10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

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

For the Fiscal Year Ended December 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 Incorporation or Organization)	(I.R.S. Employer Identification No.)

320 Park Avenue

New York, New York 10022

(Address of Principal Executive Offices)

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

Securities 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 $.01 per share	PZN	New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒

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. ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒

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

The aggregate market value of the common equity held by non-affiliates of the registrant as of June 30, 2021, the last business day of its most recently completed second fiscal quarter, was approximately $191.7 million based on the closing sale price of $11.01 per share of Class A common stock of the registrant on such date on the New York Stock Exchange. For purposes of this calculation only, it is assumed that the affiliates of the registrant include only directors and executive officers of the registrant.

As of March 7, 2022, there were 17,238,355 outstanding shares of the registrant’s Class A common stock, par value $0.01 per share.

As of March 7, 2022, there were 56,603,740 outstanding shares of the registrant’s Class B common stock, par value $0.000001 per share.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Registrant’s definitive proxy statement relating to its 2022 annual meeting of shareholders (the “2022 Proxy Statement”) are incorporated by reference into Part III of this Annual Report on Form 10-K where indicated. The 2022 Proxy Statement will be filed with the U.S. Securities and Exchange Commission within 120 days after the end of the fiscal year to which this report relates.

Auditor Firm Id: 238 Auditor Name: PricewaterhouseCoopers LLP Auditor Location: New York, New York, USA

TABLE OF CONTENTS

		Page
	Cautionary Statement Regarding Forward-Looking Statements	ii
	PART I	1
Item 1.	Business	1
Item 1A.	Risk Factors	13
Item 1B.	Unresolved Staff Comments	26
Item 2.	Properties	26
Item 3.	Legal Proceedings	26
Item 4.	Mine Safety Disclosure	26
	PART II	27
Item 5.	Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	27
Item 6.	Selected Financial Data	28
Item 7.	Management's Discussion and Analysis of Financial Condition and Results of Operations	30
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	44
Item 8.	Financial Statements and Supplementary Data	45
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	45
Item 9A.	Controls and Procedures	46
Item 9B.	Other Information	46
Item 9C.	Disclosure Regarding Foreign Jurisdictions that Prevent Inspections	46
	PART III	47
Item 10.	Directors, Executive Officers and Corporate Governance	47
Item 11.	Executive Compensation	47
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	47
Item 13.	Certain Relationships and Related Transactions, and Director Independence	47
Item 14.	Principal Accountant Fees and Services	47
	PART IV	48
Item 15.	Exhibits and Financial Statement Schedules	48
Item 16.	Form of 10-K Summary	51
SIGNATURES		52

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K, or Annual Report, contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 27E of the Securities and Exchange Act of 1934, as amended (the "Exchange Act"). Forward-looking statements provide our current views, expectations, or forecasts, of future events and performance and 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, including but not limited to those noted below and described in Part I, Item 1A — "Risk Factors" of this Annual Report, and are based on assumptions and estimates. If one or more of these risks or uncertainties materialize, or if one or more of our assumptions or estimates prove incorrect, our actual results could differ materially from those expected or implied by the forward-looking statements. Accordingly, you should not unduly rely on any forward-looking statements. The forward-looking statements in this Annual Report, speak only as of the date of this Annual Report. There may be additional risks, uncertainties and factors that we do not currently view as material or that are not known. We undertake no obligation to publicly revise any forward-looking statements to reflect circumstances or events after the date of this Annual 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, (the “SEC”), after the date of this Annual Report.

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 ongoing 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 ongoing COVID-19 pandemic as well as the conditions in the sectors in which we invest; and

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

Preliminary Notes

In this Annual Report, “we,” “our,” “us,” and “the Company” refer to Pzena Investment Management, Inc. and its consolidated subsidiaries.

All rights in the Russell 1000® Value Index, Russell Mid Cap® Value Index, Russell 2000® Value Index vest in the relevant London Stock Exchange Group plc (“LSE Group”) company which owns the relevant Index. “Russell®” is a trade mark of the relevant LSE Group company and is used by any other LSE Group company under license.

Information with respect to MSCI, Inc. (“MSCI”) requires a license from MSCI. The MSCI information provided in this Annual Report may only be used for your internal use, may not be reproduced or re-disseminated in any form and may not be used as a basis for or a component of any financial instruments or products or indices. None of the MSCI information is intended to constitute investment advice or a recommendation to make (or refrain from making) any kind of investment decision and may not be relied on as such. Historical data and analysis should not be taken as an indication or guarantee of any future performance analysis, forecast or prediction. The MSCI information is provided on an “as is” basis and the user of this information assumes the entire risk of any use made of this information. MSCI, each of its affiliates and each other person involved in or related to compiling, computing or creating any MSCI information (collectively, the “MSCI Parties”) expressly disclaims all warranties (including, without limitation, any warranties of originality, accuracy, completeness, timeliness, non-infringement, merchantability and fitness for a particular purpose) with respect to this information. Without limiting any of the foregoing, in no event shall any MSCI Party have any liability for any direct, indirect, special, incidental, punitive, consequential (including, without limitation, lost profits) or any other damages. (www.msci.com)

The S&P 500 Index is licensed from Standard & Poor's Financial Services LLC, which is the source of the performance statistics of this index.

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PART I

ITEM 1. BUSINESS

Overview

Pzena Investment Management, Inc. was formed in 2007 and is the sole managing member of Pzena Investment Management, LLC, which is our operating company. Founded in 1995, Pzena Investment Management, LLC is a value-oriented investment management company. We believe that we have established a positive, team-oriented culture that enables us to attract and retain highly qualified people. Since our inception, we have built a diverse, global client base of respected and sophisticated institutional investors, select third-party distributed mutual funds for which we act as sub-investment adviser, and funds for which we act as investment adviser.

Equity interests in Pzena Investment Management, LLC are comprised of Class A, Class B, and Class B-1 membership units. Class A and Class B membership units each have an identical economic interest in the operating company. Class B-1 membership units, first issued on December 31, 2019, 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 subsequent to the issuance of the Class B-1 membership unit. As a holding company, we hold all of the Class A membership units and recognize income generated from our economic interest in our operating company's net income. The Class B membership units of the operating company are held by employees and certain outside members. The Class B-1 membership units of the operating company are held by employees. For each Class A membership unit held, we have issued one corresponding share of Class A common stock, par value $0.01 per share, which entitles the holder to one vote per share. For each Class B membership unit, we have issued one corresponding share of Class B common stock, par value $0.000001 per share, which entitles the holder to five votes per share without dividend rights, as described below in the graphic illustration. Class B-1 membership units have not been issued corresponding shares and do not have voting rights. The percentages presented below are subject to continued changes including, but not limited to, the price of Class A common stock, issuances of awards, exercise of options and exchanges of Class B-1 membership units for Class A common stock. Based on the closing price of the Company’s Class A common stock as of December 31, 2021, we owned approximately 23.5% of the economic interest in the December 31, 2021 value of our operating company and our Class A shareholders held approximately 5.9% of our outstanding voting interests. As of December 31, 2021, we owned 21.6% of the right to the future income and distributions of the operating company.

Pzena Investment Management, Inc. also serves as the general partner of Pzena Investment Management, LP, a partnership formed with the objective of aggregating employee ownership in one entity. Certain of the owners of shares of Class B common stock, Class B membership units, and Class B-1 membership units have contributed such interests to Pzena Investment Management, LP in exchange for membership interests therein. Pzena Investment Management, LP may only vote such shares of Class B common stock and Class B membership units in accordance with its limited partnership agreement, which provides for a preliminary vote of the limited partners thereof to direct such voting. Class B-1 membership units of Pzena Investment Management, LP do not have voting rights.

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The graphic below illustrates our holding company structure and ownership as of December 31, 2021. We present ownership in terms of (i) economic interest which represents the value in Pzena Investment Management, LLC based on the closing price of Class A common stock as of December 31, 2021 and (ii) rights to future income and distributions.

 

(1)As of December 31, 2021, the Class B and Class B-1 members of Pzena Investment Management, LLC, (collectively, the “Principals”) consisted of:

•Richard S. Pzena, John P. Goetz, and William L. Lipsey, our founders, and their estate planning vehicles, who collectively held, through direct and indirect interests, approximately 48.5% of the economic interests in the December 31, 2021 value of Pzena Investment Management, LLC and 44.8% of the future income and distributions.

•50 of our other employee members and their estate planning vehicles, who collectively held, through direct and indirect interests, approximately 8.9% of the economic interests in the December 31, 2021 value of Pzena Investment Management, LLC and 15.9% of the future income and distributions.

•Certain other members of our operating company, including one of our directors and his related entities, and former employees, who collectively held, through direct and indirect interests, approximately 19.1% of the economic interests in the value of Pzena Investment Management, LLC and 17.7% of the future income and distributions.

(2)Each share of Class A common stock is entitled to one vote per share.

(3)Each share of Class B common stock is entitled to five votes per share for so long as the number of shares of Class B common stock outstanding represents at least 20% of all shares of common stock outstanding. 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.

(4)As of December 31, 2021, we held 17,324,413 Class A units of Pzena Investment Management, LLC, which represented approximately 23.5% of the economic interest in the December 31, 2021 value of Pzena Investment Management, LLC and the right to receive 21.6% of the future income and distributions.

(5)As of December 31, 2021, the principals collectively held 55,227,855 Class B units of Pzena Investment Management, LLC, which represented 74.9% of the economic interest in the December 31, 2021 value of the Pzena Investment Management, LLC and the right to receive 69.3% of the future income and distributions.

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(6)As of December 31, 2021, the principals collectively held 7,232,705 Class B-1 units of Pzena Investment Management, LLC, which represented the right to receive 9.1% of the future income and distributions. Based on the closing market price of the Company’s Class A common stock at December 31, 2021, the aggregate intrinsic value of these units represented 1.6% of the economic interest in the December 31, 2021 value of the Pzena Investment Management, LLC.

(7)Pursuant to the operating agreement of our operating company, each vested Class B unit is exchangeable for a share of the Company's Class A common stock, subject to certain timing and volume restrictions. When a vested Class B unit is exchanged for a share of Class A common stock, or is forfeited, a corresponding share of the Company's Class B common stock will automatically be redeemed and cancelled. When a share of Class A common stock or Class B unit is repurchased and retired, a corresponding membership unit or share of Class B common stock is redeemed and cancelled, respectively. Conversely, to the extent that we issue shares of Class A common stock, or additional Class B units pursuant to our equity incentive plans, the corresponding Class A membership units or shares of Class B common stock will be issued, respectively. Class B-1 units, upon the end of the holder’s 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.

We utilize a classic value approach to investing and seek to make investments in good businesses at low prices, which requires:

•willingness to invest in companies before their stock prices reflect signs of business improvement, and

•significant patience, based upon our understanding of the business’ fundamentals, and our long-term investment horizon.

Our approach and process aim to achieve attractive returns over the long term. We manage assets in value-oriented investment strategies reflecting varying degrees of portfolio concentrations across a wide range of market capitalizations in both U.S. and non-U.S. capital markets.

Our assets under management, (“AUM”), was $52.5 billion at December 31, 2021, and we managed money on behalf of institutions, acted as sub-investment adviser to a variety of SEC-registered mutual funds and non-U.S. funds as well as investment adviser to Pzena SEC-registered mutual funds, certain private placement funds, and non-U.S. funds.

Our operating company is led by a committee, consisting, as of December 31, 2021, of our Chief Executive Officer (CEO), Mr. Richard S. Pzena; each of our Presidents, Messrs. John P. Goetz and William L. Lipsey; our Executive Vice President, Ms. Caroline Cai; and our Chief Operating Officer (COO), Mr. Evan Fire (the “Executive Committee”).

Our Competitive Strengths

We believe that the following are our competitive strengths:

•Focus on Investment Excellence. We recognize that we must achieve investment excellence in order to attain long-term business success. All of our business decisions, including the design of our investment process and our willingness to limit AUM in our investment strategies, are focused on producing attractive long-term investment results. We believe that our long-term investment performance, together with our willingness to close our strategies to new investors in order to optimize the prospects for future performance, has contributed to our positive reputation among our clients and the institutional consultants who advise them.

•Consistency of Investment Process. Since our inception, we have utilized a classic value investment approach and a systematic, disciplined investment process to construct portfolios for our investment strategies in U.S. and non-U.S. markets across all market capitalizations. The consistency of our process has allowed us to leverage the same investment team to launch new strategies. We believe that our consistent investment process has resulted in our strong brand recognition in the investment community.

•Diverse and High Quality Client Base. We believe that we have developed a favorable reputation in the institutional investment community. This is evidenced by our strong relationships with institutional investors, investment consultants, and mutual fund providers, as well as the diversity and sophistication of our investors. For more information concerning our client base, see “Our Client Relationships and Distribution Approach” below.

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•Experienced Investment Professionals and a Team-Oriented Approach. We believe that our greatest asset is the experience of the individuals on our team. For more information on our investment team, see “Our Investment Team” below.

•Employee Retention. We have focused on building an environment that we believe is attractive to talented investment professionals. Important among our practices are our team-oriented approach to investment decisions, rotation of coverage areas among individuals, and our culture of employee ownership.

•Culture of Ownership. We believe the key contributors to our success should have significant ownership of our business. Since our inception, we have communicated to all our employees that they have the opportunity to become members of our operating company. As of December 31, 2021, we had 55 employee members positioned within all of our functional areas. We believe this ownership model results in a shared sense of purpose with our clients and their advisers. We intend to continue fostering a culture of ownership through our equity incentive plans, which are designed to align our team’s interests with those of our stockholders and clients. We believe this culture of ownership contributes to our team orientation and connection with clients.

Our Business Strategy

The key to our success is continued long-term investment performance. In conjunction with this, we believe the following strategies will enable us to grow our business over time:

•Unwavering Focus on Classic Value Investing. We view our unwavering focus on long-term classic value investment excellence to be the key driver of our business success.

•Capitalize on Growth Opportunities Created By Our Global Strategies. Among both institutional and retail investors industry-wide, over the past few years, there have been increasing levels of investments in portfolios including non-U.S. equities. As of December 31, 2021, the total AUM in our Global Value strategies, International Value strategies, Emerging Markets Value strategies, European Value strategies, and other Global & non-U.S. strategies was $34.2 billion, or 65.1% of our overall AUM. Our global capability provides opportunity for implementation of our strategies around the world.

•Work with Our Strong Consultant Relationships. We believe that we have built strong relationships with the leading investment consulting firms who advise potential institutional clients. Historically, new accounts sourced through consultant-led searches have been a large driver of our inflows and are expected to be a major component of our future inflows. We estimate that approximately % of all retirement plan assets are advised by investment consultants, with a relatively small number of these consultants representing a significant majority of these relationships. As a result of a consistent servicing effort over our history, we have built strong relationships with consulting firms that we believe are the most important. New accounts sourced through consultant-led searches have been a large driver of our historical growth and are expected to be a major component of our future growth. As of December 31, 2021, our largest consultant relationship represented approximately 11.6% of our AUM.

•Expand Our Non-U.S. Client Base. In recent years, we have increased our efforts to develop our non-U.S. client base. Through our strong relationships with global consultants, we have been able to accelerate the development of our relationships with their non-U.S. branches. Over time, we aim to achieve growth of this client base through these relationships and by directly calling on the world’s largest institutional investors. We have also sought to expand our non-U.S. base through our relationships with non-U.S. funds and other investment fund advisers. Effective January 1, 2022, we expanded our physical presence with the launch of an office in Dublin, in addition to our headquarters in the United States, our business development and client service office in London, and our representative office in Melbourne. We opened an office in Dublin to accommodate the market reality in a post-Brexit world. Our presence in Dublin will serve to expand our access to clients and investors in Europe. To date, our efforts have resulted in client relationships in eighteen non-U.S. countries, including Australia, the United Kingdom, Luxembourg, Canada, Ireland, Japan, and South Africa. As of December 31, 2021, we managed $20.5 billion on behalf of non-U.S. clients.

•Provide Access To Our Strategies Through a Range of Investment Vehicles and Distribution Channels. Our clients access our investment strategies through a range of investment vehicles and distribution channels, including separately managed accounts, mutual funds that we sub-advise, and certain private placement vehicles and non-U.S. funds. We also offer five SEC-registered Pzena mutual funds for which we act as

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investment adviser. For more information concerning access to our strategies and our distribution approach, see “Our Client Relationships and Distribution Approach” below.

•Employ Global Team to Serve Clients and Prospects. Our business development and client service professionals are critical to our business, as noted below under "Business Development and Client Service Teams," and are generally focused geographically covering both our institutional and intermediary distribution efforts. In addition to our headquarters in the United States and representative office in Melbourne, we have four dedicated professionals located in our London office, with the launch of our Dublin office in January 2022, two of those professionals moved from the London to the Dublin office.

•Corporate Environmental and Social Responsibility. As a global investment management organization, we are committed to adopting and implementing responsible investment principles in a manner that is consistent with our fiduciary responsibilities to our clients. Throughout the firm’s history, we have recognized the importance of considering environmental, social and governance (ESG) issues as part of a robust investment process. Assessing the potential impact of ESG issues on a company is therefore critical to our investment process. In addition, we believe our communication with the management of companies we invest in and the voting of proxies for those companies should be managed with the same care as all other elements of the investment process. Through our engagement with management, and our proxy voting, we seek to exert a constructive, long-term oriented influence on the trajectory of the company.

Our commitment to incorporating ESG into our investment approach drives us to continually enhance our approach to ESG. For example, in the beginning of 2018, we became a signatory to the Principles for Responsible Investment (PRI), which is a leading global responsible investment network of investment managers, service providers and asset owners. In 2020, we became Sustainability Accounting Standards Board (SASB) Alliance members, reflecting our focus on the financial materiality of ESG issues. In light of the increasing financial materiality of climate change, we recently published our approach to addressing climate risks and opportunities in line with the Taskforce on Climate-Related Financial Disclosures (TCFD).

Our Investment Team

We have built an investment team that is well-suited to implement our classic value investment strategy. The members of our investment team have a diverse set of backgrounds, including former corporate management, private equity, management consulting, accounting, and Wall Street professionals. Their diverse business backgrounds are instrumental in enabling us to make investments in companies where we would be comfortable owning the entire business for a three- to five-year period. We look beyond temporary earnings shortfalls that result in stock price declines, which may lead others to forego investment opportunities, if we believe the long-term fundamentals of a company remain attractive.

As of December 31, 2021, we had a 27-member investment team. Each member serves as a research analyst, and certain members of the team also have portfolio management responsibilities. There are generally three portfolio managers for each investment strategy. These managers have joint decision-making responsibility, and each has “veto authority” over all decisions regarding the relevant portfolio. Research analysts have sector and company-level research responsibilities which span all of our investment strategies, including those with a non-U.S. focus. In order to facilitate the professional development of our team, and to keep a fresh perspective on the companies in our investment portfolios, our research analysts generally rotate industry coverage every three to four years.

We follow a collaborative, consensus-oriented approach to making investment decisions, such that all members of our investment team, irrespective of their seniority, can play a significant role in this decision-making process. We hold weekly research review meetings attended by all portfolio managers and relevant research analysts, and that are open to other employees, at which we openly discuss and debate our findings regarding the normalized earnings power of potential portfolio companies. In addition, we hold daily morning meetings, attended by our portfolio managers, research analysts, portfolio implementation, and client service personnel, in order to review developments in our holdings and set a trading strategy for the day. These meetings are critical for sharing relevant developments and analysis of the companies in our portfolios. We believe that our collaborative culture is attractive to our investment professionals.

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Our Investment Strategies

As of December 31, 2021, our approximately $52.5 billion in AUM was invested in a variety of value-oriented investment strategies, representing differing degrees of concentration, and capitalization segments of U.S. and non-U.S. markets. See "Item 7 — Management's Discussion and Analysis of Financial Condition & Results of Operations — Operating Results — Assets Under Management and Flows" for additional details about our strategies.

The following table identifies our current U.S. and non-U.S. investment strategies, and the allocation of our AUM among them, as of December 31, 2021 and 2020:

Strategy	As of December 31,
	2021		2020
U.S. Value Strategies	(in billions)
Large Cap Value	$	11.8	$	9.2
Mid Cap Value		3.0		2.6
Small Cap Value		2.6		2.2
Value		0.7		0.6
Other U.S. Strategies		0.2		0.2
Global and Non-U.S. Strategies
Global Value		15.9		11.8
International Value		7.7		6.9
Emerging Markets Value		7.1		6.5
European Value		3.0		2.9
Other Global and Non-U.S. Strategies		0.5		0.4
Total	$	52.5	$	43.3

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. In addition, the number of holdings typically found in the portfolios of each of our investment strategies may vary depending on the degree of concentration in the portfolio, with our Focused Value strategies generally reflecting fewer holdings than our Value strategies.

Our largest investment strategies as of December 31, 2021 are further described below. This strategy detail is representative of our Value and Focused Value strategies, and variations thereof.

U.S. Strategies

Large Cap Value. These strategies reflect a portfolio composed of approximately 30 to 80 stocks drawn generally from a universe of 500 of the largest U.S. listed companies, based on market capitalization.

Mid Cap Value. These strategies reflect a portfolio composed of approximately 30 to 80 stocks drawn generally from a universe of U.S. listed companies ranked from the 201st to 1,200th largest, based on market capitalization.

Small Cap Value. These strategies reflect a portfolio composed of approximately 40 to 50 stocks drawn generally from a universe of U.S. listed companies ranked from the 1,001st to 3,000th largest, based on market capitalization.

Focused Value. This strategy reflects a portfolio composed of a portfolio of approximately 30 to 40 stocks drawn generally from a universe of 1,000 of the largest U.S. listed companies, based on market capitalization.

Global and Non-U.S. Strategies

Global Value. These strategies reflect a portfolio composed of approximately 40 to 95 stocks drawn generally from a universe of 2,000 of the largest companies across the world, based on market capitalization.

International Value. These strategies reflect a portfolio composed of approximately 30 to 80 stocks drawn generally from a universe of 1,500 of the largest companies across the world, excluding the United States, based on market capitalization.

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Emerging Markets Value. These strategies reflect a portfolio composed of approximately 30 to 80 stocks drawn generally from a universe of 1,500 of the largest emerging market companies, based on market capitalization.

European Value. These strategies reflect a portfolio composed of approximately 40 to 50 stocks drawn generally from a universe of 750 of the largest European companies, based on market capitalization.

We believe that our ability to retain and grow assets has been, and will continue to be, driven primarily by delivering attractive long-term investment results to our clients. We have therefore prioritized, and will continue to prioritize, investment performance over asset accumulation. Where we have deemed it necessary, we have, at times, closed certain products to new investors in order to preserve capacity to effectively implement our concentrated investment strategies for the benefit of existing clients. Currently, all of our investment strategies are open to new investors.

