity Incentive Plan | Class B-1 Units
Compensation Arrangements [Line Items]
Grants in period (in shares)			1,438,767	2,092,879
Grants in period, weighted average grant date fair value (USD per share)			$ 2.40	$ 3.98
Shares cancelled		166,804
2007 Equity Incentive Plan | Restricted Shares of Class A Common Stock
Compensation Arrangements [Line Items]
Grants in period (in shares)			0	16,806
Grants in period, weighted average grant date fair value (USD per share)			$ 0	$ 4.74
Vesting period for units (in years)		4 years
Shares available for future issuance		16,806
Equity Incentive Plan 2006 | Restricted Shares of Class A Common Stock
Compensation Arrangements [Line Items]
Grants in period (in shares)	12,353
Grants in period, weighted average grant date fair value (USD per share)	$ 4.67
Equity Incentive Plan 2006 | Delayed Exchange Unit
Compensation Arrangements [Line Items]
Grants in period (in shares)	805,987
Grants in period, weighted average grant date fair value (USD per share)	$ 4.67

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Compensation and Benefits - Narrative (Details) - USD ($) $ in Thousands		3 Months Ended		12 Months Ended
	May 01, 2020	Mar. 31, 2021	Mar. 31, 2020	Dec. 31, 2020
Compensation Arrangements [Line Items]
Employee deferred compensation liability		$ 1,644		$ 5,039
Unrecorded compensation expense		$ 42,600		$ 34,800
Phantom Shares of Class A Common Stock | Director Plan
Compensation Arrangements [Line Items]
Deferred compensation percentage of compensation directors elected		100.00%
Shares outstanding (in shares)		591,640		533,444
Distributions made under Director Plan (in shares)		11,070	0
Restricted Shares of Class A Common Stock | Director Plan
Compensation Arrangements [Line Items]
Number of shares issued under plan		5,074
Common Class B
Compensation Arrangements [Line Items]
Delayed Exchange Class B units issued (in shares)		26,097	430,955
Delayed Exchange Class B units issued		$ 100	$ 1,900
Equity Incentive Plan 2006
Compensation Arrangements [Line Items]
Cash compensation paid in the form of equity				$ 3,800
2007 Equity Incentive Plan | Restricted Shares of Class A Common Stock
Compensation Arrangements [Line Items]
Vesting period for units (in years)	4 years
Number of shares issued under plan	16,806
2007 Equity Incentive Plan | Contingent Options to Purchase Shares of Class A Common Stock
Compensation Arrangements [Line Items]
Number of shares vested during period		0	0
Bonus plan
Compensation Arrangements [Line Items]
Vesting period for units (in years)		4 years

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Employee Benefit Plans (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Compensation And Retirement Disclosure [Abstract]
Profit sharing and savings plan expenses recognized	$ 0.9	$ 0.8

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Earnings per Share - Calculation (Details) - USD ($) $ / shares in Units, $ in Thousands		3 Months Ended
		Mar. 31, 2021	Mar. 31, 2020
Computation of basic earnings per share [Abstract]
Net Income for Basic Earnings per Share		$ 4,187
Basic Weighted Average Shares Outstanding (in shares)	[1]	17,240,412	17,790,184
Basic Earnings per Share (in dollars per share)		$ 0.24
Common Class A
Computation of basic earnings per share [Abstract]
Net Income for Basic Earnings per Share		$ 4,182
Basic Weighted Average Shares Outstanding (in shares)		17,220,424	17,790,184
Participating Shares of Restricted Class A Common Stock
Computation of basic earnings per share [Abstract]
Net Income for Basic Earnings per Share		$ 5
Basic Weighted Average Shares Outstanding (in shares)	[2]	19,988

[1] ^{The Company issues restricted shares of Class A common stock and restricted Class B units that have non-forfeitable dividend rights.  Under the "two-class method," these shares and units are considered participating securities and are required to be included in the computation of basic and diluted earnings per share.}

[2] 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.

