A description of Lazard Ltd’s 2018 Plan, 2008 Plan and 2005 Equity Incentive Plan (the “2005 Plan”) and activity with respect thereto during the years ended December 31, 2022, 2021 and 2020 is presented below.

The 2018 Plan became effective on April 24, 2018 and was amended on April 29, 2021 to increase the aggregate number of shares authorized for issuance under the 2018 Plan by 20,000,000 shares. The 2018 Plan replaced the 2008 Plan, which was terminated on April 24, 2018. The 2018 Plan originally authorized issuance of up to 30,000,000 shares of common stock, plus any shares of common stock that were subject to outstanding awards under the 2008 Plan as of March 14, 2018 that are forfeited, canceled or settled in cash following April 24, 2018, which was the date that the 2018 Plan was approved by our shareholders. Such shares may be issued pursuant to the grant or exercise of stock options, stock appreciation rights, restricted stock units (“RSUs”), performance-based restricted stock units (“PRSUs”), restricted stock awards (“RSAs”), profits interest participation rights, including performance-based restricted participation units (“PRPUs”), and other share-based awards.

The 2008 Plan authorized the issuance of shares of common stock pursuant to the grant or exercise of stock options, stock appreciation rights, RSUs, PRSUs and other share-based awards. Under the 2008 Plan, the maximum

number of shares available was based on a formula that limited the aggregate number of shares that could, at any time, be subject to awards that were considered “outstanding” under the 2008 Plan to 30% of the then-outstanding shares of common stock. The 2008 Plan was terminated on April 24, 2018, and no additional awards have been or will be granted under the 2008 Plan after its termination, although outstanding deferred stock unit (“DSU”) awards granted under the 2008 Plan before its termination continue to be subject to its terms.

The 2005 Plan authorized the issuance of up to 25,000,000 shares of common stock pursuant to the grant or exercise of stock options, stock appreciation rights, RSUs and other share-based awards. The 2005 Plan expired in the second quarter of 2015, although outstanding DSU awards granted under the 2005 Plan before its expiration continue to be subject to its terms.

The following reflects the amortization expense recorded with respect to share-based incentive plans within “compensation and benefits” expense (with respect to RSUs, PRSUs, RSAs and profits interest participation rights, including PRPUs) and “professional services” expense (with respect to DSUs) within the Company’s accompanying consolidated statements of operations:

	Year Ended December 31,
	2022		2021		2020
Share-based incentive awards:
RSUs	$	125,664	$	124,895	$	140,556
PRSUs		2,011		6,136		6,264
RSAs		23,923		17,765		27,976
Profits interest participation rights		86,810		83,046		41,293
DSUs		2,233		2,116		2,360
Total	$	240,641	$	233,958	$	218,449

The ultimate amount of compensation and benefits expense relating to share-based awards is dependent upon the actual number of shares of common stock that vest. The Company periodically assesses the forfeiture rates used for such estimates, including as a result of any applicable performance conditions. A change in estimated forfeiture rates or performance results in a cumulative adjustment to compensation and benefits expense and also would cause the aggregate amount of compensation expense recognized in future periods to differ from the estimated unrecognized compensation expense described below.

RSUs generally require future service as a condition for the delivery of the underlying shares of common stock (unless the recipient is then eligible for retirement under the Company’s retirement policy) and convert into shares of common stock on a one-for-one basis after the stipulated vesting periods. The grant date fair value of the RSUs, net of an estimated forfeiture rate, is amortized over the vesting periods or requisite service periods (generally, one-third after two years and the remaining two-thirds after the third year), and is adjusted for actual forfeitures over such period.

RSUs generally include a dividend participation right that provides that, during the applicable vesting period, each RSU is attributed additional RSUs equivalent to any dividends paid on common stock during such period. During the year ended December 31, 2022, dividend participation rights required the issuance of 455,287 RSUs and the associated charge to “retained earnings”, net of estimated forfeitures (with corresponding credits to “additional paid-in-capital”) was $15,611.

Non-executive members of the Board of Directors (“Non-Executive Directors”) receive approximately 55% of their annual compensation for service on the Board of Directors and its committees in the form of DSUs, which resulted in 44,772 DSUs being granted during the year ended December 31, 2022. Their remaining compensation is payable in cash, which they may elect to receive in the form of additional DSUs under the Directors’ Fee Deferral Unit Plan described below. DSUs are convertible into shares of common stock at the time of cessation of service to the Board of Directors. DSUs include a cash dividend participation right equivalent to dividends paid on common stock.