Our Strategy Development Approach

Historically, a component of our growth has been the development of new strategies. Prior to incubating a new strategy, we perform in-depth research on the potential market for the product, as well as its overall compatibility with our investment expertise. This process involves analysis by our client team, as well as by our investment professionals. We will only launch a new product if we believe that it can add value to a client’s investment portfolio. Prior to marketing a new strategy, we generally incubate the product for a period of one to five years, so that we can test and refine our investment strategy and process before actively marketing the product to our clients.

Our Investment Performance

Since we are long-term fundamental investors, we believe that our investment strategies yield the most benefits and are best evaluated, over a long-term timeframe. For more information on our performance, see “Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations — Operating Results — Assets Under Management and Flows.”

Our Client Relationships and Distribution Approach

We believe that strong relationships with our clients are critical to our ability to succeed and to grow our AUM. In building these relationships, we have focused our efforts where we can efficiently access and service large pools of sophisticated clients with our team of dedicated business development and client service professionals.

We distribute our products primarily through the efforts of our business development and client service team, who communicate directly with our clients and with the consultants who serve them, as well as through the marketing programs of our sub-investment advisory partners and intermediary distribution partners. Since our objective is to attract long-term investors with an investment horizon in excess of three years, our business development and client service efforts focus on educating our investors and intermediary distribution partners regarding our disciplined classic value investment process and philosophy.

Our business development and client service team is responsible for:

•identifying, developing relationships with, and marketing to prospective clients;

•providing ongoing service to existing accounts;

•responding to requests for investment management proposals;

•developing and maintaining relationships with independent consultants;

•developing and maintaining relationships with intermediary partners to grow retail distribution capabilities;

•addressing all ongoing client needs, including periodic updates and reporting requirements; and

•developing direct relationships with clients sourced through consultant-led searches.

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Our business development and client service team is actively engaged with our research team to ensure our clients receive content-based information. We introduce members of our research and portfolio management team into client portfolio reviews to ensure that our clients are exposed to the full breadth of our investment resources. We also provide quarterly reports to our clients in order to share our investment perspectives. We additionally meet and hold conference calls regularly with clients to share perspectives on the portfolio and the current investment environment.

Distribution Channels

We manage assets in three principal distribution channels. A summary of selected financial data attributable to our operations for each distribution channel is included in “Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations.” The following table provides information regarding the composition of our total assets under management by distribution channel:

	As of December 31,
Assets Under Management	2021		2020
	(in billions)
Separately Managed Accounts	$	19.4	$	17.3
Sub-Advised Accounts		30.5		23.3
Pzena Funds		2.6		2.7
Total	$	52.5	$	43.3

Separately Managed Accounts

Since our inception, we have directly offered institutional investment products to public and corporate pension funds, endowments, foundations, high net worth individuals and their investment vehicles. We continue to develop direct relationships with the largest institutional investors and consultants around the world.

Sub-Advised Accounts

We have established relationships with mutual fund and fund providers globally, that offer us opportunities to efficiently access market segments through sub-investment advisory roles. The funds that we sub-advise are either multi-manager funds, in which we manage only a portion of the fund's portfolio, or funds for which we are the sole sub-adviser.

Pzena Funds

U.S. investors that do not meet our minimum account size for a separate account, or who otherwise prefer to invest through a mutual fund, can invest in certain of our strategies through our Pzena mutual funds. We act as the investment adviser to five mutual funds that offer no-load, open-end share classes designed to meet the needs of a range of investor types.

In addition, we offer investors outside of the U.S. the ability to invest in our strategies through Pzena Value Funds plc and its respective sub-funds, a family of Irish-based undertakings for collective investment in transferable securities (UCITS) funds for which we serve as investment manager and promoter. Pzena Value Funds plc began operations in 2005 and offers shares to non-U.S. investors. We currently offer a sub-fund corresponding to our Emerging Markets Focused Value, Global Value, Global Focused Value, Large Cap Value, and Emerging Markets Select Value strategies.

In the U.S., we offer access to many of our U.S., global and non-U.S. strategies through private placement vehicles and collective investment trusts.

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Advisory Fees

We earn advisory fees on our separately managed and sub-advised accounts, as well as our Pzena funds.

On 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 in which the rate we earn on the AUM declines as the amount of AUM increases.

With respect to our sub-advised accounts, as of December 31, 2021, we sub-advised fifteen SEC-registered mutual funds that each have an initial two-year term and are thereafter subject to annual renewal by each fund’s board of directors pursuant to the Investment Company Act of 1940, as amended (the “Investment Company Act”). Fourteen of these fifteen sub-investment advisory agreements are beyond their initial two-year terms as of December 31, 2021. In addition, we sub-advise twenty-one non-U.S. funds. Under these agreements, we are generally paid a management fee according to a schedule, pursuant to 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 and Pzena funds are generally based on the value of AUM at a specific date on a quarterly basis. Certain of our separately managed accounts, sub-advised accounts, and Pzena funds are calculated based on the average of the monthly or daily market value of the account. 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 related to one client relationship 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.

Competition

We compete in all aspects of our business with a large number of investment management firms, commercial banks, broker-dealers, insurance companies, and other financial institutions.

In order to grow our business, we must be able to compete effectively to maintain existing AUM and attract additional AUM. Historically, we have competed for AUM principally on the basis of:

•the performance of our investment strategies;

•our clients’ perceptions of our drive, focus, and alignment of our interests with theirs;

•the quality of the service we provide to our clients and the duration of our relationships with them;

•our brand recognition and reputation within the investing community;

•the range of strategies and investment vehicles we offer; and

•the level of advisory fees we charge for our investment management services.

Our ability to continue to compete effectively will also depend upon our ability to attract highly qualified investment professionals and retain our existing employees.

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Human Capital

At Pzena, we believe that one of our greatest assets is the experience of the individuals on our team. We have focused on building an environment that we believe is attractive to talented investment professionals. We build strong teams with diverse cultural, professional, and academic backgrounds. Important among our practices are our team-oriented approach to investment decisions, opportunities for mentorship, and other programs to help employees grow. Furthermore, every employee at Pzena is eligible for ownership. We believe this ownership model results in a shared sense of purpose with our clients and their advisers. We intend to continue fostering a culture of ownership through our equity incentive plans, which are designed to align our team’s interests with those of our stockholders and clients. We believe this culture of ownership contributes to our team orientation and connection with clients.

At December 31, 2021, we had 140 full-time employees, up from 121 at the end of 2020. This includes 27 investment professionals, compared to 25 in 2020 and 20 business development and client service professionals, compared to 17 in 2020.

As of December 31, 2021, we had 55 employees who we recognize as partner members of our operating company and who are financially exposed to the performance of our operating company. Through their ownership interests in our operating company, our employees directly and indirectly owned approximately 57.4% of the economic interests in the December 31, 2021 value of Pzena Investment Management, LLC and 60.7% of the future income and distributions of Pzena Investment Management, LLC. Of this amount, our founders, Messrs. Pzena, Goetz and Lipsey owned approximately 48.5% of the economic interests and 44.8% of the future income and distributions of our operating company.

Cybersecurity

We maintain our information technology infrastructure with a focus on business efficiency, continuity, security and controls. The information technology environment is designed to oversee and maintain all aspects of information security risk to ensure the confidentiality, integrity, and availability of information assets. We regularly perform evaluations of our security program and continue to invest in our capabilities to keep clients, employees, and critical assets safe. The Chief Information Officer is ultimately responsible for our cybersecurity program which includes the implementation of controls aligned with industry guidelines and applicable statutes and regulations to identify threats, detect attacks and protect these information assets. We have implemented security monitoring capabilities designed to alert us to suspicious activity and developed an incident response program that includes periodic testing and is designed to restore business operations as quickly and as orderly as possible in the event of a breach. In addition, employees participate in ongoing mandatory trainings and receive communications regarding the cybersecurity environment to increase awareness throughout the firm.

Regulatory Environment and Compliance

Our business is subject to extensive regulation in the United States at both the federal and state level, as well as by self-regulatory organizations. Under these laws and regulations, agencies that regulate investment advisers have broad administrative powers, including the power to limit, restrict, or prohibit an investment adviser from carrying on its business in the event that it fails to comply with such laws and regulations. Possible sanctions that may be imposed include the suspension of individual employees, limitations on engaging in certain lines of business for specified periods of time, revocation of investment adviser and other registrations, censures and fines. Our business is also subject to foreign regulation, as discussed below.

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SEC Regulation

Our operating company, Pzena Investment Management, LLC, is registered as an investment adviser with the SEC. As a registered investment adviser, it is subject to the requirements of the Investment Advisers Act of 1940, as amended, (the “Investment Advisers Act”), and the SEC’s regulations thereunder, as well as to examination by the SEC’s staff. The Investment Advisers Act imposes substantive regulation on virtually all aspects of Pzena Investment Management, LLC's business and its relationships with its clients. As an investment adviser, Pzena Investment Management, LLC owes fiduciary duties to its clients, which relate to conflicts of interest, client recommendations and other fundamental matters. Applicable requirements relate to, among other things, engaging in transactions with clients, maintaining an effective compliance program, performance fees, solicitation arrangements, advertising, recordkeeping, reporting, and disclosure requirements.

Certain U.S. funds for which Pzena Investment Management, LLC acts as the sub-investment adviser and five of the U.S. funds for which Pzena Investment Management, LLC acts as investment adviser, are registered with the SEC under the Investment Company Act. The Investment Company Act imposes additional obligations, including detailed operational requirements for both the funds and their advisers. Moreover, the Investment Company Act requires that an investment adviser’s contract with a registered fund may be terminated by the fund on not more than 60 days’ notice, and is subject to annual renewal by the fund’s board after an initial two-year term.

Both the Investment Advisers Act and the Investment Company Act regulate the “assignment” of advisory contracts by the investment adviser. The SEC is authorized to institute proceedings and impose sanctions for violations of the Investment Advisers Act and the Investment Company Act, ranging from fines and censures to termination of an investment adviser’s registration.

Pzena Financial Services, LLC, our SEC registered broker-dealer subsidiary, is subject to the SEC's Uniform Net Capital Rule, which requires that at least a minimum part of a registered broker-dealer's assets be kept in relatively liquid form. At December 31, 2021, Pzena Financial Services, LLC had net capital of $420,396, which was $408,311 in excess of its net capital requirement of $12,085.

ERISA-Related Regulation

With respect to our benefit plan clients, Pzena Investment Management, LLC is a “fiduciary” under the Employment Retirement Act of 1974, (“ERISA”), and is therefore subject to ERISA, and to regulations promulgated thereunder. ERISA and applicable provisions of the Internal Revenue Code impose certain duties on persons who are fiduciaries under ERISA, prohibit certain transactions involving ERISA plan clients, and provide monetary penalties for violations of these prohibitions.

Foreign Regulation

Pzena Investment Management, LLC maintains a representative office in Melbourne, Australia, and maintains an exemption from the Australian Financial Services license requirement under the Corporations Act 2001 of the Commonwealth of Australia.

Pzena Investment Management, Ltd, our United Kingdom subsidiary, is an appointed representative of Mirabella Advisers LLP which is authorized and regulated by the Financial Conduct Authority ("FCA") in the United Kingdom.

Pzena Investment Management, LLC has a Category I Financial Service Provider License and is regulated in South Africa by the Financial Sector Conduct Authority.

Pzena Investment Management Europe Limited, our subsidiary in Ireland, is authorized and regulated by the Central Bank of Ireland as a UCITS management company (pursuant to the European Communities (Undertakings for Collective Investment in Transferable Securities) Regulations, 2011, as amended) (No. C457984). Pzena Investment Management Europe Limited is registered in Ireland with the Companies Registration Office (No. 699811), with its registered office at Riverside One, Sir John Rogerson’s Quay, Dublin, 2, Ireland.

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Pzena Investment Management, LLC currently avails itself of the international adviser exemption in Ontario, Canada. In addition, Pzena Investment Management, LLC is registered as an exempt market dealer in Ontario, Canada. As an exempt adviser, Pzena Investment Management, LLC is only permitted to provide advice in Ontario to certain institutional and high net worth individual clients. As an exempt market dealer, Pzena Investment Management, LLC is permitted to act as a market intermediary for only certain types of trades, and is permitted to market, sell and distribute prospectus-exempt securities to accredited investors. An exempt adviser and market dealer must, upon the request of the Ontario Securities Commission, (“OSC”), produce all books, papers, documents, records and correspondence relating to its activities in Ontario, and inform the OSC if it becomes the subject of an investigation or disciplinary action by any financial services or securities regulatory authority or self-regulatory authority. In the Netherlands, Pzena Investment Management, LLC avails itself of the Section 10 Exemption, which allows U.S. investment managers to provide investment services to certain eligible Dutch clients. This exemption subjects Pzena Investment Management, LLC to certain conduct of business requirements under the Dutch regulations.

We operate in various other foreign jurisdictions without registration in reliance upon applicable exemptions under the laws of those jurisdictions.

Available Information

We make available free of charge through our website, www.pzena.com, our annual reports on Form 10-K, our quarterly reports on Form 10-Q and our current reports on Form 8-K, as well as amendments to those reports, and other filings required under the Securities Act or the Exchange Act as soon as reasonably practicable after they are electronically filed with the SEC. To retrieve these reports, and any amendments thereto, visit the Investor Relations section of our website. The SEC maintains a website at www.sec.gov. All of the materials we filed with the SEC may be accessed free of charge on the SEC's website through its EDGAR page.

Our Corporate Governance Guidelines, Code of Business Conduct and Ethics, Code of Ethics for Senior Financial Officers, and Board of Directors committee charters (including the charters of the Audit Committee, Compensation Committee, and Nominating and Corporate Governance Committee) are also available free of charge through our website under "Investor Relations — Corporate Governance."

The information on the Company's website is not part of, or incorporated by reference into, this Annual Report, or any other report we file with, or furnish to the SEC.

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ITEM 1A. RISK FACTORS

We face a variety of significant and diverse risks, many of which are inherent in our business. Described below are the risks we currently believe could materially and adversely affect our business, financial condition, results of operations or cash flow.

Risks Related to Our Business

Our primary source of revenue is derived from management fees, which are directly tied to our assets under management. Fluctuations in AUM therefore will directly impact our revenue.

Substantially all of our revenue is derived from management fees paid by our clients, based on a percentage of the market value of our AUM. Any decline and/or significant impairment in AUM would greatly affect our revenue, and could occur due to a variety of factors, including:

• Poor performance of our strategies: Poor performance of our investment strategies may result in decreased market value of AUM. In addition, underperformance could impact our ability to maintain our existing client base and develop new relationships, both of which could negatively impact AUM and revenue.

• Poor market environment: We expect our business may generate lower revenue in a depressed equities market or general economic downturn as a result of depreciation of our AUM. Any decline in the market value of securities held in client portfolios due to such adverse conditions would reduce AUM and lead to a decrease in revenue. Investor sentiment in a poor equities market environment could also decrease inflows and increase outflows from our investment strategies in favor of investments perceived as more attractive.

• Global market, economic, geo-political and other conditions: As a company that invests in both U.S. and non-U.S. markets, and with a global client base, our business is subject to changing conditions in the global financial markets, and may also be affected by domestic and international political, social and economic conditions, any of which could negatively impact our investment performance, growth strategy and AUM. See "Our global and non-U.S. strategies consist primarily of investments in the securities of issuers located outside of the United States, which may involve foreign currency exchange, political, social and economic uncertainties and risks" below.

• Termination of significant relationships: Our clients can generally terminate our advisory agreements or reduce assets under management upon short notice and for any reason. Investors in the pooled funds that we manage may also redeem their investments in the funds at any time without prior notice. As of December 31, 2021, five client relationships represented 47% and 25% of our AUM and revenue, respectively, including one client relationship which represents approximately 20% and 8% of our AUM and revenue respectively. The termination of any of these relationships and outflow of money from our pooled funds could significantly reduce our revenue, and we may not be able to establish relationships with other clients in order to replace the lost revenue. There can also be no assurance that our agreements with respect to these relationships will remain in place going forward.

• Defined benefit plans are declining: Defined benefit plans are declining as corporate plan sponsors are decreasing their liabilities and shifting employee enrollment to defined contribution plans. Given the reduction in funding and shift to defined contribution plans there is no guarantee that we will be successful in increasing our penetration of the defined contribution market, which could limit our ability to grow our AUM.

• Intermediary dependence: New accounts sourced through consultant-led searches have been a large driver of our inflows in the past, and are expected to be a major component of our inflows going forward. We have also established relationships with certain mutual fund providers who have offered us opportunities to access certain market segments through sub-investment advisory roles. Such consultants and mutual fund providers routinely review and evaluate our organization and the services we offer, and poor evaluations may result in client outflows and impact our ability to attract new assets through such intermediaries. See "Item 1 — Our

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Business Strategy — Work with Our Strong Consultant Relationships" and "Item 1 — Our Client Relationships and Distribution Approach — Distribution Channels."

• Passive strategies, such as index and exchange-traded funds have grown substantially in relation to active strategies: During the past decade investors have exhibited a desire for passive investment products given their relative performance and lower fee structure compared to active strategies managed by investment managers such as ourselves. If this market preference continues, existing and prospective clients may choose to invest in passive investment products, our AUM may be negatively impacted.

We may face capacity constraints in certain of our strategies which may prevent us from accepting new investors in those strategies.

Our ability to retain and grow assets as a firm has been, and will be, driven primarily by delivering attractive investment results to our clients. As a consequence, we have prioritized, and will continue to prioritize, investment performance over asset accumulation. Where we deemed it necessary, we have, in the past, closed certain strategies to new investors in order to preserve capacity to effectively implement our concentrated investment strategies for the benefit of existing clients. We may in the future close certain of our strategies to new investors or to new inflows from existing investors. Any such closures may limit our future AUM growth and hence our revenue growth.

Market and competitive pressures to lower our advisory fees could lead to a decline in our profit and earnings.

Market and competitive pressures in recent years have created a trend towards lower management fees in the asset management industry and there can be no assurance that we will be able to maintain our current fee structure going forward. As a result, a shift in the composition of our AUM from higher to lower fee-generating client relationships would result in a decrease in revenue, even if our aggregate level of AUM remains unchanged or increases.

The investment management business is intensely competitive.

Competition in the investment management business is based on a variety of factors, including investment performance; investor perception of an investment manager’s drive, focus and alignment of interests; quality of service provided to clients and duration of client relationships; business reputation; and level of fees charged for services. We compete in all aspects of our business with a large number of investment management firms, commercial banks, broker-dealers, insurance companies and other financial institutions. Our competitive risks are heightened by the fact that some of our competitors may implement investment styles that are viewed more favorably than ours or they may invest in alternative asset classes which the markets may perceive as more attractive than the public equity markets. If we are unable to compete effectively, our revenue could be reduced, and our business could be materially affected.

We may not be successful in expanding into new investment strategies, markets and businesses.

We actively consider the opportunistic expansion of our businesses, but we may not be successful in any such attempted expansion. Attempts to expand our businesses involve a number of risks, including entry into markets in which we may have limited or no experience, increasing the demands on our operational systems, the broadening of our geographic footprint, increasing the risks associated with conducting operations in non-U.S. jurisdictions and the diversion of management’s attention from our core businesses.

We also may not be successful in identifying new investment strategies or geographic markets that increase our profitability. Because we have not yet identified all of these potential new investment strategies, geographic markets or businesses, we cannot identify all the risks we may face and the potential adverse consequences. We also do not know how long it may take for us to expand, if we do so at all.

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Loss of key employees, and difficulties in attracting qualified investment professionals, could have a material adverse effect on our business.

The success of our business largely depends on the participation of Richard S. Pzena and the other members of our Executive Committee. Their professional reputations, expertise in investing, and relationships with our clients and within the investing community in the U.S. and abroad are an important factor in our business strategy and attracting and retaining clients. There is no guarantee that they will not resign, join our competitors or form a competing company. The terms of the current operating agreement of our operating company restrict each of these individuals from competing with us or soliciting our clients or employees during the term of their employment with us and, in certain circumstances, for a certain period thereafter. The penalty for breach of these restrictive covenants may be the forfeiture of a number of Class B or Class B-1 units held by the individual, and his or her permitted transferees, as of the earlier of the date of his breach or the termination of his or her employment. Although we may seek specific performance of these restrictive covenants, there can be no assurance that we would be successful in obtaining this relief. After this post-employment restrictive period, we may not be able to prohibit them from competing with us or soliciting our clients or employees. Furthermore, we do not carry any "key man" insurance that would provide us with proceeds in the event of the death or disability of any of the above mentioned employees.

In addition to the participants mentioned above, our success also depends on our ability to retain the senior members of our investment team and to recruit additional qualified investment professionals. We may not be successful in our efforts to retain and recruit such individuals as the market for investment professionals is extremely competitive. Our portfolio managers possess substantial experience and expertise in classic value investing and maintain significant relationships with our clients. The loss of any of our senior investment professionals could limit our ability to successfully execute our investment approach and to sustain the performance of our investment strategies, which, in turn, could have a material adverse effect on our reputation, client relationships and our revenue and earnings.

Future growth of our business may place significant demands on our resources and employees and may increase our expenses, risks and regulatory oversight.

Future growth of our business may place significant demands on our infrastructure, our investment team and other employees, which may increase our expenses. In addition, we are required to continuously develop our infrastructure in response to the increasing sophistication of the investment management market, as well as compliance with legal and regulatory developments. We may face significant challenges in: maintaining and developing adequate financial and operational controls; implementing new or updated information and financial systems, and procedures and training; and managing and appropriately sizing our work force, and other components of our business on a timely and cost-effective basis. There can be no assurance that we will be able to manage the growth of our business effectively, or that we will be able to continue to grow, and any failure to do so could adversely affect our ability to generate revenue and control expenses.

The potential inability of our systems to accommodate an increasing volume of transactions could also constrain our ability to expand our businesses and potentially raise regulatory issues. In recent years, we have substantially upgraded and expanded the capabilities of our data processing systems and other operating technology, and we expect that we may need to continue to upgrade and expand these capabilities in the future to avoid disruption of, or constraints on, our operations, however there is no guarantee that our expansions will be sufficient to accommodate our needs nor that we can continue to upgrade and expand these capabilities successfully. Additionally, there may be additional costs and/or cybersecurity risk associated with remote working in response to the ongoing COVID-19 pandemic. To the extent remote working continues after the pandemic, our systems may require additional expansions to accommodate a flexible work environment.

A change of control could result in termination of our investment advisory or sub-investment advisory agreements.