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Earnings per Share - Diluted Net Income (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Diluted Net Income [Abstract]
Less: Net Income Attributable to Non-Controlling Interests	$ 20,842	$ 769
Net Income of Pzena Investment Management, Inc.	4,187
Diluted Net Income	19,731	760
Pzena Investment Management, LLC
Diluted Net Income [Abstract]
Net Income Attributable to Non-Controlling Interests	20,648	1,084
Less: Assumed Corporate Income Taxes	5,104	324
Less: Net Income Attributable to Non-Controlling Interests	15,544	760
Net Income of Pzena Investment Management, Inc.	4,187
Diluted Net Income	$ 19,731	$ 760

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Earnings per Share - Diluted Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands		3 Months Ended
		Mar. 31, 2021	Mar. 31, 2020
Diluted Net Income Allocated to:
Total Diluted Net Income Attributable to Shareholders		$ 19,731	$ 760
Total Basic Weighted-Average Shares Outstanding (in shares)	[1]	17,240,412	17,790,184
Dilutive Effect of B Units (in shares)		55,425,613	53,885,546
Dilutive Effect of Options (in shares)		1,123,539	37,016
Dilutive Effect of Phantom Class B Units & Phantom Shares of Class A Common Stock (in shares)		2,393,896	1,857,799
Dilutive Effect of Restricted Shares of Class A Common Stock (in shares)		29,240	21,686
Diluted Weighted Average Common Shares Outstanding (in shares)		76,212,700	73,592,231
Participating Class B Units and Class B-1 Units (in shares)		7,239,297	5,990,916
Diluted Weighted-Average Shares Outstanding (in shares)	[1]	83,451,997	79,583,147
Diluted Earnings per Share (in dollars per share)		$ 0.24
Options to Purchase Class B Units
Diluted Net Income Allocated to:
Antidilutive securities excluded from diluted EPS (in shares)		400,000	2,900,000
Options to Purchase Shares of Class A Common Stock
Diluted Net Income Allocated to:
Antidilutive securities excluded from diluted EPS (in shares)		200,000	100,000
Contingent Options to Purchase Shares of Class A Common Stock
Diluted Net Income Allocated to:
Antidilutive securities excluded from diluted EPS (in shares)		1,000,000.0	1,000,000.0
Common Class A
Diluted Net Income Allocated to:
Total Diluted Net Income Attributable to Shareholders		$ 17,938	$ 701
Total Basic Weighted-Average Shares Outstanding (in shares)		17,220,424	17,790,184
Participating Shares of Restricted Class A Common Stock
Diluted Net Income Allocated to:
Total Diluted Net Income Attributable to Shareholders		$ 5
Total Basic Weighted-Average Shares Outstanding (in shares)	[2]	19,988
Participating Class B Units
Diluted Net Income Allocated to:
Total Diluted Net Income Attributable to Shareholders		$ 1,788	$ 59

[1] ^{The Company issues restricted shares of Class A common stock and restricted Class B units that have non-forfeitable dividend rights.  Under the "two-class method," these shares and units are considered participating securities and are required to be included in the computation of basic and diluted earnings per share.}

[2] 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.

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Shareholders' Equity (Details)	3 Months Ended
	Mar. 31, 2021 vote $ / shares shares	Mar. 31, 2020 $ / shares shares	Dec. 31, 2020 $ / shares	Apr. 19, 2018 USD ($)	Feb. 11, 2014 USD ($)	Apr. 24, 2012 USD ($)
Class of Stock [Line Items]
Amount authorized under stock repurchase program | $				$ 30,000,000	$ 20,000,000	$ 10,000,000
Common Class A
Class of Stock [Line Items]
Economic interest held in company by class of stock (in hundredths)	23.00%		24.20%
Percentage of right to future income and distributions	21.40%		22.40%
Par value (in dollars per share)	$ 0.01		$ 0.01
Percentage of outstanding shares that represents rights of holders to receive distribution (in hundredths)	100.00%
Common stock purchased and retired (in shares) | shares	275,218	823,792
Purchased under repurchase authorization at an average price per share (in dollars per share)	$ 8.67	$ 6.86
Common Class B
Class of Stock [Line Items]
Percentage of right to future income and distributions	69.60%		70.10%
Par value (in dollars per share)	$ 0.000001		$ 0.000001
Voting rights (in votes) | vote	5
Percentage of stock holding that will entitle holders to one vote (in hundredths)	20.00%
Voting rights when class of stock constitutes less than 20% of all shares outstanding (in votes) | vote	1
Common stock purchased and retired (in shares) | shares	18,476	94,830
Purchased under repurchase authorization at an average price per share (in dollars per share)	$ 4.87	$ 5.97
Class B-1 Units
Class of Stock [Line Items]
Percentage of right to future income and distributions	9.00%		7.50%
Voting rights (in votes) | vote	0
Number of shares issued | shares	0
Pzena Investment Management, LLC | Common Class B
Class of Stock [Line Items]
Economic interest held in company by class of stock (in hundredths)	74.60%		75.80%
Pzena Investment Management, LLC | Class B-1 Units
Class of Stock [Line Items]
Economic interest held in company by class of stock (in hundredths)	2.40%		0.00%