Lazard Ltd’s Directors’ Fee Deferral Unit Plan permits the Non-Executive Directors to elect to receive additional DSUs in lieu of some or all of their cash fees. The number of DSUs granted to a Non-Executive Director pursuant to this election will equal the value of cash fees that the applicable Non-Executive Director has elected to forego pursuant to such election, divided by the market value of a share of common stock on the date immediately preceding the date of the grant. During the year ended December 31, 2022, 17,640 DSUs had been granted pursuant to such Plan.

DSU awards are expensed at their fair value on their date of grant, inclusive of amounts related to the Directors’ Fee Deferral Unit Plan.

The following is a summary of activity relating to RSUs and DSUs for the year ended December 31, 2022:

	RSUs					DSUs
	Units			Weighted Average Grant Date Fair Value		Units		Weighted Average Grant Date Fair Value
Balance, January 1, 2022		8,150,782		$	41.16		338,408	$	38.01
Granted (including 455,287 RSUs relating to dividend participation)		5,329,456		$	33.73		62,412	$	35.78
Forfeited		(310,646	)	$	39.16		-	$	-
Settled		(4,146,675	)	$	38.71		-	$	-
Balance, December 31, 2022		9,022,917		$	37.97		400,820	$	37.66

The weighted-average grant date fair value of RSUs granted in 2022, 2021 and 2020 was $33.73, $43.38 and $42.60, respectively. The weighted-average grant date fair value of DSUs granted in 2022, 2021 and 2020 was $35.78, $46.75 and $28.49, respectively.

In connection with RSUs that settled during the year ended December 31, 2022, the Company satisfied its minimum statutory tax withholding requirements in lieu of delivering 1,527,476 shares of common stock during the year. Accordingly, 2,619,199 shares of common stock held by the Company were delivered during the year ended December 31, 2022.

As of December 31, 2022, estimated unrecognized RSU compensation expense was $115,641, with such expense expected to be recognized over a weighted average period of approximately 0.9 years subsequent to December 31, 2022.

The following is a summary of activity related to RSAs associated with compensation arrangements during the year ended December 31, 2022:

	RSAs			Weighted Average Grant Date Fair Value
Balance, January 1, 2022		871,227		$	41.24
Granted (including 67,261 relating to dividend participation)		1,064,296		$	33.37
Forfeited		(81,178	)	$	37.69
Settled		(587,921	)	$	36.63
Balance, December 31, 2022		1,266,424		$	36.99

The weighted-average grant date fair value of RSAs granted in 2022, 2021 and 2020 was $33.37, $43.80 and $42.89, respectively.

In connection with RSAs that settled during the year ended December 31, 2022, the Company satisfied its minimum statutory tax withholding requirements in lieu of delivering 203,490 shares of common stock during the year. Accordingly, 384,431 shares of common stock held by the Company were delivered during the year ended December 31, 2022.

RSAs granted in 2022 generally include a dividend participation right that provides that during the applicable vesting period each RSA is attributed additional RSAs equivalent to any dividends paid on common stock during such period. During the year ended December 31, 2022, dividend participation rights required the issuance of 67,261 RSAs and the associated charge to “retained earnings”, net of estimated forfeitures (with corresponding credits to “additional paid-in-capital”) was $2,414.

At December 31, 2022, estimated unrecognized RSAs expense was $19,897, with such expense to be recognized over a weighted average period of approximately 0.9 years subsequent to December 31, 2022.

PRSUs are RSUs that are subject to performance-based and service-based vesting conditions, and beginning with awards granted in February 2021, a market-based condition. The number of shares of common stock that a recipient will receive upon vesting of a PRSU will be calculated by reference to certain performance-based and market-based metrics that relate to Lazard Ltd’s performance over a three-year period. The target number of shares of common stock subject to each PRSU is one; however, based on the achievement of both the performance-based and market-based criteria, the number of shares of common stock that may be received will range from zero to 2.4 times the target number. PRSUs will vest on a single date approximately three years following the date of the grant, provided the applicable service and performance conditions are satisfied. PRSUs include dividend participation rights that are subject to the same vesting restrictions (including performance criteria) as the underlying PRSUs to which they relate and are settled in cash at the same rate that dividends are paid on common stock.

The following is a summary of activity relating to PRSUs during the year ended December 31, 2022:

	PRSUs		Weighted Average Grant Date Fair Value
Balance, January 1, 2022		32,394	$	46.63
Granted		62,296	$	35.44
Balance, December 31, 2022		94,690	$	39.27

The weighted-average grant date fair value of PRSUs granted in 2022, 2021 and 2020 was $35.44, $46.63 and $50.74, respectively.