Pursuant to the Investment Company Act, each of the investment advisory or sub-investment advisory agreements for the SEC-registered mutual funds that we advise will automatically terminate upon their deemed “assignment,” and a fund’s board and shareholders must approve a new agreement in order for us to continue to act as its investment adviser or sub-investment adviser. In addition, pursuant to the Investment Advisers Act, each of our investment advisory agreements for the separate accounts we manage contains a provision that states that the agreement may not be “assigned” without the consent of the client. An "assignment," pursuant to both the Investment Company Act and the Investment Advisers Act, could be deemed to occur upon a sale or transfer of a controlling block of our voting securities. Such an assignment may be deemed to occur in the event that the holders of the Class B units of our operating company exchange enough of their Class B units for shares of our Class A common stock such that they no

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longer own a controlling interest in us. If such a deemed assignment occurs, there can be no assurance that we will be able to obtain the necessary consents from clients whose assets are managed pursuant to separate accounts, or the necessary approvals from the boards and shareholders of the SEC-registered funds that we sub-advise. Such assignment, actual or constructive, could adversely affect our ability to continue managing client accounts, resulting in the loss of AUM and a corresponding loss of revenue.

Extensive regulation of our business has been and will be expensive and time consuming, and exposes us to the potential for significant penalties, including fines or limitations on our ability to conduct our business.

We are subject to extensive regulation of our investment management business and operations. As a registered investment adviser, the SEC oversees our activities pursuant to its regulatory authority under the Investment Advisers Act. In addition, we must comply with certain requirements under the Investment Company Act with respect to the SEC-registered funds for which we act as investment adviser or sub-investment adviser. As a Category I License holder in South Africa, the Financial Sector Conduct Authority has regulatory oversight over our practices and activities in South Africa. Pzena Financial Services, LLC, our SEC registered broker dealer subsidiary is regulated by the Financial Industry Regulatory Authority ("FINRA"). Pzena Investment Management Europe Limited, our Irish subsidiary, is regulated by the Central Bank of Ireland as UCITS. Each of the regulatory bodies with jurisdiction over us has the authority to regulate various aspects of financial services, including the authority to grant, and, in specific circumstances to cancel, permissions to carry on particular businesses. Our failure to comply with applicable laws or regulations could result in fines, censure, suspensions of personnel or other sanctions, including revocation of our registration as an investment adviser. Even if a sanction imposed against us is small in monetary amount, the adverse publicity arising from the imposition of such sanctions by regulators could harm our reputation, result in withdrawal by our clients and/or impede our ability to retain clients and develop new client relationships. As we continue to expand internationally, we may also be under the regulatory scope of local regulatory authorities and non-compliance with any of these authorities may result in fines, sanctions and inability to operate in that local market.

The SEC and its staff continue to engage in various initiatives and reviews that seek to improve and modernize the regulatory structure governing the asset management industry, and registered investment companies in particular. Any new rules, guidance or regulatory initiatives resulting from these efforts could expose us to additional compliance and reporting costs and may require us to change how we operate our business or manage funds, and there can be no assurance that we can sufficiently adapt to comply with such rules, guidance or regulatory initiatives.

The European Union ("E.U.") has implemented the Markets in Financial Instruments Directive (“MiFID”) rules into national legislation. MiFID II, which took effect on January 3, 2018, builds upon many initiatives introduced through MiFID which primarily focused on equity trading activity to migrate onto open and transparent markets. MiFID II has been implemented through a number of more detailed directives, regulations and standards made by the European Commission and by the European Securities Markets Authority and, compliance with MiFID II may increase costs and affect the manner in which our businesses obtain investment research services.

The United Kingdom ("U.K.") exited the E.U. effective January 31, 2020, subject to a transition period which ended December 31, 2020, (referred to as Brexit) and while we have launched our Irish office to continue our European business post-Brexit, we cannot guarantee that any of our Brexit contingency plans will succeed, in whole or in part. Additionally, our operating expenses may increase as we implement our Brexit contingency plans to continue our business in the U.K. and E.U. in the short and/or long term.

A growing focus on privacy regulations across jurisdictions, including, the European Union’s General Data Protection Regulation (“GDPR”), South Africa’s Protection of Personal Information Act (“POPIA”) and in the U.S., federal and state laws, regulations, and guidance impacting consumer privacy, such as the California Consumer Privacy Act and the California Privacy Rights Act of 2020 (the “California Privacy Laws”), are increasing costs of operations and regulatory risks. The obligations and costs of complying with privacy laws and regulations including GDPR, POPIA and California Privacy Laws may impact our financial results. Noncompliance with our legal obligations relating to privacy and data protection across various jurisdictions could result in penalties, legal proceedings by governmental entities or affected individuals, and significant legal, reputational and financial exposure

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We also face the risk of significant intervention by regulatory authorities, including extended investigation and surveillance activity, adoption of costly or restrictive new regulations, and judicial or administrative proceedings that may result in substantial penalties. The requirements imposed by our regulators are designed to ensure the integrity of the financial markets and to protect customers and other third parties who deal with us, and are not designed to protect our stockholders. Any regulatory and legislative actions and reforms affecting the investment advisory industry may negatively impact earnings by increasing our costs of operations.

Specific regulatory changes also may have a direct impact on the revenue of our business. In addition to regulatory scrutiny and potential fines and sanctions, regulators continue to examine different aspects of the asset management industry. For example, the use of “soft dollars,” where a portion of commissions paid to broker-dealers in connection with the execution of trades also pays for research and other services provided to advisors, has been reexamined by different regulatory bodies and may in the future be limited or modified. Although a substantial portion of the research relied on by our business in the investment decision-making process is generated internally by our investment analysts, external research, including external research paid for with soft dollars, is important to the process. This external research generally is used for information gathering or verification purposes, and includes broker-provided research, as well as third-party provided databases and research services. If the use of soft dollars were to be limited, we would have to bear additional costs.

We face risks, and corresponding potential costs and expenses, associated with conducting operations and growing our business in numerous countries.

We offer investment management services in different regulatory jurisdictions around the world, and intend to continue to expand our operations internationally. In order to remain competitive, we must be proactive and prepared to deploy necessary resources when and where growth opportunities present themselves. If we lack the necessary resources and/or personnel, we may be unable to take full advantage of strategic opportunities when they appear and our strategic decisions may not be efficiently implemented. Meeting local requirements and complying with local industry standards may also place additional demands on sales and compliance personnel and resources that we may not be able to meet. Finding and hiring additional, well-qualified personnel and crafting and adopting policies, procedures and controls to address local or regional requirements remain a challenge as we expand our operations internationally. Moreover, regulators could also change their policies or laws in a manner that might restrict or otherwise impede our ability to offer our investment products in their respective markets. Any of these requirements, activities, or needs could increase the costs and expenses we incur in a specific jurisdiction without any corresponding increase in revenue and income from operating in such jurisdiction.

Changes in tax laws or exposure to additional income tax liabilities could have a material impact on our financial condition, results of operations and liquidity.

We are subject to income as well as non-income-based taxes, in both the U.S. and non-U.S. jurisdictions. Additional guidance or changes to tax law may be issued that may have a direct effect on our financial condition, results of operations and liquidity. We are also subject to potential tax audits in various jurisdictions and in such event, tax authorities may disagree with certain positions we have taken and assess penalties or additional taxes. We regularly assess the likely outcomes of these potential audits in order to determine the appropriateness of our tax provision; however, there can be no assurance that we will accurately predict the outcomes of these potential audits. The actual outcomes of these potential audits could have a material impact on our net income or financial condition and any changes in tax laws or tax rulings could materially impact our effective tax rate and earnings.

We are exposed to legal risks which could materially adversely affect our business, financial condition or results of operations or cause significant reputational harm to us. Additionally, litigation may result in higher insurance premiums and increased insurance coverage risks which could increase our costs and reduce our profitability.

We depend to a large extent on our relationships with our clients and our reputation for integrity and high-caliber professional services to attract and retain clients. As a result, dissatisfaction with our services could be more damaging to our business than to other types of businesses. If our clients suffer significant losses, or are otherwise dissatisfied with our services, such as for breach of trading guidelines and/or perceived conflicts of interest, we could be subject to the risk of legal liabilities or actions alleging negligent misconduct, breach of fiduciary duty, or breach of contract. These risks are often difficult to assess or quantify and their existence and magnitude often remain unknown for substantial periods of time.

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While we strive to conduct our business in accordance with the highest ethical standards, we are always open to the risk of litigation by parties in addition to our clients, for instance by our shareholders, employees and regulators. We may incur significant legal expenses in defending against litigation. Substantial legal liability or significant regulatory action against us could materially adversely affect our business, financial condition or results of operations, or cause significant reputational harm to us.

Potential regulatory and governmental inquiries, civil litigation or employment-related claims could involve substantial financial penalties. Certain insurance coverage may not be available or may be prohibitively expensive in future periods. As our insurance policies come up for renewal, we may need to assume higher deductibles or co-insurance liabilities, or pay higher premiums, which could increase our expenses and could have a material adverse effect on our results of operations.

Inadequate business continuity plans, including those of our significant third-party vendors, could lead to material financial loss, reputational harm and inability to continue business.

We rely heavily on our financial, accounting, trading, compliance and other data processing systems. Any failure or interruption of these systems, whether caused by natural disaster, power or telecommunications failure, act of terrorism or war or otherwise, could result in a disruption of our business, liability to clients, regulatory intervention or reputational damage, and thus materially adversely affect our business. The back-up systems that we have in place and other protective measures that we have taken may not be adequate in the event of a failure or interruption.

We depend on our headquarters in New York City for the continued operation of our business. A disaster or a disruption in the infrastructure that supports our business, or directly affecting our headquarters, may have a material adverse impact on our ability to continue to operate our business without interruption.

We have a detailed business continuity plan in place that is tested on a quarterly basis. We strive to understand the protective measures of our third-party vendors, however there can be no assurance that these measures will be sufficient to mitigate the harm that may result from such a disaster or disruption.

Any significant security breach of our software applications, technology or other systems critical to our operations, may disrupt our business or cause us to lose sensitive and confidential information which in turn may cause reputational and financial harm.

We are dependent on the effectiveness of our, and our third-party vendors', information and cyber security infrastructure, policies, procedures and capabilities to protect our computer and telecommunications systems and the data that resides in or is transmitted through them. As part of our normal operations, we maintain and transmit confidential information about our clients as well as proprietary information relating to our business operations. We maintain a system of internal controls designed to provide reasonable assurance that fraudulent activity, including misappropriation of assets, fraudulent financial reporting, and unauthorized access to sensitive or confidential data is either prevented or detected in a timely manner. We are continuously working to install new, and upgrade existing, information technology systems and provide employee awareness training around phishing, malware, and other cyber risks to ensure that we are protected, to the greatest extent possible, against cyber risks and security breaches.

We also strive to understand the protective measures of our third-party vendors and ensure that we have complementary user controls in place to mitigate risk, however our information technology systems may still be vulnerable to unauthorized access or may be corrupted by cyber-attacks, computer viruses or other malicious software code, or authorized persons could inadvertently or intentionally release confidential or proprietary information. This may be especially true to the extent remote work continues after the pandemic and our employees, as well as those of our third-party vendors’, may begin or continue to work remotely. Although we take precautions to password protect and/or encrypt our electronic hardware, if such hardware is stolen, misplaced or left unattended, it may become vulnerable to hacking or other unauthorized use, creating a possible security risk and resulting in potentially costly consequences to us. A breach of our technology systems could result in the loss of valuable information, liability for stolen assets or information, remediation costs to repair damage caused by the breach, additional security costs to mitigate against future incidents and legal costs resulting from the incident. Malicious actors may also attempt to compromise or induce our employees, third-party vendors or other users of our systems to disclose sensitive information or provide access to our data, and these types of risks may be difficult to detect or prevent. Moreover, loss of confidential customer information could harm our reputation, result in the termination of contracts by our existing customers and subject us to liability under laws that protect confidential data, resulting in loss of revenue.

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Operational risk, such as trade errors or system limitations or failures, may create significant financial impact to us, hamper future growth and cause potential reputational harm.

We face potential operational risk from our management of client assets and daily business. Risks include errors that may occur during the execution, confirmation or settlement phase of transactions and such errors may cause material financial loss, which in turn may cause material financial and reputational harm to us. We also face the potential of inaccurate recording of transactions in our internal systems, caused by human error, system limitations or system malfunctions. Such errors may involve client and public reporting, execution, confirmation and settlement of trades, and billing. The potential for operational risk could have significant regulatory, financial or reputational impact. There can be no assurance that all risks and errors can be prevented.

Risks Related to Our Investment Strategy Process and Performance Risk

Our classic value investment style subjects us to the risk that the companies in which we invest may not achieve the level of earnings recovery that we initially expect, or at all.

We generally invest in companies after they have experienced, or are expected by the market to soon experience, a shortfall in their historic earnings, due to an adverse business development, management error, accounting scandal or other disruption, and before there is clear evidence of earnings recovery or business momentum. While investors are generally less willing to invest when companies lack earnings visibility, our classic value investment approach seeks to capture the return that can be obtained by investing in a company before the market has confidence in its ability to achieve earnings recovery. However, our investment approach entails the risk that the companies included in our portfolios are not able to execute as we had expected when we originally invested in them, thereby reducing the performance of our strategies. Since our positions in these investments are often substantial, even partial sales of a substantial position into the market may cause the market price of our investment to decline and there is the risk that we may be unable to find willing purchasers for our investments when we decide to sell them.

Since we apply the same investment process across all of our investment strategies, utilizing one analyst team, and given the overlapping universes of many of our investment strategies, we could have common positions and industry or sector concentrations across many of our investment strategies at the same time. As such, factors leading one of our investment strategies to underperform may lead other strategies to underperform simultaneously.

Our global and non-U.S. strategies may consist of investments in the securities of issuers located outside of the United States, which may involve foreign currency exchange, political, social and economic uncertainties and risks.

Our global and non-U.S. strategies, which together represented $34.2 billion and $28.5 billion of our AUM as of December 31, 2021 and 2020, respectively, are primarily invested in securities of companies located outside the United States. As of December 31, 2021, approximately 47% of our assets under management were invested in securities denominated in currencies other than the U.S. dollar. Investments in non-U.S. issuers may be affected by political, social and economic uncertainty affecting a country or region in which we are invested. Many emerging financial markets are not as developed, or as efficient, as the U.S. financial market, and, as a result, liquidity may be reduced and price volatility may increase. The legal and regulatory environments, including financial accounting standards and practices, may also be different, and there may be less publicly available information in respect of such companies. These risks could adversely impact the performance of our strategies that are invested in securities of non-U.S. issuers. In addition, fluctuations in foreign currency exchange rates may affect investment return and AUM since we do not engage in currency hedging for these portfolios. Due to these factors, our AUM may fluctuate from one reporting period to another, causing volatility in earnings.

Our investment approach may underperform other investment approaches during certain market conditions.

Our products are best suited for investors with long-term investment horizons. In accordance with our classic value investment approach, we typically hold securities for an average of three to five years. Our strategies may not perform well during points in the economic cycle when value-oriented stocks are relatively less attractive. For instance, during the late stages of an economic cycle, investors may purchase relatively expensive stocks in order to obtain access to above average growth. Value-oriented strategies may also experience weakness during periods when the markets are focused on one investment thesis or sector.

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Even when securities prices are rising generally, portfolio performance can be affected by our investment approach. The classic value approach has outperformed the market in some economic and market environments and underperformed it in others. In particular, a prolonged period in which the growth-style of investing outperforms the value-style may cause our investment strategy to go out of favor with clients, consultants and sub-advised relationships. Our investment strategy may be less favored during certain time periods for other reasons as well, including due to perceived riskiness or volatility of our approach. Poor performance relative to peers, coupled with changes in personnel, extensive periods in particular market environments, or other difficulties may result in a decline in our AUM.

A portion of our investment advisory revenue is also derived from performance fees. We generally earn performance fees under certain client agreements according to the performance relative to an agreed-upon benchmark. This fee structure results in a lower base fee but allows for us to earn higher fees if the investment strategy outperforms the 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. Therefore, if we fail to achieve the performance target for a particular period, we may not earn a performance fee for that period and for accounts with a high-water mark provision, our ability to earn future performance fees may be impaired. During fiscal years 2021 and 2020, we earned $0.1 million and $1.1 million, respectively, in performance fees. An increase in performance-based fee arrangements with clients could create greater fluctuations in our revenue and earnings.

In addition, 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 the fiscal years 2021 and 2020, we recognized a net reduction in base fees in the amounts of $3.8 million and $4.0 million, respectively, related to fulcrum fee arrangements. To the extent the three-year performance records of these accounts fluctuate relative to their relevant benchmarks, the amount of base fees recognized may vary.

Our investment process requires us to conduct extensive fundamental research on any company before investing, which may result in missed investment opportunities and reduce the performance of our investment strategies.

We take a considerable amount of time to complete the in-depth research projects that our investment process requires before adding any security to our portfolio. Our process requires that we take this time to understand the company and the business well enough to make an informed decision as to whether we are willing to own a significant position in a company that does not yet have clear earnings visibility. However, the time we take to make this judgment may cause us to miss the opportunity to invest in a company that has a sharp and rapid earnings recovery. Any such missed investment opportunities could adversely impact the performance of our investment strategies.

Our investment strategies subject us to the risks that the companies in which we invest may be exposed to catastrophic events, including natural disasters, pandemics (e.g., COVID-19) and other international health emergencies, weather-related events, terrorist attacks and other disruptions.

We invest in companies globally that may encounter disruptions involving power, communications, transportation, travel or other utilities or essential services on which they depend to conduct business. This could include disruptions as the result of natural disasters, pandemics, other international health emergencies, or weather-related or similar events (such as fires, hurricanes, earthquakes, floods, landslides and other natural conditions including the effects of climate change), political instability, labor strikes or turmoil, or terrorist attacks. In particular since 2020, the ongoing COVID-19 pandemic has caused disruption in financial markets across the world as governments enact quarantines, restrictions on travel and other measures the adversely affected supply chains and general economic activity. While the financial markets and our assets under management have generally recovered, the effects of the ongoing COVID-19 pandemic on the companies in which we invest continues to be uncertain and depend on future developments that remain unpredictable. Successive waves or mutations or variants of the virus may lead to an acceleration of the spread or worsening of the severity of thereof. The effectiveness of measures to combat the virus, including the development, production and distribution of vaccines and therapeutics the public acceptance thereof remains uncertain. In recent years, various parts of the world have sustained significant damage from natural disasters such as hurricanes, wildfires and/or landslides. Although we continue to assess the potential impact of current events on the companies in which we invest, there can be no assurance that these events may not adversely affect our investment and may lead one or more of our investment strategies to underperform. Such disruptions may affect our investment process by limiting our ability to complete our fundamental research in a timely manner.

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Risks Related to Our Structure

We are dependent upon distributions from Pzena Investment Management, LLC to make distributions to our Class A stockholders, and to pay taxes and other expenses.

We are a holding company and have no material assets other than our ownership of membership units of our operating company. We have no independent means of generating revenue and cash flow. Our operating company is treated as a partnership for U.S. federal income tax purposes and, as such, is not itself subject to U.S. federal income tax. Instead, its taxable income is allocated to its members, including us, pro-rata according to the number of membership units each member owns. Accordingly, we incur income taxes on our proportionate share of any taxable income of our operating company. We also incur expenses related to our operations. We intend to have our operating company distribute cash to its members in an amount at least equal to that necessary to cover their tax liabilities, if any, with respect to the earnings of our operating company. To the extent we need funds to pay our tax or other liabilities or to fund our operations, and our operating company is restricted from making distributions to us under applicable laws or regulations, or contractual restrictions, or does not have sufficient earnings to make these distributions, we may have to borrow funds to meet these obligations and run our business and, thus, our liquidity and financial condition could be materially adversely affected. There can be no assurance that funds will be available to borrow under such circumstances on terms acceptable to us, or at all.

We are required to pay most of the tax benefit of any amortization deductions we may claim as a result of the tax basis step up we receive in connection with the sales of membership units and any exchanges of Class B units and this tax treatment could be challenged by tax authorities.

As part of the reorganization we implemented with our initial public offering ("IPO"), we purchased membership units of our operating company from three of its members (the "Selling Members"). In addition, holders of Class B units may, at least once each year, exchange their Class B units of our operating company for shares of our Class A common stock. These purchases and subsequent exchanges have resulted, and are expected to continue to result, in increases in our share of the tax basis in the tangible and intangible assets of our operating company that otherwise would not have been available. These increases in tax basis have reduced, and are expected to continue to reduce, the amount of tax that we would otherwise be required to pay in the future, although the Internal Revenue Service ("IRS") might challenge all or part of this tax basis increase, and a court might sustain such a challenge.

Pursuant to a tax receivable agreement dated October 30, 2007, among us, the Selling Members, and all holders of Class B units after our IPO, we are required to pay the Selling Members, and certain holders of Class B units who elect to exchange their Class B units for shares of our Class A common stock, 85% of the amount of the cash savings, if any, in U.S. federal, state and local income tax that we realize as a result of the increases in amortizable tax basis due to the sale to us of their membership units. The actual increase in tax bases, as well as the amount and timing of any payments under this agreement, may vary depending upon a number of factors, including the timing of exchanges, the price of our Class A common stock at the time of the exchange, the extent to which such exchanges are taxable, the amount and timing of our income, and the tax rates and related laws then applicable. Payments under the tax receivable agreement are expected to give rise to certain additional tax benefits attributable to further increases in basis. Any such benefits are covered by the tax receivable agreement and may increase the amounts due thereunder. We expect that, as a result of the size and increases in our share of the tax basis in the tangible and intangible assets of our operating company attributable to our interest therein, the payments that we may make to these members likely may be substantial.

If we exercise our right to terminate the tax receivable agreement early, we may be obligated to make an early termination payment to the selling and converting shareholders, based upon the net present value of all payments that would be required to be paid by us. If certain change of control events were to occur, we would also be obligated to make an early termination payment.

Were the IRS to successfully challenge the tax bases increases described above, we would not be reimbursed for any payments made under the tax receivable agreement. As a result, in certain circumstances, we could be required to make payments under the tax receivable agreement in excess of our cash tax savings.

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Risks Related to Our Class A Common Stock

The market price and trading volume of our Class A common stock may be volatile, which could result in rapid and substantial losses for our stockholders.

The market price of our Class A common stock has been, and may continue to be, highly volatile and subject to wide fluctuations. In addition, the trading volume of our Class A common stock may fluctuate and cause significant price variations to occur. Such variations may occur for a variety of reasons, which may be unrelated to the value of our business, including volatility resulting from broader macroeconomic and geopolitical conditions, as well as the impacts of market manipulation or irrational price activity resulting from a high volume of short-term trading. If the market price of our Class A common stock declines significantly, you may be unable to resell your shares of our Class A common stock at or above your purchase price, if at all. We cannot assure you that the market price of our Class A common stock may not fluctuate or decline significantly in the future.

The market price of our Class A common stock could decline due to the large number of shares of our Class A common stock eligible for future sale upon the exchange of Class B units of our operating company or future issuance of shares of Class A common stock.

