Noncontrolling and Redeemable Noncontrolling Interests

12 Months Ended

Dec. 31, 2022

Noncontrolling and Redeemable Noncontrolling Interests

13. Noncontrolling and Redeemable Noncontrolling Interests

Noncontrolling Interests

When acquiring less than 100% ownership of an entity, the Company may enter into agreements that give the Company an option to purchase, or require the Company to purchase, the incremental ownership interests under certain circumstances. Where the option to purchase the incremental ownership is within the Company’s control, the amounts are recorded as Noncontrolling interests within Shareholder’s Equity in the Consolidated Balance Sheets. Where the incremental purchase may be required of the Company, the amounts are recorded as Redeemable noncontrolling interests in mezzanine equity in the Consolidated Balance Sheets at their estimated acquisition date redemption value and adjusted at each reporting period for changes to their estimated redemption value through Retained earnings (but not less than their initial redemption value), except for foreign currency translation adjustments.

Changes in the Company’s ownership interests in its less than 100% owned subsidiaries during the years ended December 31, 2022, 2021, and 2020 were as follows:


	Year Ended December 31,
		2022		2021		2020
Net income attributable to Stagwell Inc. common shareholders		$	27,269	$	21,036	$	56,356
Transfers from the noncontrolling interest:
Change in Stagwell Inc. Paid-in capital for purchase of redeemable noncontrolling interests and noncontrolling interests		(1,000)		(26,538)		—
Change in Stagwell Inc. Paid-in-Capital for conversion of Class C to Class A shares		47,911		—		—
Net transfers from noncontrolling interests		46,911		(26,538)		—
Change from net income (loss) attributable to Stagwell Inc. and transfers to noncontrolling interests		$	74,180	$	(5,502)	$	56,356

The following table presents net income attributable to noncontrolling interests between holders of Class C Common Stock and other equity interest holders for the years ended December 31, 2022, 2021, and 2020:


	Year Ended December 31,
		2022		2021		2020
Net income attributable to Class C shareholders		$	24,452	$	6,126	$	—
Net income attributable to other equity interest holders		5,986		9,170		18,231
Net income attributable to noncontrolling interests		$	30,438	$	15,296	$	18,231

The following table presents noncontrolling interests between holders of Class C Common Stock and other equity interest holders as of December 31, 2022 and December 31, 2021:


	December 31, 2022		December 31, 2021
Noncontrolling interest of Class C shareholders	$	428,406	$	475,373
Noncontrolling interest of other equity interest holders	33,691		32,914
NCI attributable to noncontrolling interests	$	462,097	$	508,287

The table above has been revised to reclassify approximately $45,422 from previously reported non-controlling interests to additional paid-in capital that should have been recognized as a result of the exchange of Paired Units for shares of the Company’s Class A common stock in February 2022.

Redeemable Noncontrolling Interests

The following table presents changes in redeemable noncontrolling interests:


	December 31, 2022		December 31, 2021
Beginning balance	$	43,364	$	604
Redemptions	(4,222)		(15,231)
Acquisitions (1)	—		53,270
Changes in redemption value	(8,711)		3,834

Net income (loss) attributable to redeemable noncontrolling interests	8,135		(412)
Other	545		1,299
Ending balance	$	39,111	$	43,364

(1) In 2021, approximately $26,000 represents redeemable noncontrolling interests acquired in connection with the acquisition of MDC. Approximately $27,000 represents redeemable noncontrolling interests acquired in connection with the purchase of the noncontrolling interest of Targeted Victory. See Note 4 of the Notes included herein for additional information related to the purchase of Targeted Victory.

The noncontrolling shareholders’ ability to exercise any such option right is subject to the satisfaction of certain conditions, including conditions requiring notice in advance of exercise and specific employment termination conditions. In addition, these rights cannot be exercised prior to specified staggered exercise dates. The exercise of these rights at their earliest contractual date would result in obligations of the Company to fund the related amounts during 2022 to 2027. It is not determinable, at this time, if or when the owners of these rights will exercise all or a portion of these rights.

The redeemable noncontrolling interest of $39,111 as of December 31, 2022, consists of $35,206, assuming that the subsidiaries perform over the relevant periods at their current profit levels, and $3,905 upon termination of such owner’s employment with the applicable subsidiary or death.

These adjustments will not impact the calculation of earnings (loss) per share if the redemption values are less than the estimated fair values. There is no related impact on the Company’s income per share calculations.