Compensation expense recognized for PRSU awards is determined by multiplying the number of shares of common stock underlying such awards that, based on the Company’s estimate, are considered probable of vesting, by the grant date fair value. As of December 31, 2022, the total estimated unrecognized compensation expense was $3,295, and the Company expects to amortize such expense over a weighted-average period of approximately 0.8 years subsequent to December 31, 2022.

Profits interest participation rights are equity incentive awards that, subject to certain conditions, may be exchanged for shares of common stock pursuant to the 2018 Plan. The Company granted profits interest participation rights subject to service-based and performance-based vesting criteria and other conditions, and beginning in February 2021, incremental market-based vesting criteria, which we refer to as performance-based restricted participation units (“PRPUs”), to certain of our executive officers. The Company also granted profits interest participation rights subject to service-based vesting criteria and other conditions, but not the performance-based and incremental market-based vesting criteria associated with PRPUs, to a limited number of other senior employees. Profits interest participation rights generally provide for vesting approximately three years following the grant date, so long as applicable conditions have been satisfied.

Profits interest participation rights are a class of membership interests in Lazard Group that are intended to qualify as “profits interests” for U.S. federal income tax purposes, and are recorded as noncontrolling interests within stockholders’ equity in the Company’s consolidated statements of financial condition until they are exchanged into common stock, at which time there is a reclassification to additional paid-in-capital. The profits interest participation rights generally allow the recipient to realize value only to the extent that both (i) the service-based vesting conditions and, if applicable, the performance-based and incremental market-based conditions, are satisfied, and (ii) an amount of economic appreciation in the assets of Lazard Group occurs as necessary to satisfy certain partnership tax rules (referred to as the “Minimum Value Condition”) before the fifth anniversary of the grant date, otherwise the profits interest participation rights will be forfeited. Upon satisfaction of such conditions, profits interest participation rights that are in parity with the value of common stock will be exchanged on a one-for-one basis for shares of common stock. If forfeited based solely on failing to meet the Minimum Value Condition, the associated compensation expense would not be reversed. With regard to the profits interest participation rights granted in February 2019 and February 2020, the Minimum Value Condition was met during the years ended December 31, 2020 and December 31, 2021, respectively. On March 1, 2022, the profits interest participation rights granted in February 2019, for which the Minimum Value Condition and other vesting conditions were satisfied, were exchanged on a one-for-one basis for shares of common stock.

Like outstanding RSUs and similar awards, profits interest participation rights are subject to continued employment and other conditions and restrictions and are forfeited if those conditions and restrictions are not fulfilled. More specifically, vesting of profits interest participation rights are subject to compliance with restrictive covenants including non-compete, non-solicitation of clients, no hire of employees and confidentiality, which are similar to those applicable to PRSUs and RSUs. In addition, profits interest participation rights must satisfy the Minimum Value Condition.

The number of shares of common stock that a recipient will receive upon the exchange of a PRPU award is calculated by reference to applicable performance-based conditions and, beginning with PRPUs granted in 2021, incremental market-based conditions and only result in value to the recipient to the extent the conditions are satisfied. The target number of shares of common stock subject to each PRPU is one. Based on the achievement of performance criteria, as determined by the Compensation Committee, the number of shares of common stock that may be received in connection with the PRPU awards granted prior to February 2021 will range from zero to two times the target number. For the PRPU awards granted beginning in February 2021, subject to both performance-based and incremental market-based criteria, the number of shares that may be received will range from zero to 2.4 times the target number. Unless applicable conditions are satisfied during the three year performance period, and the Minimum Value Condition is satisfied within five years following the grant date, all PRPUs will be forfeited, and the recipients will not be entitled to any such awards.

The performance metrics applicable to the PRPU awards granted prior to February 2021 were also evaluated on an annual basis at the end of each fiscal year during the performance period, and, if Lazard Ltd achieved a threshold level of performance with respect to the fiscal year, 25% of the target number of PRPUs are no longer at risk of forfeiture based on the achievement of performance criteria. Profits interest participation rights are allocated income, subject to vesting and settled in cash, in respect of dividends paid on common stock.