Pursuant to the operating agreement of our operating company, on at least one date designated by us each year, certain holders of Class B units generally may exchange up to 15% of certain of their Class B units for an equivalent number of shares of our Class A common stock, subject to certain restrictions and conditions set forth in the operating agreement. Pursuant to the operating agreement of our operating company, no later than the second exchange date after holders of our Class B-1 units cease to be employed by us, such Class B-1 holders are required to exchange all of their Class B-1 units for a number of shares of our Class A common stock that will be determined based on the market value of our Class A common stock at the time of the grant of the Class B-1 units and at the time of the exchange. Also, since 2011, the non-employee members of our operating company may exchange all of their vested Class B units, in accordance with the timing restrictions set forth in the operating agreement.

Pursuant to the resale and registration rights agreement, dated October 30, 2007, among the holders of Class B units and us, these holders may resell the shares of Class A common stock issued to them upon the exchange of their Class B units as discussed above.

During 2021, we established June 10, 2021 and December 22, 2021 as exchange dates. Certain employee members elected to exchange an aggregate of 790,414 of their Class B units for an equivalent number of shares of our Class A common stock, which are freely tradable. As of December 31, 2021, there remained 55,227,855 shares of our Class A common stock that have previously been registered in various registration statements filed with the SEC, which may be issued upon the exchange of currently outstanding Class B units as discussed above. An additional 5,044,761 shares of Class A common stock are registered relating to Class B units that have not been issued. There are also shares of our Class A common stock registered in various registration statements filed with the SEC, which may be issued upon the exchange of 7,232,705 currently outstanding Class B-1 units as discussed above. The number of such shares of our Class A common stock issuable upon exchange of currently outstanding Class B-1 units will depend on the market value of our Class A common stock at issuance of the relevant Class B-1 units and at the time of any such future exchange.

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Anti-takeover provisions in our amended and restated certificate of incorporation and bylaws could discourage a change of control that our stockholders may favor, which could also adversely affect the market price of our Class A common stock.

Provisions in our amended and restated certificate of incorporation and bylaws may make it more difficult and expensive for a third party to acquire control of us, even if a change of control would be beneficial to our stockholders. For example, our amended and restated certificate of incorporation authorizes our Board of Directors to issue up to 200,000,000 shares of our preferred stock and to designate the rights, preferences, privileges and restrictions of unissued series of our preferred stock, each without any vote or action by our stockholders. We could issue a series of preferred stock to impede the consummation of a merger, tender offer or other takeover attempt. The anti-takeover provisions in our amended and restated certificate of incorporation and bylaws may impede takeover attempts, or other transactions, that may be in the best interests of our stockholders and, in particular, our Class A stockholders. In addition, the market price of our Class A common stock could be adversely affected to the extent that provisions of our amended and restated certificate of incorporation and bylaws discourage potential takeover attempts, or other transactions, that our stockholders may favor.

The disparity in the voting rights among the classes of our common stock may have a potential adverse effect on the price of our Class A common stock and may give rise to conflicts of interest.

As of December 31, 2021, our Class B stockholders collectively hold approximately 94.1% of the combined voting power of our common stock. These stockholders consist of our founders, 50 of our other employees (directly or through their interests in Pzena Investment Management, LP), the estate planning vehicles of our founders and certain of our other employees, certain other members of our operating company, including one of our directors and his related entities, and former employees (directly or through their interests in Pzena Investment Management, LP). Holders of shares of our Class B common stock have entered into a Class B Stockholders’ Agreement with respect to all shares of Class B common stock then held by them and any additional shares of Class B common stock they may acquire in the future. Pursuant to this agreement, they may vote these shares of Class B common stock together on all matters submitted to a vote of our common stockholders. To the extent that we cause our operating company to issue additional Class B units, which may be granted, subject to vesting, to our employees pursuant to the PIM LLC 2006 Equity Incentive Plan, these employees will be entitled to receive an equivalent number of shares of our Class B common stock, subject to the condition that they agree to enter into this Class B Stockholders’ Agreement. Each share of our Class B common stock entitles its holder to five votes per share for so long as the Class B stockholders collectively hold 20% of the total number of shares of our common stock outstanding. When a Class B unit is exchanged for a share of our Class A common stock, an unvested Class B unit is forfeited due to the employee holder’s failure to satisfy the conditions of the award agreement pursuant to which it was granted, or any Class B unit is forfeited as a result of a breach of any restrictive covenants contained in our operating company’s amended and restated operating agreement, a corresponding share of our Class B common stock will automatically be redeemed by us.

For so long as our Class B stockholders hold at least 20% of the total number of shares of our common stock outstanding, they will be able to elect all of the members of our Board of Directors and thereby control our management and affairs, including determinations with respect to acquisitions, dispositions, borrowings, issuances of securities, and the declaration and payment of dividends. In addition, they will be able to determine the outcome of all matters requiring approval of stockholders, and will be able to cause or prevent a change of control of our Company or a change in the composition of our Board of Directors, and could preclude any unsolicited acquisition of our Company. Our Class B stockholders have the ability to prevent the consummation of mergers, takeovers or other transactions that may be in the best interests of our Class A stockholders. In particular, this concentration of voting power could deprive Class A stockholders of an opportunity to receive a premium for their shares of Class A common stock as part of a sale of our company, and could ultimately affect the market price of our Class A common stock.

Each share of our Class A common stock entitles its holder to one vote on all matters to be voted on by stockholders. This difference in voting rights could adversely affect the value of our Class A common stock to the extent that investors view, or any potential future purchaser of our company views, the superior voting rights of the Class B common stock to have more value.

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Our ability to pay dividends is subject to the discretion of our Board of Directors and may be limited by our holding company structure and applicable provisions of Delaware law.

We currently intend to pay cash dividends on a quarterly basis and our Board of Directors has targeted a cash dividend payout ratio of approximately 60% to 70% of annual as adjusted earnings per share, subject to growth initiatives and other funding needs. However, our Board of Directors may, in its discretion, modify the level of dividends, or discontinue the payment of dividends entirely. Furthermore, we are a holding company, and depend upon the ability of Pzena Investment Management, LLC, our operating company, to generate earnings and cash flows and distribute them to us so that we may pay our obligations and expenses and pay dividends to our stockholders. We expect to cause Pzena Investment Management, LLC to make distributions to its members, including us. However, the ability of Pzena Investment Management, LLC to make such distributions is subject to its operating results, cash requirements and financial condition, and applicable Delaware laws (which may limit the amount of funds available for distribution to its members), as well as any contractual restrictions. If, as a consequence of these various limitations and restrictions, we do not receive distributions from our operating company, we may not be able to make, or may have to reduce or eliminate, the payment of dividends on our Class A common stock. Because of these various limitations and restrictions, we have, in the past, had to suspend our quarterly dividend payment. See “Item 5 — Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities — Our Dividend Policy.”

The dual class structure of our common stock may adversely affect the trading market for our Class A common stock.

S&P Dow Jones and FTSE Russell have announced changes to their eligibility criteria for inclusion of shares of public companies on certain indices, namely, to exclude companies with multiple classes of shares of common stock from being added to such indices. In addition, several shareholder advisory firms have announced their opposition to the use of multiple class structures. As a result, the dual class structure of our common stock may prevent the inclusion of our Class A common stock in such indices and may cause shareholder advisory firms to publish negative commentary about our corporate governance practices. Any such exclusion from indices could result in a less active trading market for our Class A common stock. Any actions or publications by shareholder advisory firms critical of our corporate governance practices or capital structure could also adversely affect the value of our Class A common stock.

General Risks

Insurance coverage may not protect us from all of the liabilities that could arise from the risks inherent in our business.

We maintain insurance coverage focused on reducing potential losses related to our operations. We purchase insurance in amounts, and against risks, that we consider appropriate. There can be no assurance, however, that a claim or claims will be completely covered by insurance or, if covered at all, will not exceed the limits of our existing insurance coverage. If a loss occurs that is partially or completely uninsured, we may be exposed to substantial liability. Insurance costs are impacted by market conditions and our risk profile, and may increase significantly over relatively short periods. Renewals of insurance policies may result in additional costs through higher premiums or the assumption of higher deductibles or co-insurance liability. In addition, insurance and other safeguards might only partially reimburse us for our losses in the event our business continuity plan fails and our operations are significantly disrupted.

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Our ability to conduct our business may be materially adversely impacted by catastrophic events, including natural disasters, pandemics (including COVID-19) and other international health emergencies, weather-related events, terrorist attacks, and other disruptions.

We may encounter disruptions involving power, communications, transportation, travel or other utilities or essential services depended on by us or by third parties with whom we conduct business. This could include disruptions as the result of natural disasters, pandemics, other international health emergencies, or weather-related or similar events (such as fires, hurricanes, earthquakes, floods, landslides and other natural conditions including the effects of climate change), political instability, labor strikes or turmoil, or terrorist attacks. In 2020, we, along with the rest of the world had to adapt our business in response to the ongoing COVID-19 pandemic. In recent years, several parts of the U.S. also sustained significant damage from natural disasters such as hurricanes, wildfires and/or landslides. Additionally, Australia sustained significant damage from wildfires in recent years. Similar potential disruptions may occur in any of the locations in which we or our clients do business. We continue to assess the potential impact on our investments and clients of such events, and what impact, if any, these events could have on our businesses, financial condition, results of operations and prospects. While we have in place business continuity plans that address potential impacts of the ongoing COVID-19 pandemic to our personnel and our facilities, and technologies that enable our personnel to work remotely, there is no guarantee that or plans will continue to be effective or appropriate. While our employees have to date been able to work remotely, operational challenges may arise in the future, which may reduce our organizational efficiency or effectiveness, and increase operational, compliance and cybersecurity risks. In addition, because most of our employees have not previously worked remotely for an extended period of time, we are unsure of the impact that the remote work environment and lack of in-person meetings with colleagues, clients and the companies we invest in will have on the growth of our business and the results of our operations.

The individuals, counterparties or issuers on whom we rely to perform services for us may be unable or unwilling to honor their contractual obligations to us.

We rely on various third parties and other vendors to fulfill their obligations to us, whether specified by contract, course of dealing or otherwise. Disruptions in the financial markets and other economic challenges may cause our counterparties and other vendors to experience significant cash flow problems or even render them insolvent, which may expose us to credit, operational or other risk.

Increases in our expenses could lead to a decline in our profit margin and increase the volatility of our earnings.

Our expenses are subject to increase based on a variety of factors such as higher operating expenses resulting from business expansion, product development and increased marketing efforts; higher compensation expense due to increased competition for talent, headcount and seniority level; macroeconomic trends such as rising inflation and the increase in interest rates in response thereto; and related expenses to meet business and regulatory needs. Some or all of these expenses may remain at higher levels for the foreseeable future, leading to higher costs for our business. Fluctuations in expenses could impact our profit margins and contribute to earnings volatility.

Certain changes in accounting and/or financial reporting standards issued by the Financial Accounting Standards Board (“FASB”), the SEC or other standard-setting bodies could have a material impact on our reported financial position or results of our operations.

We are subject to the application of accounting principles generally accepted in the United States of America (“U.S. GAAP”), which are periodically revised and/or expanded. As such, we are required to adopt new or revised accounting and/or financial reporting standards issued by recognized accounting standard setters or regulators, such as the FASB and the SEC. Changes associated with the adoption of revised financial reporting standards could have a material impact on our reported financial position or results of our operations.

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ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 2. PROPERTIES

As of the date of this Annual Report, our corporate headquarters and principal offices are located at 320 Park Avenue, 8th Floor, New York, New York 10022. We occupy approximately 45,050 square feet of space under a non-cancellable operating lease, the term of which expires on December 31, 2025. In January 2022, we have entered into a lease amendment which extends the term until October 31, 2036 and provides for a total of approximately 74,000 square feet of space. We plan to sublet a portion of the space; however, our obligations on the lease are not subject to finding suitable sublessee(s).

ITEM 3. LEGAL PROCEEDINGS

In the normal course of business, we may be subject to various legal and administrative proceedings.

Currently, there are no material legal proceedings pending against us that we believe may have a material effect on our business, cash flow or results of operations.

ITEM 4. MINE SAFETY DISCLOSURES

Not Applicable.

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PART II.

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Our Class A common stock is listed for trading on the New York Stock Exchange (the “NYSE”) under the symbol “PZN.” As of March 8, 2022, there were approximately 39 record holders of our Class A common stock and 26 record holders of our Class B common stock. These numbers do not include shareholders who hold their shares through one or more intermediaries, such as banks, brokers or depositories.

Our Dividend Policy

Our Board of Directors has targeted a cash dividend payout ratio of approximately 60% to 70% of our as adjusted diluted net income, subject to growth initiatives and other funding needs. However, our Board of Directors may, in its discretion, modify the level of dividends, or discontinue the payment of dividends entirely.

We use annual non-GAAP as adjusted earnings measures, discussed in further detail in “Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operation — Net Income” in Part II of this Annual Report, to assess the strength of the underlying operations of the business. Included in our annual results are certain tax related and non-recurring adjustments that we feel add a measure of non-operational complexity to our results as reported under GAAP and obscure the underlying performance of the business. Management therefore does not consider these adjustments when evaluating operating results or financial information in any given period, and instead uses as adjusted measures of earnings, which exclude these items, to analyze our operations between periods, and over time, and to evaluate the financial condition and results of operations. Investors should consider the as adjusted measures in addition to, and not as a substitute for, financial measures prepared in accordance with GAAP. The adjusted measures that we present are not determined in accordance with GAAP. We have made adjustments that we have determined are appropriate, but such adjustments may differ from the adjustments made by other companies using similarly titled measures. Accordingly, such measures may not be comparable to the similarly titled measures presented by other companies.

As a holding company, we have no material assets other than 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, if any. 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. 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, or any of our financing facilities or other agreements restrict us from doing so. To the extent we do not have cash on hand sufficient to pay dividends in the future, we may decide not to pay dividends.

Our ability to pay dividends is subject to Board of Director discretion and may be limited by our holding company structure and applicable provisions of Delaware law. See “Item 1A — Risk Factors — Risks Related to Our Class A Common Stock — Our ability to pay dividends is subject to the discretion of our Board of Directors and may be limited by our holding company structure and applicable provisions of Delaware law.”

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Issuer Purchases of Equity Securities

On April 24, 2012, our Board of Directors authorized us to repurchase an aggregate of $10.0 million of our outstanding Class A common stock in the open market and Class B units of the operating company in private transactions in accordance with applicable securities laws. On February 5, 2014, the Board of Directors authorized us to repurchase an additional $20.0 million of our outstanding Class A common stock and Class B units of the operating company. On April 19, 2018, the Company announced that its Board of Directors approved an additional increase of $30.0 million in the aggregate amount authorized under the program. On July 20, 2021, the Company announced that its Board of Directors approved an increase of $40.0 million in the aggregate amount authorized under the program. The timing, number, and value of common shares and units repurchased are subject to our discretion. Our share repurchase program is not subject to an expiration date and may be suspended, discontinued, or modified at any time, or for any reason. Shares repurchased under the repurchase program during the fourth quarter of 2021 are as follows:

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 Programs		(d) Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs(1)
							(in millions)
October 1, 2021 through October 31, 2021		76,964	$	10.63		76,964	$	43.6
November 1, 2021 through November 30, 2021		83,495		11.10		83,495		42.6
December 1, 2021 through December 31, 2021		98,292		9.60		98,292		41.3
Total		258,751	$	10.39		258,751	$	41.3

(1)The dollar amount in the column entitled "Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs," reflects the remainder of the program and also reflects the repurchase of 42,811 of the operating company's Class B units during November and December 2021 for an average price of $8.61 per unit. Class B units are repurchased at fair value determined by reference to our Class A common stock on the date of the transaction since Class B units are exchangeable for shares of our Class A common stock on a one-for-one basis and adjusted for the impact of award terms on the value of the award.

Securities Authorized for Issuance under Equity Compensation Plans

See Part III, Item 12 – Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters in this annual report for disclosure relating to our equity compensation plans. The information required to be reported in such item will be included in the Company’s 2022 Proxy Statement and is incorporated by reference herein.

ITEM 6. SELECTED FINANCIAL DATA

The following tables set forth selected historical consolidated financial data of Pzena Investment Management, Inc. The selected consolidated statements of operations data for the years ended December 31, 2021 and 2020 and the selected consolidated statements of financial condition data as of December 31, 2021 and 2020, have been derived from Pzena Investment Management, Inc.’s audited consolidated financial statements included in this Annual Report.

The selected consolidated statement of operations data for the years ended December 31, 2019, 2018 and 2017, and the selected consolidated statements of financial condition as of December 31, 2019, 2018 and 2017, have been derived from Pzena Investment Management, Inc.’s audited consolidated financial statements not included in this report.

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You should read the following selected historical consolidated financial data together with “Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the historical consolidated financial statements and the related notes included in this Annual Report.

	For the Years Ended December 31,
	2021		2020		2019		2018			2017
	(in thousands, except share and per share amounts)
Statements of Operations Data:
REVENUE
Management Fees	$	199,242	$	137,541	$	149,691	$	150,700		$	138,136
Performance Fees		92		1,078		1,055		2,879			3,159
Total Revenue		199,334		138,619		150,746		153,579			141,295
EXPENSES
Cash Compensation and Benefits		61,248		55,283		58,016		51,600			48,722
Other Non-Cash Compensation		15,824		13,204		30,093		9,819			10,182
Total Compensation and Benefits Expense		77,072		68,487		88,109		61,419			58,904
General and Administrative Expenses		16,403		14,859		16,973		13,405			13,337
TOTAL OPERATING EXPENSES		93,475		83,346		105,082		74,824			72,241
Operating Income		105,859		55,273		45,664		78,755			69,054
Other Income/ (Expense)		8,416		552		5,607		(2,658	)		25,608
INCOME BEFORE INCOME TAXES		114,275		55,825		51,271		76,097			94,662
Income Tax Provision		7,798		4,287		5,795		7,778			34,512
Consolidated Net Income		106,477		51,538		45,476		68,319			60,150
Less: Net Income Attributable to Non-Controlling Interests		87,798		42,664		37,014		54,525			53,242
NET INCOME Attributable to Pzena Investment Management, Inc.	$	18,679	$	8,874	$	8,462	$	13,794		$	6,908
Per Share Data1:
Net Income for Basic Earnings per Share	$	18,679	$	8,874	$	8,462	$	13,794		$	6,908
Basic Earnings per Share	$	1.07	$	0.52	$	0.47	$	0.78		$	0.40
Basic Weighted Average Shares Outstanding		17,414,694		17,208,174		17,945,686		17,678,874			17,338,348
Net Income for Diluted Earnings per Share	$	83,661	$	40,766	$	34,046	$	55,347		$	40,064
Diluted Earnings per Share2	$	1.00	$	0.52	$	0.46	$	0.77		$	0.40
Diluted Weighted Average Shares Outstanding		84,007,638		79,143,710		74,199,308		71,934,144			70,934,362
Cash Dividends Declared Per Share	$	0.34	$	0.55	$	0.58	$	0.51		$	0.37

(1)Pursuant to our equity incentive plans, the Company issues shares of Class A common stock, the operating company issues Class B units that have non-forfeitable dividend rights, and the operating company issues Class B-1 units that are entitled to receive distributions during the holders’ employment. 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)During the year ended December 31, 2017, 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.

	As of December 31,
	2021		2020		2019		2018		2017
	(in thousands)
Statements of Financial Condition Data:
Cash and Cash Equivalents	$	81,133	$	65,534	$	52,480	$	38,099	$	63,414
TOTAL ASSETS		264,300		188,687		199,452		170,976		169,047
TOTAL LIABILITIES		86,246		79,732		91,242		71,968		69,758
Non-Controlling Interests		135,466		77,849		76,766		66,006		66,985
EQUITY		42,588		31,106		31,444		33,002		32,304

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ITEM 7. 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 December 31, 2021, our AUM was approximately $52.5 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, certain 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 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 December 31, 2021, the holders of our Class A common stock (through the Company), the holders of Class B units of our operating company, and Class B-1 units of the operating company held approximately 23.5%, 74.9%, and 1.6%, respectively, of the economic interests in the December 31, 2021 value of our operating company. As of December 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 21.6%, 69.3%, and 9.1%, respectively, of the future income and distributions. For the year ended December 31, 2021, the weighted-average non-controlling interest of our operating company was 78.2%.

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 December 31, 2021, through direct and indirect interests, our three founders; 50 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 48.5%, 8.9%, and 19.1% of the economic interests in the December 31, 2021 value of our operating company, respectively. As of December 31, 2021, through direct and indirect interests, our three founders; 50 other employee members; and certain former employees, collectively held 44.8%, 15.9%, and 17.7% of the future income and distributions of our operating company, respectively.

Net Income

GAAP diluted net income and GAAP diluted earnings per share were $83.7 million and $1.00, respectively, for the year ended December 31, 2021, and $40.8 million and $0.52, respectively, for the year ended December 31, 2020.

In evaluating the results of operations, management also reviews non-GAAP as adjusted measures of earnings, which are adjusted to exclude accounting items that add a measure of non-operational complexity which obscures the underlying performance of the business. For the twelve months ended December 31, 2021 and 2020, no adjustments were made to GAAP earnings. We believe that these adjustments, and the as adjusted measures derived from them, provide information to better analyze our operations between periods, and over time. Investors should consider these as adjusted measures in addition to, and not as a substitute for, financial measures prepared in accordance with GAAP.

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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 resulting effective tax rate was 25.0% for the year ended December 31, 2021 and 24.8% for the year ended December 31, 2020. 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 is recognized over the period in which investment management services are provided. In accordance with Revenue Recognition Topic of the Financial Accounting Standards 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 is presented net of fund expense cap reimbursements.

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 will depend 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 our assets under management. Fluctuations in AUM therefore will directly impact our revenue."

For our separately managed accounts, we are paid management fees according to a schedule, which varies by investment strategy. The substantial majority of these accounts pay us management fees pursuant to a schedule in 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 sub-advised 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 and Pzena funds are generally based on the value of AUM at a specific date on a quarterly basis. Certain of our separately managed accounts, sub-advised accounts, and Pzena funds 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 related to one client relationship 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.

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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;

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

•changes in the amount of expense cap reimbursements paid.

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, costs associated with operating and maintaining our research, trading and portfolio accounting systems, 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.

We incur additional expenses associated with being a public company for, among other things, director and officer insurance, director fees, SEC reporting and compliance (including Sarbanes-Oxley compliance), professional fees, transfer agent fees, and other similar expenses.