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Non-Controlling Interests (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Noncontrolling Interest [Line Items]
Net Income Attributable to Non-Controlling Interests	$ 20,842	$ 769
Non-Controlling Interests of Pzena Investment Management, LLC
Noncontrolling Interest [Line Items]
Net Income Attributable to Non-Controlling Interests	20,648	1,084
Non-Controlling Interests of Consolidated Subsidiaries
Noncontrolling Interest [Line Items]
Net Income Attributable to Non-Controlling Interests	$ 194	$ (315)

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Investments - Summary of Investments (Details) - USD ($) $ in Thousands		Mar. 31, 2021	Dec. 31, 2020
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total Equity Investments, at Fair Value		$ 31,525	$ 26,053
Investments in Equity Method Investees		9,894	8,051
Total	[1]	41,419	34,104
Equity Securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total Equity Investments, at Fair Value		24,208	18,739
Mutual Funds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total Equity Investments, at Fair Value		$ 7,317	$ 7,314

[1] Asset and liability amounts in parentheses represent the aggregated balances at March 31, 2021 and December 31, 2020 attributable to Pzena Investment Management Special Situations, LLC, Pzena U.S. Best Ideas (GP), LLC, Pzena Global Best Ideas (GP), LLC, and Pzena Global Focus Value Fund which were variable interest entities as of March 31, 2021 and December 31, 2020, respectively.

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Investments - Investments, Fair Value (Details) - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2021	Dec. 31, 2020
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Equity Investments, at Fair Value, Cost	$ 26,952	$ 23,814
Equity Investments, at Fair Value, Unrealized Gain/(Loss)	4,573	2,239
Equity Investments, at Fair Value	31,525	26,053
Securities Short Sold Proceeds	699	620
Securities Short Sold Unrealized (Gain)/Loss	44	94
Securities Short Sold,Fair Value	743	714
Equity Securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Equity Investments, at Fair Value, Cost	19,648	16,521
Equity Investments, at Fair Value, Unrealized Gain/(Loss)	4,560	2,218
Equity Investments, at Fair Value	24,208	18,739
Securities Short Sold Proceeds	699	620
Securities Short Sold Unrealized (Gain)/Loss	44	94
Securities Short Sold,Fair Value	743	714
Mutual Funds
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Equity Investments, at Fair Value, Cost	7,304	7,293
Equity Investments, at Fair Value, Unrealized Gain/(Loss)	13	21
Equity Investments, at Fair Value	$ 7,317	$ 7,314

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Investments - Narrative (Details) - USD ($) $ in Thousands	Mar. 31, 2021	Dec. 31, 2020
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments in equity method investees	$ 9,894	$ 8,051
Minimum
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Operating company's ownership	1.00%
Maximum
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Operating company's ownership	7.00%

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Fair Value Measurements (Details) - USD ($) $ in Thousands	Mar. 31, 2021	Dec. 31, 2020
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Equity Investments, at Fair Value	$ 31,525	$ 26,053
Total Assets	31,533	26,061
Securities Sold Short, at Fair Value	743	714
Total Liabilities	743	714
Money Market Funds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash Equivalents	8	8
Equity Securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Equity Investments, at Fair Value	24,208	18,739
Mutual Funds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Equity Investments, at Fair Value	7,317	7,314
Fair Value | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total Assets	30,696	25,328
Securities Sold Short, at Fair Value	743	714
Total Liabilities	743	714
Fair Value | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total Assets	837	733
Fair Value | Money Market Funds | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash Equivalents	8	8
Fair Value | Equity Securities | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Equity Investments, at Fair Value	23,371	18,006
Fair Value | Equity Securities | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Equity Investments, at Fair Value	837	733
Fair Value | Mutual Funds | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Equity Investments, at Fair Value	$ 7,317	$ 7,314

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Property and Equipment (Details) - USD ($) $ in Thousands	Mar. 31, 2021	Dec. 31, 2020
Property Plant And Equipment [Line Items]
Property and equipment, gross	$ 10,295	$ 10,356
Accumulated Depreciation and Amortization	(6,203)	(5,980)
Total	4,092	4,376
Leasehold Improvements
Property Plant And Equipment [Line Items]
Property and equipment, gross	6,929	6,929
Furniture and Fixtures
Property Plant And Equipment [Line Items]
Property and equipment, gross	1,591	1,591
Computer Hardware
Property Plant And Equipment [Line Items]
Property and equipment, gross	684	745
Computer Software
Property Plant And Equipment [Line Items]
Property and equipment, gross	879	879
Office Equipment
Property Plant And Equipment [Line Items]
Property and equipment, gross	$ 212	$ 212