The following is a summary of activity relating to profits interest participation rights, including PRPUs, during the year ended December 31, 2022:

	Profits Interest Participation Rights			Weighted Average Grant Date Fair Value
Balance, January 1, 2022		4,122,993		$	41.50
Granted		1,521,103		$	34.53
Forfeited		(96,323	)	$	38.92
Settled		(1,902,756	)	$	38.76
Performance units earned (a)		486,611		$	40.64
Balance, December 31, 2022 (b)		4,131,628		$	40.15

(b)

Table includes 2,447,224 PRPUs, which represents the target number of PRPUs granted and performance units earned, net of settlements as of December 31, 2022, including 2,001,174 PRPUs as of January 1, 2022 and 963,660 PRPUs granted and 486,611 performance units earned, net of 1,004,221 PRPUs settled during the year ended December 31, 2022. The weighted average grant date fair values for PRPUs and other profits interest participation rights outstanding as of January 1, 2022 were $41.82 and $41.20, respectively. The weighted average grant date fair values for PRPUs and other profits interest participation rights granted during the year ended December 31, 2022 were $35.44 and $32.95, respectively. The weighted average grant date fair values for other profits interest participation rights forfeited during the year ended December 31, 2022 were $38.92. The weighted average grant date fair values for PRPUs and other profits interest participation rights settled during the year ended December 31, 2022 were $38.86 and $38.65, respectively. The weighted average grant date fair values for PRPUs and other profits interest participation rights outstanding as of December 31, 2022 were $40.29 and $39.96, respectively.

The weighted-average grant date fair value of profits interest participation rights granted in 2022, 2021 and 2020 was $34.53, $44.73 and $42.89, respectively. Compensation expense recognized for profits interest participation rights, including PRPUs, is determined by multiplying the number of shares of common stock underlying such awards that, based on the Company’s estimate, are considered probable of vesting, by the grant date fair value. As of December 31, 2022, the total estimated unrecognized compensation expense was $21,331 and the

Company expects to amortize such expense over a weighted-average period of approximately 0.9 years subsequent to December 31, 2022.

In connection with LFI and other similar deferred compensation arrangements, granted to eligible employees, which generally require future service as a condition for vesting, the Company recorded a prepaid compensation asset and a corresponding compensation liability on the grant date based upon the fair value of the award. The prepaid asset is amortized on a straight-line basis over the applicable vesting periods or requisite service periods(which are generally similar to the comparable periods for RSUs) and is charged to “compensation and benefits” expense within the Company’s consolidated statement of operations. LFI and similar deferred compensation arrangements that do not require future service are expensed immediately. The related compensation liability is accounted for at fair value as a derivative liability, which contemplates the impact of estimated forfeitures, and is adjusted for changes in fair value primarily related to changes in value of the underlying investments.

The following is a summary of activity relating to LFI and other similar deferred compensation arrangements during the year ended December 31, 2022:

	Prepaid Compensation Asset			Compensation Liability
Balance, January 1, 2022	$	108,049		$	358,877
Granted		167,654			167,654
Settled		-			(145,666	)
Forfeited		(5,033	)		(16,894	)
Amortization		(158,483	)		-
Change in fair value related to:
Change in fair value of underlying investments		-			(44,261	)
Adjustment for estimated forfeitures		-			8,256
Other		(63	)		(1,684	)
Balance, December 31, 2022	$	112,124		$	326,282

The amortization of the prepaid compensation asset will generally be recognized over a weighted average period of approximately 0.8 years subsequent to December 31, 2022.

The following is a summary of the impact of LFI and other similar deferred compensation arrangements on “compensation and benefits” expense within the accompanying consolidated statements of operations for the years ended December 31, 2022, 2021 and 2020:

	Year Ended December 31,
	2022			2021		2020
Amortization, net of forfeitures	$	154,878		$	151,604	$	119,441
Change in the fair value of underlying investments		(44,261	)		35,494		40,634
Total	$	110,617		$	187,098	$	160,075

In February 2023, the Company granted approximately $436,200 of deferred incentive compensation awards to eligible employees as part of the year-end compensation process with respect to the 2022 fiscal year. These grants included: RSUs or RSAs; PRSUs; profits interest participation rights, including PRPUs; LFI awards; deferred cash awards; and a portion of certain fund managers’ year-end incentive compensation that is reinvested in certain funds managed by the Company’s Asset Management business.

The RSUs, RSAs and LFI granted generally provide for one-third vesting on the second anniversary of the grant date and the remaining two-thirds vesting on the third anniversary of the grant date, so long as applicable conditions have been satisfied. PRSUs and the profits interest participation rights, including PRPUs, granted generally provide for vesting on the third anniversary of the grant date, so long as applicable conditions have been satisfied. The majority of deferred cash awards vest in August 2023, so long as applicable conditions have been satisfied. Compensation expense with respect to such incentive awards will generally be recognized over the applicable service period.