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 professional service fees, rent, 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 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 IPO 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 subsidiaries 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 (as noted in "Item 1 — Business — Overview"), we have reflected their membership interests as a non-controlling interest in our consolidated financial statements. Based on the closing price of the

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Company’s Class A common stock as of as of December 31, 2021, the holders of our Class A common stock of the Company and the holders of Class B units and Class B-1 Units of our operating company held approximately 23.5% and 74.9%, and 1.6%, respectively, of the economic interests in the December 31, 2021 value of the operating company. As of December 31, 2021, the holders of our Class A common stock and the holders of Class B units and B-1 units of our operating company held approximately 21.6%, 69.3%, and 9.1%, respectively, of the future income and distributions of our operating company. In addition, our operating company consolidates the results of operations of the private investment partnerships and Pzena-branded mutual funds 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

Assets Under Management and Flows

As of December 31, 2021, our approximately $52.5 billion of AUM was invested in a variety of value-oriented investment strategies, representing distinct capitalization segments of U.S. and non-U.S. equity markets. The performance of our largest investment strategies as of December 31, 2021 is 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 December 31, 2021 and 2020:

	AUM at December 31,
Strategy	2021		2020
	(in billions)
U.S. Value Strategies
Large Cap Value	$	11.8	$	9.2
Mid Cap Value		3.0		2.6
Small Cap Value		2.6		2.2
Value		0.7		0.6
Other U.S. Strategies		0.2		0.2
Total U.S. Value Strategies		18.3		14.8
Global and Non-U.S. Value Strategies
Global Value		15.9		11.8
International Value		7.7		6.9
Emerging Markets Value		7.1		6.5
European Value		3.0		2.9
Other Global and Non-U.S. Strategies		0.5		0.4
Total Global and Non-U.S. Value Strategies		34.2		28.5
Total	$	52.5	$	43.3

	AUM at December 31,
Account Domicile	2021		2020
	(in billions)
U.S.	$	32.0	$	26.5
Non-U.S.		20.5		16.8
Total	$	52.5	$	43.3

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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 December 31, 2021, and in the five-year, three-year, and one-year periods ended December 31, 2021, relative to the performance of the market index which is often used by our clients to compare the performance of the relevant investment strategy.

	Period Ended December 31, 20211
Investment Strategy (Inception Date)	Since Inception			5 Years			3 Years			1 Year
Large Cap Value (July 2012)
Annualized Gross Returns		13.2	%		10.4	%		17.2	%		29.5	%
Annualized Net Returns		13.1	%		10.3	%		17.1	%		29.4	%
Russell 1000® Value Index		12.7	%		11.2	%		17.6	%		25.2	%
International Value (November 2008)
Annualized Gross Returns		9.7	%		8.4	%		12.2	%		12.9	%
Annualized Net Returns		9.4	%		8.1	%		11.8	%		12.6	%
MSCI EAFE® Index – Net/U.S.$2		7.9	%		9.5	%		13.5	%		11.3	%
Emerging Markets Focused Value (January 2008)
Annualized Gross Returns		4.3	%		9.9	%		10.3	%		7.5	%
Annualized Net Returns		3.5	%		9.1	%		9.5	%		6.7	%
MSCI® Emerging Markets Index – Net/U.S.$2		2.3	%		9.9	%		10.9	%		-2.5	%
Large Cap Focused Value (October 2000)
Annualized Gross Returns		8.0	%		10.0	%		17.5	%		30.2	%
Annualized Net Returns		7.6	%		9.6	%		17.1	%		29.8	%
Russell 1000® Value Index		7.7	%		11.2	%		17.6	%		25.2	%
Global Value (January 2010)
Annualized Gross Returns		9.3	%		10.4	%		15.7	%		20.6	%
Annualized Net Returns		8.9	%		10.0	%		15.3	%		20.1	%
MSCI® World Index – Net/U.S.$2		11.0	%		15.0	%		21.7	%		21.8	%
European Focused Value (August 2008)
Annualized Gross Returns		5.6	%		7.4	%		11.3	%		17.2	%
Annualized Net Returns		5.2	%		7.0	%		10.9	%		16.8	%
MSCI® Europe Index – Net/U.S.$2		4.2	%		10.1	%		14.9	%		16.3	%
Global Focused Value (January 2004)
Annualized Gross Returns		6.6	%		9.9	%		15.5	%		20.2	%
Annualized Net Returns		5.9	%		9.4	%		15.0	%		19.7	%
MSCI® All Country World Index – Net/U.S.$2		8.4	%		14.4	%		20.4	%		18.5	%
Mid Cap Value (April 2014)
Annualized Gross Returns		9.7	%		9.4	%		19.9	%		29.8	%
Annualized Net Returns		9.5	%		9.2	%		19.7	%		29.6	%
Russell Mid Cap® Value Index		10.2	%		11.2	%		19.6	%		28.3	%
Focused Value (January 1996)
Annualized Gross Returns		10.6	%		8.6	%		17.3	%		27.2	%
Annualized Net Returns		9.9	%		8.0	%		16.5	%		26.5	%
Russell 1000® Value Index		9.4	%		11.2	%		17.6	%		25.2	%
Small Cap Focused Value (January 1996)
Annualized Gross Returns		13.5	%		8.8	%		18.8	%		30.5	%
Annualized Net Returns		12.3	%		7.8	%		17.7	%		29.4	%
Russell 2000® Value Index		10.0	%		9.1	%		18.0	%		28.3	%
International Focused Value (January 2004)
Annualized Gross Returns		6.8	%		8.9	%		12.3	%		13.2	%
Annualized Net Returns		6.0	%		8.3	%		11.7	%		12.6	%
MSCI® All Country World ex-U.S. Index – Net/U.S.$2		6.5	%		9.6	%		13.2	%		7.8	%
Mid Cap Focused Value (September 1998)
Annualized Gross Returns		12.9	%		11.2	%		22.9	%		32.9	%
Annualized Net Returns		12.1	%		10.5	%		22.1	%		32.0	%
Russell Mid Cap® Value Index		10.7	%		11.2	%		19.6	%		28.3	%

1The 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.

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

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Large Cap Value. This strategy reflects a portfolio composed of approximately 50 to 80 stocks drawn generally from a universe of 500 of the largest U.S. listed companies, based on market capitalization. This strategy was launched in July 2012. At December 31, 2021, the Large Cap Value strategy generated a one-year annualized gross return of 29.5%, outperforming its benchmark. The top contributing sectors included the consumer discretionary, industrials, and financial services sectors.

International Value. This strategy reflects a portfolio composed of approximately 60 to 80 stocks drawn generally 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 December 31, 2021, the International Value strategy generated a one-year annualized gross return of 12.9%, outperforming its benchmark. The top contributing sectors included the industrials sector, partially offset by the underperformance of the energy sector.

Emerging Markets Focused Value. This strategy reflects a portfolio composed of approximately 40 to 80 stocks drawn generally from a universe of 1,500 of the largest emerging market companies, based on market capitalization. This strategy was launched in January 2008. At December 31, 2021, the Emerging Markets Focused Value strategy generated a one-year annualized gross return of 7.5%, outperforming its benchmark. The top contributing sectors included the financial services, consumer discretionary, and industrials sectors.

Large Cap Focused Value. This strategy reflects a portfolio composed of approximately 30 to 40 stocks drawn generally from a universe of 500 of the largest U.S. listed companies, based on market capitalization. This strategy was launched in October 2000. At December 31, 2021, the Large Cap Focused Value strategy generated a one-year annualized gross return of 30.2%, outperforming its benchmark. The top contributing sectors included the industrials, consumer discretionary, and financial services sectors.

Global Value. This strategy reflects a portfolio composed of approximately 60 to 95 stocks drawn generally 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 December 31, 2021, the Global Value strategy generated a one-year annualized gross return of 20.6%, underperforming its benchmark. The top detracting sectors included the consumer discretionary and information technology sectors, partially offset by the outperformance of the financial services sector.

European Focused Value. This strategy reflects a portfolio composed of approximately 40 to 50 stocks drawn generally from a universe of 750 of the largest European companies, based on market capitalization. This strategy was launched in August 2008. At December 31, 2021, the European Focused Value strategy generated a one-year annualized gross return of 17.2%, outperforming its benchmark. The top contributing sectors included the consumer staples, industrials, and consumer discretionary sectors, partially offset by the underperformance of the energy sector.

Global Focused Value. This strategy reflects a portfolio composed of approximately 40 to 60 stocks drawn generally 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 December 31, 2021, the Global Focused Value strategy generated a one-year annualized gross return of 20.2%, outperforming its benchmark. The top contributing sectors included the financial services and industrials sectors, partially offset by the underperformance of the materials sector.

Mid Cap Value. This strategy reflects a portfolio composed of approximately 50 to 80 stocks drawn generally 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 December 31, 2021, the Mid Cap Value strategy generated a one-year annualized gross return of 29.8%, outperforming its benchmark. The top contributing sectors included the consumer discretionary sector.

Focused Value. This strategy reflects a portfolio composed of a portfolio of approximately 30 to 40 stocks drawn generally 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 December 31, 2021, the Focused Value strategy generated a one-year annualized gross return of 27.2%, outperforming its benchmark. The top contributing sectors included the industrials and consumer discretionary sectors, partially offset by the underperformance of the energy sector.

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Small Cap Focused Value. This strategy reflects a portfolio composed of approximately 40 to 50 stocks drawn generally 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 December 31, 2021, the Small Cap Focused Value strategy generated a one-year annualized gross return of 30.5%, outperforming its benchmark. The top contributing sectors included the health care and materials sectors, partially offset by the underperformance of the consumer discretionary and energy sectors.

International Focused Value. This strategy reflects a portfolio composed of approximately 30 to 50 stocks drawn generally 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 December 31, 2021, the International Focused Value strategy generated a one-year annualized gross return of 13.2%, outperforming its benchmark. The top contributing sectors included the consumer discretionary, industrials, and communication services sectors, partially offset by the underperformance of the energy sector.

Mid Cap Focused Value. This strategy reflects a portfolio composed of approximately 30 to 40 stocks drawn generally 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 December 31, 2021, the Mid Cap Focused Value strategy generated a one-year annualized gross return of 32.9%, outperforming its benchmark. The top contributing sectors included the consumer discretionary, materials, and industrials sectors, partially offset by the underperformance of the energy 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 years ended December 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.

	For the Years Ended December 31,
Assets Under Management	2021			2020
	(in billions)
Separately Managed Accounts
Assets
Beginning of Period	$	17.3		$	16.4
Inflows		2.0			1.8
Outflows		(2.9	)		(1.7	)
Net Flows		(0.9	)		0.1
Market Appreciation/(Depreciation)		3.6			0.3
Foreign Exchange1		(0.6	)		0.5
End of Period	$	19.4		$	17.3
Sub-Advised Accounts
Assets
Beginning of Period	$	23.3		$	22.4
Inflows		7.1			5.0
Outflows		(5.0	)		(4.6	)
Net Flows		2.1			0.4
Market Appreciation/(Depreciation)		5.6			0.2
Foreign Exchange1		(0.5	)		0.3
End of Period	$	30.5		$	23.3
Pzena Funds
Assets
Beginning of Period Assets	$	2.7		$	2.4
Inflows		0.6			0.5
Outflows		(1.0	)		(0.5	)
Net Flows		(0.4	)		-
Market Appreciation/(Depreciation)		0.4			0.2
Foreign Exchange1		(0.1	)		0.1
End of Period	$	2.6		$	2.7
Total
Assets
Beginning of Period	$	43.3		$	41.2
Inflows		9.7			7.3
Outflows		(8.9	)		(6.8	)
Net Flows		0.8			0.5
Market Appreciation/(Depreciation)		9.6			0.7
Foreign Exchange1		(1.2	)		0.9
End of Period	$	52.5		$	43.3

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

During the year ended December 31, 2021, our AUM increased $9.2 billion, or 21.2%, from $43.3 billion at December 31, 2020. This increase is due to market appreciation and net inflows, partially offset by foreign exchange movements during the year ended December 31, 2021.

At December 31, 2021, we managed $19.4 billion in separately managed accounts, $30.5 billion in sub-advised accounts, and $2.6 billion in Pzena funds, for a total of $52.5 billion in assets. For the year ended December 31, 2021, we experienced $9.6 billion in market appreciation and total gross inflows of $9.7 billion, which were partially offset by total gross outflows of $8.9 billion and a decrease associated with foreign exchange movements of $1.2 billion. Assets in separately managed accounts increased by $2.1 billion, or 12.1%, from $17.3 billion at December 31, 2020, due to $3.6 billion in market appreciation and $2.0 billion in gross inflows, partially offset by $2.9 billion in gross

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outflows and a decrease associated with foreign exchange movements of $0.6 billion. Assets in sub-advised accounts increased by $7.2 billion, or 30.9%, from $23.3 billion at December 31, 2020, due to $5.6 billion in market appreciation and $7.1 billion in gross inflows, partially offset by $5.0 billion in gross outflows and a decrease associated with foreign exchange movements of $0.5 billion. Assets in Pzena funds decreased by $0.1 billion, or 3.7%, from $2.7 billion at December 31, 2020 due to $0.4 billion in market appreciation and $0.6 billion in gross inflows, offset by $1.0 billion in gross outflows and a decrease of $0.1 billion associated with foreign exchange movements.

At December 31, 2020, we managed $17.3 billion in separately managed accounts, $23.3 billion in sub-advised accounts, and $2.7 billion in Pzena funds, for a total of $43.3 billion in assets. For the year ended December 31, 2020, we experienced $0.7 billion in market appreciation and total gross inflows of $7.3 billion, which were partially offset by total gross outflows of $6.8 billion. Assets in separately managed accounts increased by $0.9 billion, or 5.5%, from $16.4 billion at December 31, 2019, due to an increase associated with foreign exchange movements of $0.5 billion, $0.3 billion in market appreciation and $1.8 billion in gross inflows, partially offset by $ 1.7 billion in gross outflows. Assets in sub-advised accounts increased by $0.9 billion, or 4.0%, from $22.4 billion at December 31, 2019, due to an increase associated with foreign exchange movements of $0.3 billion, $0.2 billion in market appreciation and $5.0 billion in gross inflows, partially offset by $4.6 billion in gross outflows. Assets in Pzena funds increased by $0.3 billion, or 12.5%, from $2.4 billion at December 31, 2019 as a result of $0.2 billion in market appreciation and an increase of $0.1 billion associated with foreign exchange movements.

Revenue

Our revenue from advisory fees earned on our separately managed accounts, sub-advised accounts and Pzena funds for the two years ended December 31, 2021 is described below:

	For the Years Ended December 31,
Revenue	2021		2020
	(in thousands)
Separately Managed Accounts	$	102,841	$	74,725
Sub-Advised Accounts		77,214		48,714
Pzena Funds		19,279		15,180
Total	$	199,334	$	138,619

Year Ended December 31, 2021 versus December 31, 2020

Our total revenue increased $60.7 million, or 43.8%, to $199.3 million for the year ended December 31, 2021 from $138.6 million for the year ended December 31, 2020. This change was primarily driven by the increase in AUM levels in 2021 compared to 2020. Average AUM increased 43.7% to $50.0 billion for the year ended December 31, 2021 from $34.8 billion for the year ended December 31, 2020. We also recognized $0.1 million and $1.1 million in performance fees during the years ended December 31, 2021, and 2020, respectively. For the years ended December 31, 2021 and 2020, we recognized a net reduction of base fees in the amount of $3.8 million and $4.0 million, respectively, related to fulcrum fee arrangements.

Our weighted average fee rates were 0.398% and 0.398% for the years ended December 31, 2021 and 2020, respectively. Average assets in separately managed accounts increased 35.7% to $19.0 billion for the year ended December 31, 2021, from $14.0 billion for the year ended December 31, 2020, and had weighted average fees of 0.539% and 0.534% for the years ended December 31, 2021 and 2020, respectively. Average assets in sub-advised accounts increased 50.8% to $28.2 billion for the year ended December 31, 2021, from $18.7 billion for the year ended December 31, 2020, and had weighted average fees of 0.274% and 0.261% for the years ended December 31, 2021 and 2020, respectively. The increase in weighted average fee rates for assets in sub-advised accounts is driven by a shift in assets to certain strategies that typically carry higher fee rates. Average assets in Pzena funds increased 33.3% to $2.8 billion for the year ended December 31, 2021, from $2.1 billion for the year ended December 31, 2020, and had weighted average fees of 0.694% and 0.709% for the years ended December 31, 2021 and 2020, respectively. The decrease in weighted average fee rates for Pzena funds is driven by a decrease in performance fees recognized during the fiscal year 2021 compared to 2020.

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Expenses

Our operating expense is driven primarily by our compensation costs. The table below describes the components of our operating expense for the years ended December 31, 2021 and 2020.

	For the Years Ended December 31,
	2021		2020
	(in thousands)
Cash Compensation and Other Benefits	$	61,248	$	55,283
Other Non-Cash Compensation		15,824		13,204
Total Compensation and Benefits Expense		77,072		68,487
General and Administrative Expense		16,403		14,859
Total Operating Expenses	$	93,475	$	83,346

Year Ended December 31, 2021 versus December 31, 2020

Total operating expenses increased by $10.1 million, or 12.2%, to $93.5 million for the year ended December 31, 2021, from $83.3 million for the year ended December 31, 2020.

Compensation and benefits expense increased by $8.6 million, or 12.5%, to $77.1 million for the year ended December 31, 2021, from $68.5 million for the year ended December 31, 2020. The increase is driven by an increase in compensation and in the market performance of strategies tied to the Company’s deferred compensation obligation.

General and administrative expense increased by $1.5 million, or 10.4%, to $16.4 million for the year ended December 31, 2021, from $14.9 million for the year ended December 31, 2020. The increase in general and administrative expenses primarily reflects an increase in professional fees and data and systems expense.

Other Income

Year Ended December 31, 2021 versus December 31, 2020

Other income of $8.4 million for the year ended December 31, 2021 consisted primarily $4.4 million in net realized and unrealized gains from investments, $2.2 million in equity in the earnings of affiliates, $1.2 million in interest and dividend income, and $0.6 million of income associated with an adjustment to the liability to selling and converting shareholders. Other income of $0.6 million for the year ended December 31, 2020 consisted primarily of $0.6 million in net realized and unrealized gains from investments and $0.8 million in interest and dividend income partially offset by $0.9 million in equity in the losses of affiliates.

Income Tax Expense

For the years ended December 31, 2021 and 2020, components of income tax expense are as follows:

	For the Years Ended December 31,
	2021		2020
	(in thousands)
Unincorporated and Other Business Tax Expenses	$	1,584	$	858
Corporate Income Tax Expense		6,214		3,429
Total Income Tax Expense	$	7,798	$	4,287

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Income before corporate income taxes used to calculate our income before income taxes for the years ended December 31, 2021 and 2020 are as follows:

	For the Years Ended December 31,
	2021			2020
	(in thousands)
Income Before Income Taxes	$	114,275		$	55,825
Unincorporated and Other Business Taxes		(1,584	)		(858	)
Net Income Attributable to Non-Controlling Interests of the Operating Company		(86,781	)		(42,421	)
Non-Controlling Interests of Consolidated Subsidiaries		(1,017	)		(243	)
Income Before Corporate Income Taxes	$	24,893		$	12,303

Our GAAP effective tax rate was 25.0%, and 28.2% for the years ended December 31, 2021 and 2020, respectively, and was determined as follows:

	For the Years Ended December 31,
	2021						2020
	Tax			% of GAAP Pre-tax Income			Tax		% of GAAP Pre-tax Income
	(in thousands)						(in thousands)
Federal Corporate Tax	$	5,228			21.0	%	$	2,539		21.0	%
State and Local Taxes, Net of Federal Benefit		1,021			4.1	%		462		3.8	%
Impact of Permanent Differences		-			0.0	%		-		0.0	%
Prior Period and Other Adjustments		(35	)		-0.1	%		428		3.4	%
GAAP Effective Taxes	$	6,214			25.0	%	$	3,429		28.2	%

Year Ended December 31, 2021 versus December 31, 2020

Income tax expense was $7.8 million for the year ended December 31, 2021, compared to $4.3 million for the year ended December 31, 2020.

Net Income Attributable to Non-Controlling Interests

Year Ended December 31, 2021 versus December 31, 2020

Net income attributable to non-controlling interests was $87.8 million for the year ended December 31, 2021, and consisted of $86.8 million associated with our employees' and outside investors' approximately 78.2% weighted-average interest in the income of the operating company, and approximately $1.0 million associated with our consolidated subsidiaries' interest in the gains of our consolidated subsidiaries. Net income attributable to non-controlling interests was $42.7 million for the year ended December 31, 2020, and consisted of $42.4 million associated with our employees’ and outside investors’ approximately 77.7% weighted-average interest in the income of the operating company, and approximately $0.2 million associated with our consolidated subsidiaries’ interest in the losses of our consolidated subsidiaries. The increase in net income attributable to non-controlling interests primarily reflects the increase in net income of the operating company for the year ended December 31, 2021, and 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 compensation plans.

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 strategic growth initiatives such as providing the seed investments in our mutual funds.

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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 year ended December 31, 2021, our average AUM and revenues increased by 43.7% and 43.8%, respectively, compared to our average AUM and revenues for the year ended December 31, 2020. At December 31, 2021, our cash was $81.1 million, inclusive of $5.9 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 $17.9 million in investments set aside to satisfy our obligations under our deferred compensation programs. Advisory fees receivable was $41.1 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, debt obligations, 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 continuously 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 consists 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

As we are a holding company and have no material assets other than our ownership of membership interests in our operating company, 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 shareholders 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 has targeted a cash dividend payout ratio of approximately 60% to 70% of our as adjusted diluted net income, subject to growth initiatives and other funding needs. However, our Board of Directors may, in its discretion, modify the level of dividends, or discontinue the payment of dividends entirely.

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. See “Item 1A — Risk Factors — Risks Relating to Our Class A Common Stock — Our ability to pay dividends is subject to the discretion of our Board of Directors 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 IPO, 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 bases 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 have 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 IPO who sold all of its membership units to us in connection with our IPO, and any future holders of Class B units, that requires us to pay them 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 bases 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

Year Ended December 31, 2021 versus December 31, 2020

Cash, cash equivalents and restricted cash increased $15.6 million to $82.2 million in 2021 compared to $66.6 million in 2020. Net cash provided by operating activities decreased $25.5 million in 2021 to $76.8 million from $51.3 million in 2020. The increase primarily reflects an increase in net income partially offset by equity in the earnings of affiliates, net realized and unrealized gains from investments, as well as changes in operating assets and liabilities and working capital.

Net cash used in investing activities was $2.8 million in 2021 compared to net cash provided of $24.1 million in 2020. The $26.9 million decrease in cash provided by investing activities was primarily due to a $27.0 million decrease in net sales of investments and a $0.5 million increase in purchases of property and equipment partially offset by a $0.5 million increase in net consolidation (deconsolidation) of sponsored investment funds.

Net cash used in financing activities decreased $3.8 million in 2021 to $58.5 million from $62.3 million in 2020. This decrease is primarily due to a $3.8 million decrease in dividends paid and a $2.8 million increase in net contributions from non-controlling interests partially offset by a $2.0 million decrease in cash provided by sales of shares under the equity incentive plan and a $0.8 million decrease in the repurchase and retirement of shares of Class A common stock and Class B units during 2021.

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 December 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 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 investment partnerships 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 (UBT) and its consolidated subsidiary Pzena Investment Management, LTD has made a provision for U.K. income taxes.