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Property and Equipment - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Property Plant And Equipment [Line Items]
Depreciation expense	$ 296	$ 306
General and Administrative Expense
Property Plant And Equipment [Line Items]
Depreciation expense	$ 300	$ 300

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Related Party Transactions (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020	Dec. 31, 2020
Related Party Transaction [Line Items]
Investment advisory fees	$ 45,871	$ 34,679
Loan write-off period	7 years
Net of Expense Reimbursement | VIEs That are Not Consolidated
Related Party Transaction [Line Items]
Investment advisory fees	$ 200	300
Employees
Related Party Transaction [Line Items]
Loans to employees	3,300		$ 2,600
Pzena Mutual Funds
Related Party Transaction [Line Items]
Investment advisory fees waived	300	300
Company's Executive Officers and Other Employees
Related Party Transaction [Line Items]
Investment advisory fees waived	$ 300	$ 200

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Commitments and Contingencies - Additional Information (Details) - USD ($)			3 Months Ended
		Feb. 01, 2019	Mar. 31, 2021	Mar. 31, 2020	Oct. 01, 2016
Other Commitments [Line Items]
Claims or payments to agreements			$ 0
Accrual made in consolidated financial statements			$ 0
Operating leases, contract term					4 years
Company or sublessee, prior notice period for cancellation of sublease agreement			6 months
Expected annual sublease income		$ 300,000
Lease expenses	[1]		$ 589,000
Short-term lease expense			100,000
Sublease income			100,000	$ 100,000
General and Administrative Expense
Other Commitments [Line Items]
Lease expenses			$ 700,000	$ 700,000

[1] Amounts have not been reduced by sublease income of $0.1 million recognized during the three months ended March 31, 2021.

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Commitments and Contingencies - Components of Operating Lease Expense and Supplemental Cash Flow Information (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2021 USD ($)
Leases [Abstract]
Operating lease expense	$ 589	[1]
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$ 601

[1] Amounts have not been reduced by sublease income of $0.1 million recognized during the three months ended March 31, 2021.

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Commitments and Contingencies - Components of Operating Lease Expense and Supplemental Cash Flow Information (Parenthetical) (Details) $ in Millions	3 Months Ended
	Mar. 31, 2021 USD ($)
Leases [Abstract]
Sublease Income	$ 0.1

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Commitments and Contingencies - Information Regarding Operating Leases (Details) - USD ($) $ in Thousands	Mar. 31, 2021	Dec. 31, 2020
Leases [Abstract]
Operating lease right-of-use assets	$ 10,989	$ 11,578
Operating lease liabilities	$ 11,304	$ 11,905
Weighted-average remaining lease term (in years)	4 years 8 months 12 days
Weighted-average discount rate	4.30%

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Commitments and Contingencies - Maturities of Lease Liabilities (Details) - USD ($) $ in Thousands	Mar. 31, 2021	Dec. 31, 2020
Operating Leases
2021 (excluding the three months ended March 31, 2021)	$ 2,134
2022	2,574
2023	2,574
2024	2,596
2025	2,607
Total undiscounted lease payments	12,485
Less discount	(1,181)
Lease Liabilities	$ 11,304	$ 11,905

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Income Taxes - Additional Information (Details) - USD ($)	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020	Dec. 31, 2020
Income Tax Disclosure [Abstract]
Effective tax rate	8.60%	56.30%
Economic interest held in company by class of stock (in hundredths)	78.40%	77.10%
Unrecognized tax benefits	$ 8,100,000		$ 7,600,000
Interest related to unrecognized tax benefits	1,400,000		1,200,000
Penalty accruals	0		0
Deferred tax assets	27,800,000		29,800,000
Valuation allowance on deferred tax assets	$ 0		$ 0

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Subsequent Events (Details) - $ / shares		3 Months Ended
	Apr. 20, 2021	Mar. 31, 2021	Mar. 31, 2020
Subsequent Event [Line Items]
Cash dividends declared (in dollars per share)		$ 0.25	$ 0.46
Common Class A | Subsequent Event
Subsequent Event [Line Items]
Cash dividends declared (in dollars per share)	$ 0.03
Dividend declared date	Apr. 20, 2021
Dividend payable date	May 21, 2021
Dividend record date	Apr. 30, 2021