Equity-Based Compensation

9 Months Ended

Dec. 31, 2022

Share-Based Payment Arrangement [Abstract]

Equity-Based Compensation

10. Equity Based Compensation

Restricted Stock Awards

A summary of restricted stock activity for the nine months ended December 31, 2022 is presented below:

	Total Unvested	Weighted- Average Grant-Date Fair Value of Award
March 31, 2022	281,307	$	67.50
Granted	41,160	$	66.97
Vested	(11,485)	$	77.38
Forfeited	(5,899)	$	70.15
December 31, 2022	305,083	$	67.00

As of December 31, 2022, total unrecognized compensation expense related to restricted stock was $14,950.

Performance Awards

The Company granted performance stock awards to certain employees that are subject to both a market-based vesting and a service-based vesting condition (“Performance Awards”). The Performance Awards will vest based upon (i) the market price of HLI Class A common stock achieving certain price thresholds from $150 per share to $230 per share and (ii) continued employment through the date the price target is met (with a minimum of five years of service required after the grant date for vesting). If the price target is met prior to the fifth anniversary of the grant date, the vesting date will be the fifth anniversary of the grant date. Holders of the Performance Awards do not participate in dividends until such awards have met both their market-based and service-based vesting requirements.

Due to the existence of the service requirement, the vesting period for these awards will vary with each respective tranche as the employees must be employed with the Company at the point in which the market requirement is met with a minimum of five years of service required after the grant date for vesting. As such, compensation expense will be recognized ratably for each vesting tranche from the grant date to the end for the employee’s service period. The fair value of the awards granted are based on a Monte-Carlo simulation valuation model.

A summary of Performance Award activity for the nine months ended December 31, 2022 is presented below:

	Total Unvested	Weighted- Average Grant-Date Fair Value of Award
March 31, 2022	—	$	—
Granted	528,282	$	29.79
Vested	—	$	—
Forfeited	—	$	—
December 31, 2022	528,282	$	29.79

Below is a summary of the grant date fair value based on the Monte Carlo simulation valuation model and the significant assumptions used to estimate the grant date fair value of the Performance Awards granted September 16, 2022:

Grant Date Fair Value	$	29.79
Closing share price as of grant date	$	69.67
Risk Free Rate	3.6%
Volatility	37.0%
Dividend Yield	2.3%

As of December 31, 2022, total estimated unrecognized expense related to the unvested Performance Awards was $14,815, and none of the Performance Awards have met their market price based vesting condition.