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. Each quarter, we re-evaluate our estimate related to the valuation allowance, including our assumptions about future taxable income. If we are not able to realize all or part of our net deferred tax assets in the future, a valuation allowance would be recorded against our deferred tax asset and charged to income tax expense in the period such determination was made.

Management 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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Non-Cash Compensation

The Company uses a fair value method in recording the expense associated with the granting of Class B units, Class B-1 units, Delayed Exchange Class B units, phantom Delayed Exchange Class B units, options to purchase Class A common stock and Class B units, options to purchase Delayed Exchange Class B units, and shares of Class A common stock under the 2006 and 2007 Equity Incentive Plans; phantom Delayed Exchange Class B units under the Bonus Plan; and phantom shares of Class A common stock under the Director Plan. The fair value of awarded restricted shares of Class A common stock under the 2007 Equity Incentive Plan and phantom shares of Class A common stock under the Director Plan is determined based on the closing market price of our Class A common stock on the date of grant. The fair value of awarded Class B and Class B-1 units under the 2006 and 2007 Equity Incentive Plans are determined by reference to the market price of our Class A common stock on the date of grant, since Class B and Class B-1 units are exchangeable for shares of our Class A common stock, adjusted for the impact of award terms on the value of the award. Certain of the restricted shares of Class A common stock are not entitled to dividends or dividend equivalents while unvested. The fair value of these awards is determined based on the closing market price of our Class A common stock on the date of grant, net of the present value of the dividends using the applicable risk-free interest rate. The Delayed Exchange Class B Units have a seven years exchange limitation and are not entitled to any benefits under the tax receivable agreement. The fair value of these awards is determined based on the closing market price of our Class A common stock on the date of grant, net of the effects of these terms. The Class B-1 units are entitled to distributions for the duration of the holder’s employment and will participate in additional value to the extent there has been appreciation subsequent to the issuance of the Class B-1 unit. The fair value of these awards is determined based on the present value of expected future dividends, an option pricing model where the strike price reflects the threshold value over which appreciation is recognized, and the impact of award terms on the value of the award. The Company also issued options to purchase Delayed Exchange Class B units. The fair value of these options is determined using an option pricing model where the strike price reflects the fair value of Delayed Exchange Class B units on the date of grant. Certain of the phantom Delayed Exchange Class B units are not entitled to dividends or dividend equivalents while unvested.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market Risk

Our exposure to market risk is directly related to our role as investment adviser for separate accounts we manage, funds we offer, and accounts for which we act as sub-investment adviser.

Our revenue for the two years ended December 31, 2021 was generally derived from advisory fees, which are typically based on the market value of our AUM, which can be affected by adverse changes in interest rates, foreign currency exchange rates and equity prices. Accordingly, a decline in the prices of securities would cause our revenue and income to decline, due to a decrease in the value of the assets we manage. In addition, such a decline could cause our clients to withdraw their funds in favor of investments offering higher returns or lower risk, which would cause our revenue and income to decline further.

The value of our AUM was $52.5 billion as of December 31, 2021. A 10% increase or decrease in the value of our AUM, if proportionately distributed over all of our investment strategies, products, and client relationships, would cause an annualized increase or decrease in our revenues of approximately $20.9 million at our current weighted average fee rate excluding the impact of performance fees and fulcrum fee arrangements of 0.398%. There are differences in our fee rates across distribution channels, investment strategies and the size of client relationships. As such, a change in the composition of our AUM, in particular an increase in the proportion of our total assets under management attributable to strategies, clients or relationships with lower effective fee rates, could have a material negative impact on our overall weighted average fee rates and thus different impact to revenues on the same 10% increase or decrease in the value of our AUM.

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We are also subject to market risk due to a decline in the value of our holdings and the holdings of our consolidated subsidiaries, which as of December 31, 2021 consist primarily of equity securities at fair value, trading debt securities and investments in equity method investees. At December 31, 2021, the aggregate value of our assets subject to market risk was $95.5 million. At December 31, 2021, the aggregate value of our liabilities subject to market risk was $0.2 million. Assuming a 10% increase or decrease, the fair value of these assets would increase or decrease by $9.6 million, at December 31, 2021.

Exchange Rate Risk

A substantial portion of the accounts that we advise, or sub-advise, hold investments that are denominated in currencies other than the U.S. dollar. Movements in the rate of exchange between the U.S. dollar and the underlying foreign currency affect the values of assets held in accounts that we manage, thereby affecting the amount of revenues we earn. The value of our AUM was $52.5 billion as of December 31, 2021 and approximately 34% of our assets under management across our investment strategies were invested in strategies that primarily invest in securities of non-U.S. companies and approximately 47% of our assets under management were invested in securities denominated in currencies other than the U.S. dollar. To the extent our assets under management are denominated in currencies other than the U.S. dollar, the value of those assets under management will decrease with an increase in the value of the U.S. dollar, or increase with a decrease in the value of the U.S. dollar. Because we believe that many of our clients invest in those strategies in order to gain exposure to non-U.S. currencies, or may implement their own hedging programs, we do not hedge an investment portfolio’s exposure to a non-U.S. currency.

We have not adopted a corporate-level risk management policy to manage this exchange rate risk. Assuming that 47% of our assets under management is invested in securities denominated in currencies other than the U.S. dollar and excluding the impact of any hedging arrangements, a 10% increase or decrease in the value of the U.S. dollar would decrease or increase the fair value of our assets under management by $2.6 billion, which would cause an annualized increase or decrease in revenues of approximately $10.5 million at our current weighted average fee rate excluding the impact of performance fees and fulcrum fee arrangements of 0.398%.

We operate in several foreign countries, but mainly in the United Kingdom. We incur operating expenses and have foreign currency-denominated assets and liabilities associated with these operations, although our revenues are predominately realized in U.S. dollar. We do not believe that foreign currency fluctuations materially affect our results of operations.

Interest Rate Risk

As of December 31, 2021, approximately $81.1 million of our total cash was primarily held in demand deposit accounts and money market funds. As such, interest rate changes would not have a material impact on the income we earn from these deposits. Our interest sensitive assets and liabilities include trading debt securities. At December 31, 2021, the aggregate value of our assets subject to interest rate risk was $7.3 million. Assuming a 10% increase or decrease, the fair value of these assets would increase or decrease by $0.7 million, at December 31, 2021. In addition, the Company does not have any debt, and as a result does not have any direct exposure to interest rate risk at December 31, 2021.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Our consolidated financial statements and notes thereto begin on page F-4 of this Annual Report and are incorporated herein by reference.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

45

ITEM 9A. CONTROLS AND PROCEDURES

Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures

During the course of their review of our consolidated financial statements as of December 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 Exchange Act. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of December 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.

Management’s Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over our financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal control system is designed to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of our financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America. There are inherent limitations in the effectiveness of any internal controls, including the possibility of human error and the circumvention or overriding of controls. Accordingly, even effective internal controls can provide only reasonable assurances with respect to financial statement preparation. Further, because of changes in conditions, the effectiveness of internal controls may vary over time.

Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, has assessed the effectiveness of our internal control over financial reporting as of December 31, 2021. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control — Integrated Framework (2013).

Based on the assessment using those criteria, management concluded that, as of December 31, 2021, our internal control over financial reporting was effective.

PricewaterhouseCoopers LLP, the independent registered public accounting firm that audited the financial statements included in this Annual Report have issued an audit report on our internal control over financial reporting. This report appears on page F-2 of this Annual Report.

Changes in Internal Control Over Financial Reporting

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

ITEM 9B. OTHER INFORMATION

None.

ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

Not Applicable.

46

PART III.

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The information required by this Item will be set forth under the proposal “Election of Directors” and under the heading "Other Matters" in the Company’s 2022 Proxy Statement to be filed with the U.S. Securities and Exchange Commission (“SEC”) within 120 days after December 31, 2021 in connection with the solicitation of proxies for the Company’s 2022 annual meeting of shareholders and is incorporated herein by reference ("Company's 2022 Proxy Statement").

The Company has a code of ethics, “Code of Business Conduct and Ethics,” that applies to all employees, including the Company’s principal executive officer and principal financial officer and principal accounting officer, as well as to the members of the Board of Directors of the Company. The code is available at www.pzena.com. The Company intends to disclose any changes in, or waivers from, this code by posting such information on the same website or by filing a Form 8-K, in each case to the extent such disclosure is required by rules of the SEC or the New York Stock Exchange.

ITEM 11. EXECUTIVE COMPENSATION

The information required by this Item will be set forth under the headings “Executive Compensation” and "2021 Non-Employee Director Compensation" in the Company’s 2022 Proxy Statement and is incorporated herein by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The information required by this Item will be set forth under the headings “Security Ownership of Principal Stockholders and Management,” and "Equity Compensation Plan Information," in the Company’s 2022 Proxy Statement and is incorporated herein by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

The information required by this Item will be set forth under the heading “Related Party Transactions” and under the subheading “Director Independence” under the proposal "Election of Directors” in the Company’s 2022 Proxy Statement and is incorporated herein by reference.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

The information required by this Item will be set forth under the proposal “Ratification of Independent Auditors” in the Company’s 2022 Proxy Statement and is incorporated herein by reference.

47

PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

The following documents are filed as part of this Annual Report:

1.Financial Statements

Pzena Investment Management, Inc.	Page
Report of PricewaterhouseCoopers LLP, Independent Registered Public Accounting Firm	F-2
Consolidated Statements of Financial Condition as of December 31, 2021 and 2020	F-5
Consolidated Statements of Operations for the Years Ended December 31, 2021 and 2020	F-6
Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2021 and 2020	F-7
Consolidated Statements of Changes in Equity for the Years Ended December 31, 2021 and 2020	F-8
Consolidated Statements of Cash Flows for the Years Ended December 31, 2021 and 2020	F-9
Notes to Consolidated Financial Statements	F-10

2.Financial Statement Schedules

There are no Financial Statement Schedules filed as part of this Annual Report, since the required information is included in our consolidated financial statements and in the notes thereto.

3.Exhibit List

We have incorporated by reference herein certain exhibits as specified below pursuant to Rule 12b-32 of the Exchange Act. If specific material facts exist which contradict the representations and warranties contained in the documents filed or incorporated by reference in this Annual Report, corrective disclosure has been provided.

Additional information about us may be found elsewhere in this Annual Report, and our other public filings, which are available without charge through the SEC’s website at http://www.sec.gov, as well as through our website at www.pzena.com.

Exhibit	Description of Exhibit
3.1	Second Amended and Restated Certificate of Incorporation of Pzena Investment Management, Inc., effective as of May 23, 2017(1)
3.2	Second Amended and Restated Bylaws of Pzena Investment Management, Inc., effective as of January 15, 2016(2)
4.1	Form of Pzena Investment Management, Inc. Class A Common Stock Certificate(3)
4.2	Form of Exchange Rights of Class B Members(4)
4.3	Form of Exchange Rights of Class B-1 Members(4)
4.4	Resale and Registration Rights Agreement, dated as of October 30, 2007, by and among Pzena Investment Management, Inc. and the Holders named on the signature pages thereto(5)
4.5	Class B Stockholders’ Agreement, dated as of October 30, 2007, by and among Pzena Investment Management, Inc. and the Class B Stockholders named on the signature pages thereto(5)
4.6	Description of Capital Stock(4)
10.1	Amended and Restated Operating Agreement of Pzena Investment Management, LLC, dated as of December 30, 2019, by and among Pzena Investment Management, Inc. and the Class B Members named on the signature pages thereto(4)
10.2	Tax Receivable Agreement, dated as of October 30, 2007, by and among Pzena Investment Management, Inc., Pzena Investment Management, LLC and the Continuing Members and Exiting Members named on the signature pages thereto(5)
10.3	Pzena Investment Management, LLC Amended and Restated 2006 Equity Incentive Plan(6)

48

10.4	Pzena Investment Management, LLC Amended and Restated Bonus Plan, as amended, dated as of October 21, 2008(7)
10.5	Pzena Investment Management, Inc. 2007 Equity Incentive Plan, as amended, dated as of January 31, 2017(6)
10.6	Executive Employment Agreement for Richard S. Pzena, dated as of October 30, 2007, by and among Pzena Investment Management, Inc., Pzena Investment Management, LLC and Richard S. Pzena(5)
10.7	Executive Employment Agreement for John P. Goetz, dated as of October 30, 2007, by and among Pzena Investment Management, Inc., Pzena Investment Management, LLC and John P. Goetz(5)
10.8	Amended and Restated Executive Employment Agreement for William L. Lipsey, dated as of October 30, 2007, by and among Pzena Investment Management, Inc., Pzena Investment Management, LLC and William L. Lipsey(5)
10.9	Indemnification Agreement for Richard S. Pzena, dated as of October 30, 2007, by and among Pzena Investment Management, Inc. and Richard S. Pzena(5)
10.10	Indemnification Agreement for Steven M. Galbraith, dated as of October 30, 2007, by and among Pzena Investment Management, Inc. and Steven M. Galbraith(5)
10.11	Indemnification Agreement for Joel M. Greenblatt, dated as of October 30, 2007, by and among Pzena Investment Management, Inc. and Joel M. Greenblatt(5)
10.12	Indemnification Agreement for Richard P. Meyerowich, dated as of October 30, 2007, by and among Pzena Investment Management, Inc. and Richard P. Meyerowich(5)
10.13	Indemnification Agreement for John P. Goetz, dated as of May 17, 2011, by and among Pzena Investment Management, Inc. and John P. Goetz(8)
10.14	Indemnification Agreement for William L. Lipsey, dated as of May 17, 2011, by and among Pzena Investment Management, Inc. and William L. Lipsey(8)
10.15	Pzena Investment Management, Inc. Non-Employee Director Deferred Compensation Plan, dated as of July 21, 2009 (9)
10.16	Amendment to Executive Employment Agreement for Richard S. Pzena, dated as of November 1, 2012, by and among Pzena Investment Management, Inc., Pzena Investment Management, LLC, and Richard S. Pzena(10)
10.17	Amendment to Executive Employment Agreement for John P. Goetz, dated as of November 1, 2012, by and among Pzena Investment Management, Inc., Pzena Investment Management, LLC, and John P. Goetz(10)
10.18	Amendment to Amended and Restated Executive Employment Agreement for William L. Lipsey, dated as of November 1, 2012, by and among Pzena Investment Management, Inc., Pzena Investment Management, LLC, and William L. Lipsey(10)
10.19	Amendment, dated as of November 12, 2012, to Tax Receivable Agreement, dated as of October 30, 2007, by and among Pzena Investment Management, Inc., Pzena Investment Management, LLC and the Continuing Members and Exiting Members named on the signature pages thereto (11)
10.20	Indemnification Agreement for Charles D. Johnston, dated as of February 5, 2014, by and among Pzena Investment Management, Inc. and Charles D. Johnston (12)
10.21	Lease, dated as of June 13, 2014, between Mutual of America Life Insurance Company, as Landlord and Pzena Investment Management, LLC, as Tenant (13)
10.22	Form of Class B-1 Unit Agreement (filed herewith)
10.23	Amendment to the Pzena Investment Management, LLC Amended and Restated Bonus Plan, dated December 2, 2014(14)
10.24	Form of Unit-Based Award Agreement for Phantom Class B Units(14)
10.25	Form of Class B Unit Agreement - Delayed Exchange (14)
10.26	Form of Class B Unit-Based Agreement for Phantom Class B Units - Revised December, 2015(15)
10.27	Form of Class B Unit Agreement - Delayed Exchange - Revised December, 2015(15)
10.28	Amended and Restated Agreement of Limited Partnership of Pzena Investment Management, LP, dated as of December 30, 2019(4)

49

10.29	Form of Class B Unit Option Agreement - Delayed Exchange (16)
10.30	Amendment, dated as of December 18, 2017, to Tax Receivable Agreement, dated as of October 30, 2007, as amended by and among Pzena Investment Management, Inc., Pzena Investment Management, LLC and the Continuing Members and Exiting Members named on the signature pages thereto(16)
10.31	First Amendment of Lease dated November 8th, 2018 amending the Lease, dated as of June 13, 2014, between Mutual of America Life Insurance Company, as Landlord and Pzena Investment Management, LLC as Tenant(17)
10.32	Indemnification Agreement for Shavar Jeffries, dated as of January 26, 2021, by and among Pzena Investment Management, Inc. and Shavar Jeffries(18)
10.33	Indemnification Agreement for Chenyu Caroline Cai, dated as of October 19, 2021, by and among Pzena Investment Management, Inc. and Chenyu Caroline Cai(19)
10.34	Second Amendment of Lease dated January 21, 2022 between 320 Park Avenue LLC (as successor-in-interest to Mutual of America Life Insurance Company) and Pzena Investment Management LLC, amending the Lease, dated as of June 13, 2014, between Mutual of America Life Insurance Company, as Landlord and Pzena Investment Management, LLC as Tenant as amended (filed herewith)
14.1	Code of Business Conduct and Ethics, effective as of October 25, 2007, amended as of June 30, 2020(20)
14.2	Code of Ethics for Senior Financial Officers(21)
21.1	List of Subsidiaries of Pzena Investment Management, Inc. (filed herewith)
23.1	Consent of PricewaterhouseCoopers LLP, Independent Registered Public Accounting Firm (filed herewith)
31.1	Certification of Chief Executive Officer pursuant to Exchange Act Rule 13a-14(a) (filed herewith)
31.2	Certification of Chief Financial Officer pursuant to Exchange Act Rule 13a-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	Materials from the Pzena Investment Management, Inc. Annual Report on Form 10-K for the year ended December 31, 2021, formatted in Inline XBRL (Extensible Business Reporting Language): (i) Consolidated Statements of Financial Condition, (ii) Consolidated Statements of Operations, (iii) Consolidated Statement of Changes in Equity, (iv) Consolidated Statements of Cash Flows, and (vi) related Unaudited Notes to the Consolidated Financial Statements, tagged in detail
104	Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101)

(1)Previously filed as an exhibit to our current report on Form 8-K filed with the Securities and Exchange Commission on May 24, 2017 (SEC File No. 001-33761).

(2)Previously filed as an exhibit to our current report on Form 8-K filed with the Securities and Exchange Commission on January 19, 2016 (SEC File No. 001-33761).

(3)Previously filed as an exhibit to Amendment No. 4 of the Registration Statement on Form S-1 (No. 333-143660) of Pzena Investment Management, Inc., which was filed with the Securities and Exchange Commission on October 22, 2007.

(4)Previously filed as an exhibit to our annual report on Form 10-K filed with the Securities and Exchange Commission on March 10, 2020 (SEC File No. 001-33761).

(5)Previously filed as an exhibit to our quarterly report on Form 10-Q filed with the Securities and Exchange Commission on December 5, 2007 (SEC File No. 001-33761).

(6)Previously filed as an exhibit to our quarterly report on Form 10-Q filed with the Securities and Exchange Commission on August 8, 2017 (SEC File No. 001-33761).

(7)Previously filed as an exhibit to our quarterly report on Form 10-Q filed with the Securities and Exchange Commission on November 13, 2008 (SEC File No. 001-33761).

(8)Previously filed as an exhibit to our annual report on Form 10-K filed with the Securities and Exchange Commission on March 14, 2012 (SEC File No. 001-33761).

(9)Previously filed as an exhibit to our quarterly report on Form 10-Q filed with the Securities and Exchange Commission on November 9, 2009 (SEC File No. 001-33761).

50

(10)Previously filed as an exhibit to our current report on Form 8-K filed with the Securities and Exchange Commission on November 2, 2012 (SEC File No. 001-33761).

(11)Previously filed as an exhibit to our annual report on Form 10-K filed with the Securities and Exchange Commission on March 12, 2013 (SEC File No. 001-33761).

(12)Previously filed as an exhibit to our current report on Form 8-K filed with the Securities and Exchange Commission on January 30, 2014 (SEC File No. 001-33761).

(13)Previously filed as an exhibit to our quarterly report on Form 10-Q filed with the Securities and Exchange Commission on August 7, 2014 (SEC File No. 001-33761).

(14)Previously filed as an exhibit to our annual report on Form 10-K filed with the Securities and Exchange Commission on March 16, 2015 (SEC File No. 001-33761)

(15)Previously filed as an exhibit to our annual report on Form 10-K filed with the Securities and Exchange Commission on March 14, 2016 (SEC File No. 001-33761).

(16)Previously filed as an exhibit to our annual report on Form 10-K filed with the Securities and Exchange Commission on March 9, 2018 (SEC File No. 001-33761).

(17)Previously filed as an exhibit to our annual report on Form 10-K filed with the Securities and Exchange Commission on March 8, 2019 (SEC File No. 001-33761).

(18)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).

(19)Previously filed as an exhibit to our current report on Form 8-K filed with the Securities and Exchange Commission on October 21, 2021 (SEC File No. 001-33761).

(20)Previously filed as an exhibit to our annual report on Form 10-K filed with the Securities and Exchange Commission on March 10, 2021 (SEC File No. 001-33761).

(21)Previously filed as an exhibit to our annual report on Form 10-K filed with the Securities and Exchange Commission on March 31, 2008 (SEC File No. 001-33761).

ITEM 16. FORM OF 10-K SUMMARY

None.

51

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, Pzena Investment Management, Inc. has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Dated: March 8, 2022

Pzena Investment Management, Inc.

By:	/s/ Richard S. Pzena
	Name: Richard S. Pzena Title: Chief Executive Officer

Each person whose signature appears below constitutes and appoints Jessica R. Doran and Joan F. Berger, and each of them, his or her true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any and all amendments to this Annual Report, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done to effectuate the intent and purpose of this paragraph, as fully as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them, or their or his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

52

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of Pzena Investment Management, Inc. and in the capacities and on the dates indicated.

SIGNATURE	TITLE	DATE
/s/ Richard S. Pzena	Chairman, Chief Executive Officer, Co-Chief Investment Officer (principal executive officer)	March 8, 2022
Richard S. Pzena
/s/ Jessica R. Doran	Chief Financial Officer (principal financial and accounting officer)	March 8, 2022
Jessica R. Doran
/s/ John P. Goetz	President, Co-Chief Investment Officer, Director	March 8, 2022
John P. Goetz
/s/ William L. Lipsey	President, Head of Business Development and Client Service, Director	March 8, 2022
William L. Lipsey
/s/ Chenyu Caroline Cai	Executive Vice President, Director	March 8, 2022
Chenyu Caroline Cai
/s/ Steven M. Galbraith	Director	March 8, 2022
Steven M. Galbraith
/s/ Joel M. Greenblatt	Director	March 8, 2022
Joel M. Greenblatt
/s/ Richard P. Meyerowich	Director	March 8, 2022
Richard P. Meyerowich
/s/ Charles D. Johnston	Director	March 8, 2022
Charles D. Johnston
/s/ Shavar D. Jeffries	Director	March 8, 2022
Shavar D. Jeffries

53

INDEX TO FINANCIAL STATEMENTS OF

PZENA INVESTMENT MANAGEMENT, INC.

	Page
Pzena Investment Management, Inc.
Report of PricewaterhouseCoopers LLP, Independent Registered Public Accounting Firm	F-2
Consolidated Statements of Financial Condition as of December 31, 2021 and 2020	F-5
Consolidated Statements of Operations for the Years Ended December 31, 2021 and 2020	F-6
Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2021 and 2020	F-7
Consolidated Statements of Changes in Equity for the Years Ended December 31, 2021 and 2020	F-8
Consolidated Statements of Cash Flows for the Years Ended December 31, 2021 and 2020	F-9
Notes to Consolidated Financial Statements	F-10

F-1

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of Pzena Investment Management, Inc.

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated statements of financial condition of Pzena Investment Management, Inc. and its subsidiaries (the “Company”) as of December 31, 2021 and 2020, and the related consolidated statements of operations, comprehensive income, changes in equity and cash flows for each of the two years in the period ended December 31, 2021, including the related notes (collectively referred to as the consolidated financial statements”). We also have audited the Company's internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2021 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

Basis for Opinions

The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the Management's Report on Internal Control

Over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed 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. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable

F-2

assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Critical Audit Matters

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Income Taxes – Deferred Tax Assets and the Related Liability to Selling and Converting Shareholders Under the Tax Receivable Agreement

As described in Notes 2 and 13 to the consolidated financial statements, the Company has recorded a deferred tax assets (“DTA”) balance of $25.9 million as of December 31, 2021 while the liability to selling and converting shareholders under the tax receivable agreement (“TRA”) was $24.7 million. These DTAs 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 (“Exchanges”). The Company records an increase in DTAs 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 Exchanges. The Company records 85% of the estimated realizable tax benefit (which is the recorded DTA less any recorded valuation allowance) as an increase to the liability due under the TRA, which is reflected as the liability to selling and converting shareholders. As disclosed by management, the actual increase in the tax basis, as well as the amount and timing of any payments under the TRA, may vary depending on a number of factors, including the timing of Exchanges, the price of the Class A common stock at the time of the Exchange, the extent to which such Exchanges are taxable, the amount and timing of income, and the tax rates and related laws then applicable. The determination of the tax basis also requires management to make judgments in estimating the components included in the tax basis as of the date of Exchanges (such as cash to be received by the Company on hypothetical sale of assets and allocation of gain/loss to the Company at the time of the Exchanges taking into account complex partnership tax rules). In addition, management estimates the period of time that may generate cash tax savings of such tax benefits and the realizability of the tax benefits.

The principal considerations for our determination that performing procedures relating to deferred tax assets and the related liability to selling and converting shareholders under the tax receivable agreement is a critical audit matter are (i) the significant judgment by management to determine the impact of the change in tax basis, resulting from the Exchanges in 2021, on the DTA and the related liabilities under the TRA, which in turn led to a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s determination of the change in tax basis, the likelihood of the Company having sufficient future taxable income to utilize the deferred tax asset, and the tax rate then applicable and (ii) the audit effort involved the use of professionals with specialized skill and knowledge.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to income taxes, including controls over the DTAs and the related liabilities under the TRA. These procedures also included, among others (i) testing management’s process for estimating the DTAs and the related

F-3

liabilities under the TRA, (ii) evaluating the reasonableness of the determination of (a) the change in tax basis from the Exchanges in 2021 and (b) the likelihood of the Company having sufficient future taxable income to utilize the DTA and the tax rate then applicable; and (iii) testing the completeness and accuracy of the data used by management in the determination of the change in tax basis, future taxable income, and the tax rate then applicable. Professionals with specialized skill and knowledge were used to assist in testing management's determination of the change in tax basis and evaluating the appropriateness of the application of the tax laws.

/s/ PricewaterhouseCoopers LLP

New York, New York

March 8, 2022

We have served as the Company’s auditor since 2017.

F-4

PZENA INVESTMENT MANAGEMENT, INC.

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

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

	As of
	December 31, 2021		December 31, 2020
ASSETS
Cash and Cash Equivalents ($1,030 and $2,201)1	$	81,133	$	65,534
Restricted Cash		1,056		1,050
Due from Broker		55		87
Advisory Fees Receivable		41,127		36,524
Investments ($27,483 and $1,131)1		95,506		34,104
Receivable from Related Parties		3,871		2,880
Other Receivables ($40 and $8)1		265		154
Prepaid Expenses and Other Assets		1,700		2,569
Right-of-use Asset		10,014		11,578
Deferred Tax Assets		25,886		29,831
Property and Equipment, Net of Accumulated Depreciation of $7,086 and $5,980, respectively		3,687		4,376
TOTAL ASSETS	$	264,300	$	188,687
LIABILITIES AND EQUITY
Liabilities:
Accounts Payable and Accrued Expenses ($62 and $28)1	$	44,167	$	36,317
Due to Broker ($0 and $2)1		—		56
Securities Sold Short, at Fair Value		237		714
Liability to Selling and Converting Shareholders		24,679		25,701
Lease Liability		10,323		11,905
Deferred Compensation Liability		6,840		5,039
Other Liabilities		—		-
TOTAL LIABILITIES		86,246		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; 17,306,455 and 17,328,899 Shares Issued and Outstanding in 2021 and 2020, respectively)		172		173
Class B Common Stock (Par Value $0.000001; 750,000,000 Shares Authorized; 55,203,277 and 54,313,620 Shares Issued and Outstanding in 2021 and 2020, respectively)		—		—
Additional Paid-In Capital		3,989		5,190
Retained Earnings		38,420		25,611
Accumulated Other Comprehensive Loss		7		132
Total Pzena Investment Management, Inc.'s Equity		42,588		31,106
Non-Controlling Interests		135,466		77,849
TOTAL EQUITY		178,054		108,955
TOTAL LIABILITIES AND EQUITY	$	264,300	$	188,687

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

See accompanying notes to consolidated financial statements.

F-5

PZENA INVESTMENT MANAGEMENT, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

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

	For the Years Ended December 31,
	2021			2020
REVENUE	$	199,334		$	138,619
EXPENSES
Compensation and Benefits Expenses		77,072			68,487
General and Administrative Expenses		16,403			14,859
TOTAL OPERATING EXPENSES		93,475			83,346
Operating Income		105,859			55,273
OTHER INCOME
Interest Income		210			466
Interest Expense		(2	)		(16	)
Dividend Income		976			329
Net Realized and Unrealized Gains from Investments		4,392			630
Equity in the Earnings/ (Losses) of Affiliates		2,170			(929	)
Other Income		670			72
Total Other Income		8,416			552
Income Before Income Taxes		114,275			55,825
Income Tax Expense		7,798			4,287
Net Income		106,477			51,538
Less: Net Income Attributable to Non-Controlling Interests		87,798			42,664
Net Income Attributable to Pzena Investment Management, Inc.	$	18,679		$	8,874
Net Income for Basic Earnings per Share	$	18,679		$	8,874
Basic Earnings per Share	$	1.07		$	0.52
Basic Weighted Average Shares Outstanding		17,414,694			17,208,174
Net Income for Diluted Earnings per Share	$	83,661		$	40,766
Diluted Earnings per Share	$	1.00		$	0.52
Diluted Weighted Average Shares Outstanding1		84,007,638			79,143,710
Cash Dividends per Share of Class A Common Stock	$	0.34		$	0.55

1 The Company issues restricted shares of Class A common stock and the operating company issues 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 diluted earnings per share.

See accompanying notes to consolidated financial statements.

F-6

PZENA INVESTMENT MANAGEMENT, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands)

	For the Years Ended December 31,
	2021			2020
NET INCOME	$	106,477		$	51,538
OTHER COMPREHENSIVE INCOME
Foreign Currency Translation Adjustment		(866	)		565
Total Other Comprehensive (Loss)/ Income		(866	)		565
Comprehensive Income		105,611			52,103
Less: Comprehensive Income Attributable to Non-Controlling Interests		87,057			43,094
Total Comprehensive Income Attributable to Pzena Investment Management, Inc.	$	18,554		$	9,009

See accompanying notes to consolidated financial statements.

F-7

PZENA INVESTMENT MANAGEMENT, INC.

CONSOLIDATED STATEMENTS 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/ (Loss)			Retained Earnings			Non-Controlling Interests			Total
Balance at December 31, 2019		18,009,350			52,879,323		$	179		$	4,829		$	(3	)	$	26,439		$	76,766		$	108,210
Unit Conversion		494,316			(494,316	)		5			1,007			—			—			(622	)		390
Amortization of Non-Cash Compensation		20,000			859,811			1			1,838			—			—			6,327			8,166
Issuance of Shares under Equity Incentive Plan		—			637,349			—			890			—			—			2,952			3,842
Sale of Shares Under Equity Incentive Plan		—			554,860			—			523			—			—			1,772			2,295
Modification		16,806			(16,806	)		—			-			—			—			-			-
Directors' Shares		—			—			—			103			—			—			352			455
Net Income		—			—			—			—			—			8,874			42,664			51,538
Foreign Currency Translation Adjustments		—			—			—			—			135			—			430			565
Options Exercised		—			603			—			—			—			—			—			—
Repurchase and Retirement of Class A Common Stock		(1,211,573	)		—			(12	)		(1,723	)		—			—			(5,928	)		(7,663	)
Repurchase and Retirement of Class B Units		-			(107,204	)		-			(131	)		—			—			(509	)		(640	)
Effect of Deconsolidation		—			—			—			—			—			—			(1,685	)		(1,685	)
Contributions from Non-Controlling Interests		—			—			—			—			—			—			1,013			1,013
Distributions to Non-Controlling Interests		—			—			—						—			—			(47,590	)		(47,590	)
Class A Cash Dividends Declared and Paid ($0.55 per share)		—			—			—			—			—			(9,702	)		—			(9,702	)
Tax Impact of Transactions with Non-Controlling Shareholders		—			—			—			(239	)		—			—			—			(239	)
Other		—			—			—			(1,907	)		—			—			1,907			—
Balance at December 31, 2020		17,328,899			54,313,620		$	173		$	5,190		$	132		$	25,611		$	77,849		$	108,955
Unit Conversion		790,414			(790,414	)		8			1,430			—			—			(1,117	)		321
Amortization of Non-Cash Compensation		24,201			851,263			—			1,977			—			—			7,012			8,989
Issuance of Shares under Equity Incentive Plan		12,353			810,857			—			879			—			—			2,973			3,852
Sale of Shares Under Equity Incentive Plan		—			49,081			—			68			—			—			247			315
Directors' Shares		16,144			—			—			141			—			—			505			646
Net Income		—			—			—			—			—			18,679			87,798			106,477
Foreign Currency Translation Adjustments		—			—			—			—			(125	)		—			(741	)		(866	)
Options Exercised		—			32,947			—			—			—			—			—			—
Repurchase and Retirement of Class A Common Stock		(865,556	)		—			(9	)		(1,895	)		—			—			(6,751	)		(8,655	)
Repurchase and Retirement of Class B Units		—			(64,077	)		—			(107	)		—			—			(384	)		(491	)
Effect of Consolidation		—			—			—			—			—			—			9,730			9,730
Contributions from Non-Controlling Interests		—			—			—			—			—			—			30,023			30,023
Distributions to Non-Controlling Interests		—			—			—						—			—			(73,773	)		(73,773	)
Class A Cash Dividends Declared and Paid ($0.34 per share)		—			—			—			—			—			(5,870	)		—			(5,870	)
Tax Impact of Transactions with Non-Controlling Shareholders		—			—			—			(1,599	)		—			—			—			(1,599	)
Other		—			—			—			(2,095	)		—			—			2,095			—
Balance at December 31, 2021		17,306,455			55,203,277		$	172		$	3,989		$	7		$	38,420		$	135,466		$	178,054

See accompanying notes to consolidated financial statements.

F-8

PZENA INVESTMENT MANAGEMENT, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

	For the Years Ended December 31,
	2021			20201
OPERATING ACTIVITIES
Net Income	$	106,477		$	51,538
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:
Depreciation		1,180			1,214
Loss on Disposal of Fixed Assets		—			—
Non-Cash Compensation		15,824			13,204
Directors' Share Grants		646			455
Net Realized and Unrealized Gains from Investments		(4,392	)		(630	)
Equity in the Losses/ (Earnings) of Affiliates		(2,170	)		929
Non-Cash Performance Fees		(29	)		—
Foreign Currency Translation Adjustment		(866	)		565
Noncash Lease Expense		2,503			2,282
Change in Liability to Selling and Converting Shareholders		(607	)		(213	)
Deferred Income Taxes		4,787			3,432
Changes in Operating Assets and Liabilities:
Advisory Fees Receivable		(4,603	)		(3,637	)
Due from Broker		32			(113	)
Prepaid Expenses and Other Assets		800			273
Due to Broker		(56	)		16
Accounts Payable, Accrued Expenses, and Other Liabilities		6,686			(8,442	)
Tax Receivable Agreement Payments		(2,476	)		(2,881	)
Change in Lease Liability		(2,521	)		(2,330	)
Purchases of Investments		(61,449	)		(23,935	)
Proceeds from Sale of Investments		17,061			19,602
Net Cash Provided by Operating Activities		76,827			51,329
INVESTING ACTIVITIES
Purchases of Investments		(18,981	)		(25,169	)
Proceeds from Sale of Investments		17,172			50,371
Net Consolidations (Deconsolidations) of Sponsored Investment Funds		578			(123	)
Payments (to)/ from Related Parties		(1,049	)		(1,011	)
Purchase of Property and Equipment		(491	)		(43	)
Net Cash (Used In)/ Provided by Investing Activities		(2,771	)		24,025
FINANCING ACTIVITIES
Repurchase and Retirement of Class A Common Stock		(8,655	)		(7,662	)
Repurchase and Retirement of Class B Units		(491	)		(640	)
Sale of Shares under Equity Incentive Plan		315			2,295
Distributions to Non-Controlling Interests		(73,773	)		(47,590	)
Contributions from Non-Controlling Interests		30,023			1,013
Dividends		(5,870	)		(9,702	)
Net Cash Used in Financing Activities		(58,451	)		(62,286	)
NET CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH	$	15,605		$	13,068
CASH, CASH EQUIVALENTS AND RESTRICTED CASH — Beginning of Year	$	66,584		$	53,516
Net Change in Cash, Cash Equivalents and Restricted Cash		15,605			13,068
CASH, CASH EQUIVALENTS AND RESTRICTED CASH — End of Year	$	82,189		$	66,584
Supplementary Cash Flow Information:
Unit Conversion	$	321		$	390
Issuance of Shares under Equity Incentive Plan	$	3,852		$	3,842
Income Taxes Paid	$	698		$	562
Supplementary Schedule of Non-Cash Investing Transactions:
Increase in Noncontrolling Interests Due to Net Consolidation (Deconsolidation) of Sponsored Investment Vehicles	$	9,730		$	(1,685	)

1 Net consolidation (Deconsolidation) of Sponsored Investment Funds have been reclassified to conform to the current year presentation.

See accompanying notes to consolidated financial statements.

F-9

Pzena Investment Management, Inc.

Notes to Consolidated Financial Statements

Note 1 — Organization

Pzena Investment Management, Inc. (the “Company”) functions as 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 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 which is registered under the Investment Advisers Act of 1940 and is headquartered in New York, New York. As of December 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 has consolidated the results of operations and financial condition of the following entities as of December 31, 2021:

Legal Entity	Type of Entity (Date of Formation)	Ownership at December 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 (1/08/2015)		100.0	%
Pzena Investment Management Europe Limited	Irish Private Company Limited by Shares (07/08/2021)		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 International Small Cap Value Fund, a series of Advisors Series Trust	Open-end Management Investment Company, series of Delaware Statutory Trust (6/28/2018)		51.3	%
Pzena International Value Fund, a series of Advisors Series Trust	Open-end Management Investment Company, series of Delaware Statutory Trust (6/27/2021)		50.7	%
Pzena Global Focused Value Fund	Australian Registered Investment Scheme (6/10/2016)		15.9	%

F-10

Pzena Investment Management, Inc.

Notes to Consolidated Financial Statements (Continued)

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. The consolidation guidance requires an analysis to determine if an entity should be evaluated for consolidation using the voting interest entity (“VOE”) model or the variable interest entity (“VIE”) model. Under the VOE model, controlling financial interest is generally defined as a majority ownership of voting interests. Under the VIE model, controlling financial interest is established if the entity is determined to be the primary beneficiary, which is defined as (i) the power to direct activities that most significantly impact the economic performance of the entity and (ii) the right to receive potentially significant benefits or the obligation to absorb potentially significant losses.

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 or a voting 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.

F-11

Pzena Investment Management, Inc.

Notes to Consolidated Financial Statements (Continued)

During June of 2021, the Company provided the initial cash investment for the launch of a Pzena mutual fund, the Pzena International Value Fund. Due to its series fund structure, registration, and compliance with the requirements of the Investment Company Act of 1940, the fund is analyzed for consolidation under the voting interest model. As a result of the Company's initial interests, it consolidated the Pzena International Value Fund through September 17, 2021. During September of 2021, due to additional subscriptions into the Pzena International Value Fund, the Company's ownership decreased below the threshold for consolidation under the voting interest model. As the Company was no longer deemed to control the fund, it deconsolidated the entity and removed the related assets, liabilities and non-controlling interest from the Company’s consolidated statements of financial condition and classified the Company's remaining investment as an equity method investment. During December of 2021, due to additional contributions from the Company into the Pzena International Value Fund, the Company's ownership increased above the threshold for consolidation under the voting interest model. As of December 31, 2021, Pzena International Value Fund’s $20.1 million in net assets were included in the Company’s consolidated statements of financial condition.

During September of 2021, the Company redeemed its investment in Pzena Investment Management Special Situations, 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 December of 2021, the Company provided the initial cash investment for the launch of the Pzena Emerging Markets Select Value Fund, a new sub-fund through Pzena Value Funds plc. Due to its fund structure, the fund is analyzed for consolidation under the voting interest model. As a result of the Company's initial interests, it consolidated the Pzena Emerging Markets Select Value Fund as of December 31, 2021. At December 31, 2021, Emerging Markets Select Value Fund’s $10.3 million in net assets were included in the Company’s Consolidated Statements of Financial Condition.

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 noncontrolling 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 December 31, 2021 and 2020, Pzena Global Focused Value Fund’s $26.7 million and $3.6 million, respectively, 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 continue to 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 $234.7 million and $265.9 million at December 31, 2021 and 2020, respectively.

F-12

Pzena Investment Management, Inc.

Notes to Consolidated Financial Statements (Continued)

As of December 31, 2021 and 2020, in order to satisfy certain of the Company's obligations under its deferred compensation programs, the operating company had $1.8 million and $3.2 million in investments, respectively, in certain of these firm-sponsored vehicles, for which the Company was not deemed to be the primary beneficiary. The Company's exposure to risk in the non-consolidated VIEs is generally limited to any equity investment and any uncollected management fees. As of December 31, 2021 and 2020, the Company's maximum exposure to loss as a result of its involvement with the non-consolidated VIEs was $2.2 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 the Company’s consolidated financial condition or results of operations.

Management’s Use of Estimates:

The preparation of 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 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 their contractual terms. Advisory fee income also includes performance fees that may be earned by the Company depending on the investment return of 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 preferred method identified in 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 is presented net of fund expense cap reimbursements.

F-13

Pzena Investment Management, Inc.

Notes to Consolidated Financial Statements (Continued)

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

	For the Years Ended December 31,
Revenue	2021			2020
	(in thousands)
Separately Managed Accounts
Asset-Based Fees	$	102,841		$	74,725
Performance-Based Fees		—			—
Total Separately Managed Fees		102,841			74,725
Sub-Advised Accounts
Asset-Based Fees	$	80,990		$	52,741
Impact of Fulcrum Fees1		(3,776	)		(4,027	)
Performance-Based Fees		—			—
Total Sub-Advised Fees		77,214			48,714
Pzena Funds
Asset-Based Fees	$	20,096		$	15,154
Expense Cap Reimbursements		(909	)		(1,052	)
Performance-Based Fees		92			1,078
Total Pzena Funds Fees		19,279			15,180
Total	$	199,334		$	138,619

1Represents 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 December 31, 2021 and 2020, Cash and Cash Equivalents was $81.1 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 December 31, 2021, and 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.

	For the Years Ended December 31,
	2021		2020		2019
	(in thousands)
Cash and Cash Equivalents	$	81,133	$	65,534	$	52,480
Restricted Cash		1,056		1,050		1,036
Total	$	82,189	$	66,584	$	53,516

F-14

Pzena Investment Management, Inc.

Notes to Consolidated Financial Statements (Continued)

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 and trading debt securities 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, 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 are recorded at the amount of capital reported by the private investment partnership or mutual fund. The capital account reflects any contributions paid to, distributions received from, and equity earnings of, the entities. The earnings of these investments are recognized in 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. For the years ended December 31, 2021 and 2020, no impairment losses were recognized.

Securities Valuation:

Investments in equity securities 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 securities 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.

F-15

Pzena Investment Management, Inc.

Notes to Consolidated Financial Statements (Continued)

Concentrations of Credit Risk:

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash, 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. For the years ended December 31, 2021 and 2020, there were no client relationships representing more than 10% of the Company's revenue. At December 31, 2021 and 2020, no allowance for doubtful accounts has been deemed necessary.

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, 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. Capitalized internal-use software development costs are amortized on a straight-line basis over three years from the date of implementation.

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 a “C” corporation under the Internal Revenue Code, and is 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.

F-16

Pzena Investment Management, Inc.

Notes to Consolidated Financial Statements (Continued)

Judgment is required in evaluating the Company's uncertain tax positions and determining its provision for income taxes. The Company establishes reserves 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.

The Company’s purchase of membership units of the operating company concurrent with the 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 (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 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 deductions 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 computation of inside basis requires management to make judgments in estimating the components included in the inside basis as of the date of the Exchange (i.e., cash received by the Company on hypothetical sale of assets, allocation of gain/loss to the Company at the time of the Exchange taking into account complex partnership tax rules). In addition, management estimates the period of time that may generate cash tax savings of such tax attributes and the realizability of the tax attributes. 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.

Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount that is more-likely-than-not to be realized. At December 31, 2021 and 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.

F-17

Pzena Investment Management, Inc.

Notes to Consolidated Financial Statements (Continued)

Foreign Currency:

The functional 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/ (loss) 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 the consolidated statements of operations. For the year ended December 31, 2021, the Company recorded $0.9 million of other comprehensive losses associated with foreign currency translation adjustments. For the year ended December 31, 2020, the Company recorded approximately $0.6 million of other comprehensive income 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. 

Note 3 — Compensation and Benefits

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

	For the Years Ended December 31,
	2021		2020
	(in thousands)
Cash Compensation and Other Benefits	$	61,248	$	55,283
Non-Cash Compensation		15,824		13,204
Total Compensation and Benefits Expense	$	77,072	$	68,487

F-18

Pzena Investment Management, Inc.

Notes to Consolidated Financial Statements (Continued)

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 awards of Class B-1 units of the operating company, Delayed Exchange Class B units, phantom Delayed Exchange Class B units, options to purchase shares of Class A common stock, and shares of Class A common stock awarded for the years ended December 31, 2021 and 2020, are as follows:

	For the Years Ended December 31,
	2021				2020
	Amount		Fair Value1		Amount		Fair Value1
Class B-1 Units2		1,456,753	$	2.41		2,092,879	$	3.98
Delayed Exchange Class B Units3		810,857	$	4.68		620,543	$	5.95
Deferred Compensation Phantom Delayed Exchange Class B Units4		—	$	—		188,283	$	4.67
Options to Purchase Shares of Class A Common Stock5		—	$	—		146,804	$	2.03
Restricted Shares of Class A Common Stock6		17,706	$	4.67		16,806	$	4.74

1Represents the weighted average grant date estimated fair value per share, unit, or option.

2Represents 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. Of the units issued during the year ended December 31, 2021, 1,400,305 units vest on the fifth anniversary of the grant date, 38,462 units vest ratably over four years, and 17,986 units vested immediately. Of the units issued during the year ended December 31, 2020, 2,032,879 units vest on the fifth anniversary of the grant date and 60,000 units vest ratably over four years. 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.

3Represents Class B units issued under the 2006 Equity Incentive Plan (as defined below). 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.

4Represents phantom Delayed Exchange Class B units issued under the 2006 Equity Incentive Plan and pursuant to the Bonus Plan (as defined below). These phantom units vest ratably over four years, but may not be exchanged pursuant to the Amended and Restated Operating Agreement of the operating company until seven years after the date they vest. These units are also not entitled to any benefits under the Tax Receivable Agreement between the Company and members of the operating company.

5Represents 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.

6Represents shares of Class A common stock issued under the 2007 Equity Incentive Plan. Of the shares issued during the year ended December 31, 2021, 12,353 shares vest immediately and 5,353 shares vest ratably over four years. The 16,806 shares issued during the year ended December 31, 2020, vest ratably over four years. 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, 2021, $6.8 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, 2022 are as follows:

	January 1,
	2022
	Amount		Fair Value1
Delayed Exchange Class B Units2		1,084,675	$	6.16
Restricted Shares of Class A Common Stock3		17,057	$	6.16

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

2Represents 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.

3Represents 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.

F-19

Pzena Investment Management, Inc.

Notes to Consolidated Financial Statements (Continued)

Pursuant to the 2006 Equity Incentive Plan, the operating company issues Class B units, Class B-1 units, phantom Class B units, and options to purchase Class B units. The Company also issues Delayed Exchange Class B units pursuant to the 2006 Equity Incentive Plan. These Delayed Exchange Class B units 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 they vest. These Delayed Exchange Class B units are also not entitled to any benefit under the Tax Receivable Agreement between the Company and current, future and past members of the operating company. The 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, and contingently vesting options to acquire shares of Class A common stock.

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 as 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. As of December 31, 2021 and 2020, the liability associated with deferred compensation investment accounts was $6.8 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 the 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. Elections of deferred stock units result in the issuance of phantom shares of Class A common stock. Distributions under the Director Plan shall be made in a single distribution of shares of our 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. Amounts deferred in any calendar year are amortized over the calendar year and reflected as General and Administrative Expense. During the second quarter of 2020, the Company’s Board of Directors agreed to waive compensation for the full year of 2020, which resulted in the forfeiture of 49,673 phantom shares of Class A common stock. During the fourth quarter of 2020, the Board of Directors elected to re-instate 50% of their compensation for the year of 2020. For the years ended December 31, 2021 and 2020, the directors were awarded 75,038 and 78,416 phantom shares of Class A common stock, respectively, reflecting the annual deferral of compensation and additional phantom shares issued as of each date, and in the amount of dividends and/or special dividends and distributions that are paid with respect to Class A common stock of the Company. As of December 31, 2021 and 2020, there were 597,412 and 533,444 phantom shares of Class A common stock outstanding, respectively. During the year ended December 31, 2021, the Company distributed 11,070 shares of Class A common stock under the Director Plan. There were no distributions made under the Director Plan during the year ended December 31, 2020. During the year ended December 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.

The Company uses a fair value method in recording the expense associated with the granting of Class B units, Class B-1 units, Delayed Exchange Class B units, phantom Delayed Exchange Class B units, options to purchase Class A common stock and Class B units, options to purchase Delayed Exchange Class B units, and shares of Class A common stock under the 2006 and 2007 Equity Incentive Plans; phantom Delayed Exchange Class B units under the Bonus Plan; and phantom shares of Class A common stock under the Director Plan.

F-20

Pzena Investment Management, Inc.

Notes to Consolidated Financial Statements (Continued)

The fair value of awarded restricted shares of Class A common stock under the 2007 Equity Incentive Plan and phantom shares of Class A common stock under the Director Plan is determined based on the closing market price of our Class A common stock on the date of grant. The fair value of awarded Class B and Class B-1 units under the 2006 and 2007 Equity Incentive Plans are determined by reference to the market price of our Class A common stock on the date of grant, since Class B and Class B-1 units are exchangeable for shares of our Class A common stock, adjusted for the impact of award terms on the value of the award. Certain of the restricted shares of Class A common stock are not entitled to dividends or dividend equivalents while unvested. The fair value of these awards is determined based on the closing market price of our Class A common stock on the date of grant, net of the present value of the dividends using the applicable risk-free interest rate. The Delayed Exchange Class B Units have a seven years exchange limitation and are not entitled to any benefits under the tax receivable agreement. The fair value of these awards is determined based on the closing market price of our Class A common stock on the date of grant, net of the effects of these terms. The Class B-1 units are entitled to distributions for the duration of the holder’s employment and will participate in additional value to the extent there has been appreciation subsequent to the issuance of the Class B-1 unit. The fair value of these awards is determined based on the present value of expected future dividends, an option pricing model where the strike price reflects the threshold value over which appreciation is recognized, and the impact of award terms on the value of the award. The Company also issued options to purchase Delayed Exchange Class B units. The fair value of these options is determined using an option pricing model where the strike price reflects the fair value of Delayed Exchange Class B units on the date of grant. Certain of the phantom Delayed Exchange Class B units are not entitled to dividends or dividend equivalents while unvested.

The option model used in the fair value of Options to Purchase Shares of Class A Common Stock, Class B-1 units, and the Delayed Exchange Class B units is determined by using an appropriate option pricing model on the grant date. For each of the years ended December 31, 2021 and 2020, the Company issued options and units valued using the Black-Scholes option pricing model with the following weighted average assumptions:

	2021			2020
	January 1,			January 1,
Weighted Average Time Until Exercise	10 years			10 years
Expected Volatility		45	%		44	%
Risk-Free Rate		0.90	%		1.90	%
Dividend Yield		4.40	%		4.40	%

Weighted Average Time Until Exercise — The expected term is based on the Company’s historical experience and the particular terms of its option awards.

Expected Volatility — Due to the lack of sufficient historical data for the Company’s own shares, the Company based its expected volatility on a representative peer group.

Risk-Free Rate — The risk-free rate for periods within the expected term of the options is based on the interest rate of a traded zero-coupon U.S. Treasury bond with a term equal to the options’ expected term on the date of grant.

Dividend Yield — The dividend yield is based on the Company’s anticipated dividend payout over the expected term of the option awards.

F-21

Pzena Investment Management, Inc.

Notes to Consolidated Financial Statements (Continued)

The following is a summary of the Class B-1 unit activity for the two years ended December 31, 2021:

	For the Years Ended December 31,
	2021				2020
	Units Outstanding		Weighted Average Threshold Price		Units Outstanding		Weighted Average Threshold Price
Beginning Balance		5,775,952	$	8.15		3,683,073	$	8.15
Units Granted1		1,456,753		7.06		2,092,879		8.15
Units Cancelled		—		—		—		—
Units Forfeited		—		—		—		—
Units Exercised		—		—		—		—
Ending Balance		7,232,705	$	7.93		5,775,952	$	8.15

1Amounts reflected include the impact of a modification as of May 1, 2020, which resulted in the cancellation of 166,804 Class B-1 units.

The weighted average grant-date fair value per Class B-1 unit issued in 2021 and 2020 was $2.41 and $3.98, respectively. During the years ended December 31, 2021 and 2020, no Class B-1 units were exercised.

Exercise prices for Class B-1 units outstanding and exercisable as of December 31, 2021 are as follows:

	Units Outstanding				Units Exercisable
	Number Outstanding as of December 31, 2021		Weighted Average Threshold Price		Number Exercisable as of December 31, 2021		Weighted Average Threshold Price
$5.00 – $10.00		7,214,719	$	7.92		3,709,776	$	8.15
$10.00 – $15.00		17,986		11.01		17,986		11.01
$5.00 – $15.00		7,232,705	$	7.93		3,727,762	$	8.16

Based on the closing market price of the Company’s Class A common stock on December 31, 2021, the aggregate intrinsic value of the Company’s Class B-1 units was as follows:

	Units Outstanding		Units Exercisable
	(in thousands)
Aggregate Intrinsic Value	$	11,164	$	4,914

The following is a summary of the option activity for the two years ended December 31, 2021:

	For the Years Ended December 31,
	2021					2020
	Options Outstanding			Weighted Average Exercise Price		Options Outstanding			Weighted Average Exercise Price
Beginning Balance		6,762,389		$	8.27		6,779,677		$	8.24
Options Granted1		—			—		189,539			7.65
Options Cancelled		—			—		(8,426	)		7.58
Options Forfeited		—			—		(178,740	)		6.57
Options Exercised		(61,334	)		4.77		(19,661	)		7.58
Ending Balance		6,701,055		$	8.30		6,762,389		$	8.27

1Options granted for the year ended December 31, 2020 include 189,539 options to purchase shares of Class A common stock.

The weighted average grant-date fair values per option issued in 2020 was $1.84. The 61,334 options exercised in 2021 resulted in 32,947 net Class B units issued, as a result of the redemption of 28,387 Class B units for the cashless exercise of the options. The 19,661 options exercised in 2020 resulted in 603 net Class B units issued, as a result of the redemption of 19,058 Class B units for the cashless exercise of the options. The 187,166 options to purchase Class B units that were cancelled or forfeited during 2020 were in connection with employee departures and

F-22

Pzena Investment Management, Inc.

Notes to Consolidated Financial Statements (Continued)

option expirations. During the year ended December 31, 2021, 500,000 contingently vesting options vested. During the year ended December 31, 2020, no contingently vesting options vested.

Exercise prices for options outstanding and exercisable as of December 31, 2021 are as follows:

	Options Outstanding						Options Exercisable
	Number Outstanding as of December 31, 2021		Weighted- Average Remaining Contractual Life		Weighted Average Exercise Price		Number Exercisable as of December 31, 2021		Weighted- Average Remaining Contractual Life		Weighted Average Exercise Price
$5.00 – $10.00		5,308,921		5.7	$	7.02		1,215,769		6.1	$	6.90
$10.00 – $15.00		1,392,134		1.7		13.19		522,134		0.6		12.88
$5.00 – $15.00		6,701,055		4.8	$	8.30		1,737,903		4.4	$	8.69

Based on the closing market price of the Company’s Class A common stock on December 31, 2021, the aggregate intrinsic value of the Company’s options was as follows:

	Options Outstanding		Options Exercisable
	(in thousands)
Aggregate Intrinsic Value	$	12,989	$	3,130

Phantom Delayed Exchange Class B units issued pursuant to the Bonus Plan, which vest ratably over four years, are summarized as follows:

	For the Years Ended December 31,
	2021					2020
	Phantom Units Outstanding			Weighted Average Price		Phantom Units Outstanding			Weighted Average Price
Beginning Balance		472,302		$	5.57		503,869		$	6.33
Phantom Delayed Exchange Class B Units Issued1		-			-		188,283			4.67
Vesting of Phantom Delayed Exchange Class B Units1		(201,523	)		5.97		(208,879	)		6.56
Phantom Delayed Exchange Class B Units Forfetied1		-			-		(10,971	)		6.04
Ending Balance		270,779		$	5.29		472,302		$	5.57

1Represents phantom Delayed Exchange Class B units issued under the 2006 Equity Incentive Plan. These phantom units vest ratably over four years, but may not be exchanged pursuant to the Amended and Restated Operating Agreement of the operating company until seven years after the date they vest. These units are also not entitled to any benefits under the Tax Receivable Agreement between the Company and members of the operating company.

Phantom Class B units and Phantom Delayed Exchange Class B units issued pursuant to the 2006 Equity Incentive Plan, which vest ratably over 10 years and are not eligible to receive dividends or dividend equivalents until vested, are summarized as follows:

	For the Years Ended December 31,
	2021					2020
	Phantom Units Outstanding			Weighted Average Price		Phantom Units Outstanding			Weighted Average Price
Beginning Balance		3,108,154		$	4.00		3,734,050		$	4.05
Phantom Delayed Exchange Class B Units Issued		—			—		—			—
Vesting of Phantom Class B Units		(626,158	)		4.29		(625,896	)		4.29
Phantom Class B Units Forfeited		—			—		—			—
Ending Balance		2,481,996		$	3.93		3,108,154		$	4.00

F-23

Pzena Investment Management, Inc.

Notes to Consolidated Financial Statements (Continued)

As of December 31, 2021 and 2020, the Company had approximately $42.1 million and $34.8 million, respectively, in unrecorded compensation expense related to unvested awards issued pursuant to its Bonus Plan; Class B units, option grants, and phantom Class B units issued under the 2006 Equity Incentive Plan; and restricted Class A common stock issued under the 2007 Equity Incentive Plan. The Company anticipates that this unrecorded cost will amortize over the respective vesting periods of the awards.

As of December 31, 2021, the total units and shares remaining available for future issuance under the equity incentive plans are as follows:

Plan	Number of Securities Remaining Available For Future Issuance Under Equity Incentive Plans
Pzena Investment Management, LLC 2006 Equity Incentive Plan		4,984,985
Pzena Investment Management, Inc. 2007 Equity Incentive Plan		6,555,791
Total		11,540,776

Note 4 — Employee Benefit Plans

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. During the years ended December 31, 2021 and 2020, the expense recognized in connection with this plan was $1.3 million and $1.1 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.

F-24

Pzena Investment Management, Inc.

Notes to Consolidated Financial Statements (Continued)

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

	For the Years Ended December 31,
	2021		2020
	(in thousands, except share and per share amounts)
Net Income Allocated to:
Class A Common Stock	$	18,657	$	8,868
Participating Shares of Restricted Class A Common Stock		22		6
Net Income for Basic Earnings Per Share	$	18,679	$	8,874
Basic Weighted-Average Shares Outstanding		17,394,327		17,196,939
Add: Participating Shares of Restricted Class A Common Stock1		20,367		11,235
Total Basic Weighted-Average Shares Outstanding		17,414,694		17,208,174
Basic Earnings per Share	$	1.07	$	0.52

1Certain 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 Class A common stock, phantom Delayed Exchange Class B units, outstanding Class B unit options, options to purchase Class A common stock, and restricted Class A common stock, to the extent they would have a dilutive effect on earnings per share for the reporting period. Net income for diluted earnings per share generally assumes 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 any prior period and other adjustments. 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 years ended December 31, 2021 and 2020, the Company’s diluted net income was determined as follows:

	For the Years Ended December 31,
	2021			2020
	(in thousands)
Net Income Attributable to Non-Controlling Interests of Pzena Investment Management, LLC	$	86,781		$	42,421
Less: Assumed Corporate Income Taxes		(21,799	)		(10,529	)
Assumed After-Tax Income of Pzena Investment Management, LLC		64,982			31,892
Net Income of Pzena Investment Management, Inc.		18,679			8,874
Diluted Net Income	$	83,661		$	40,766

Under the two-class method, 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 Class B units for purposes of calculating earnings per share. Dividend equivalent distributions paid per share on the Company’s unvested Class B units are equal to the dividends paid per share of Class A common stock of the Company.

F-25

Pzena Investment Management, Inc.

Notes to Consolidated Financial Statements (Continued)

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

	For the Years Ended December 31,
	2021		2020
	(In thousands, except share and per share amounts)
Diluted Net Income Allocated to:
Class A Common Stock	$	76,421	$	37,732
Participating Shares of Restricted Class A Common Stock		22		6
Participating Class B Units and Class B-1 Units		7,218		3,028
Total Diluted Net Income Attributable to Shareholders	$	83,661	$	40,766
Basic Weighted-Average Shares Outstanding		17,414,694		17,208,174
Dilutive Effect of Class B Units		55,037,164		54,156,631
Dilutive Effect of Options1		1,586,602		12,637
Dilutive Effect of Phantom Units		2,687,583		1,874,199
Dilutive Effect of Restricted Shares of Class A Common Stock2		33,231		12,660
Dilutive Weighted-Average Shares Outstanding		76,759,274		73,264,301
Add: Participating Class B Units and Class B-1 Units3		7,248,364		5,879,409
Total Dilutive Weighted-Average Shares Outstanding		84,007,638		79,143,710
Diluted Earnings per Share	$	1.00	$	0.52

1Represents the dilutive effect of options to purchase Class B units, Delayed Exchange Class B units, and Class A common stock.

2Certain 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.

3Unvested Class B Units granted to employees have nonforfeitable rights to dividends 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.

Approximately 0.3 million options to purchase Class B units, 0.6 million options to purchase shares of Class A common stock, and 0.5 million contingent options to purchase shares of Class A common stock were excluded from the calculation of diluted earnings per share for the year ended December 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 5.5 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 Class A common stock were excluded from the calculation of diluted earnings per share for the year ended December 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.

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, first issued on December 31, 2019, 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. Based on the closing price of the Company’s Class A common stock as of as of December 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 approximately 23.5%, 74.9%, and 1.6% respectively, of the

F-26

Pzena Investment Management, Inc.

Notes to Consolidated Financial Statements (Continued)

economic interest in the December 31, 2021 value of the operating company. As of December 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 21.6%, 69.3%, and 9.1%, respectively, of the right to the future income and distributions. As of December 31, 2020, the holders of Class A common stock (through the Company) and the holders of Class B units of the operating company held approximately 24.2% and 75.8%, respectively, of the economic interest in the December 31, 2020 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 has a corresponding share of the Company’s Class B common stock, par value $0.000001 per share. 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 this 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 in accordance 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.

On December 22, 2021, June 10, 2021 and December 22, 2020, certain of the operating company’s members exchanged an aggregate of 30,414, 760,000, and 494,316, respectively, of their Class B units for an equivalent number of shares of Class A common stock of the Company. These acquisitions of additional operating company membership interests were treated as reorganizations of entities under common control as required by the Business Combinations Topic of the FASB ASC.

The incremental assets and liabilities assumed in the exchanges were recorded on December 22, 2021, June 10, 2021, and December 22, 2020 as follows:

	December 22,  2021			June 10,  2021			December 22,  2020
	(in thousands)
Pzena Investment Management, LLC Members' Capital	$	372		$	9,279		$	6,694
Pzena Investment Management, LLC Accumulated Deficit		(324	)		(8,210	)		(6,072	)
Realizable Deferred Tax Asset		-			2,493			506
Net Tax Receivable Liability to Converting Unitholders		-			(2,119	)		(430	)
Total	$	48		$	1,443		$	698
Common Stock, at Par	$	-		$	8		$	5
Additional Paid-in Capital		48			1,435			693
Total	$	48		$	1,443		$	698

F-27

Pzena Investment Management, Inc.

Notes to Consolidated Financial Statements (Continued)

F-28

Pzena Investment Management, Inc.

Notes to Consolidated Financial Statements (Continued)

The Company announced a share repurchase program on April 24, 2012. The Board of Directors authorized the Company to repurchase 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 5, 2014, the Board of Directors authorized the Company to repurchase an additional $20 million of the Company's outstanding Class A common stock and Class B units of the operating company. 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. On July 20, 2021, the Company announced that its Board of Directors approved an increase of $40 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 year ended December 31, 2021, the Company purchased and retired 865,556 shares of Class A common stock and 64,077 Class B units at an average price per share of $9.99 and $7.66, respectively. During the year ended December 31, 2020, the Company purchased and retired 1,211,573 shares of Class A common stock and 107,204 Class B units at an average price per share of $6.32 and $5.97, respectively. The Company records the repurchase of shares and units at cost based on the trade date of the transaction.

During the years ended December 31, 2021 and 2020, 49,081 and 554,860 Delayed Exchange Class B units were issued for approximately $0.3 million and $2.3 million in cash, respectively, to certain employee members pursuant to the 2006 Equity Incentive Plan.

Note 7 — Non-Controlling Interests

Non-Controlling Interests in the operations of the Company’s operating company and consolidated subsidiaries are comprised of the following:

	For the Years Ended December 31,
	2021		2020
	(in thousands)
Non-Controlling Interests of Pzena Investment Management, LLC	$	86,781	$	42,421
Non-Controlling Interests of Consolidated Subsidiaries		1,017		243
Non-Controlling Interests	$	87,798	$	42,664

Distributions to non-controlling interests represent tax allocations and dividend equivalents paid to the members of the operating company, as well as redemptions by investors in the Company’s consolidated subsidiaries.

Note 8 — Investments

The following is a summary of Investments:

	As of
	December 31, 2021		December 31, 2020
	(in thousands)
Equity Investments, at Fair Value
Equity Securities	$	82,900	$	18,739
Mutual Funds		7,319		7,314
Total Equity Investments, at Fair Value	$	90,219	$	26,053
Investment in Equity Method Investees		5,287		8,051
Total	$	95,506	$	34,104

F-29

Pzena Investment Management, Inc.

Notes to Consolidated Financial Statements (Continued)

Investment Securities, Trading

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

	Cost		Unrealized Gain/(Loss)			Fair Value
	(in thousands)
Equity Securities	$	80,480	$	2,420		$	82,900
Mutual Funds		7,328		(9	)		7,319
Total Equity Investments, at Fair Value	$	87,808	$	2,411		$	90,219

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

	Cost		Unrealized Gain/(Loss)			Fair Value
	(in thousands)
Equity Securities	$	259	$	(22	)	$	237
Total Securities Sold Short, at Fair Value	$	259	$	(22	)	$	237

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:

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

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 Investments on the consolidated statements of financial condition. As of December 31, 2021, the Company's investments range between 1% and 8% of the capital of these entities and have an aggregate carrying value of $5.3 million.

F-30

Pzena Investment Management, Inc.

Notes to Consolidated Financial Statements (Continued)

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 transparency 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 certain cash equivalents and equity investments held at fair value. Cash investments in actively traded money market funds are measured at net asset values. Equity securities are exchange-traded securities with quoted prices in active markets. The fair value of investments in mutual funds are based on 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 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 tables present these instruments’ fair value at December 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		82,163		737		—		82,900
Mutual Funds		7,319		—		—		7,319
Total	$	89,490	$	737	$	—	$	90,227
Liabilities
Securities Sold Short		237		—		—		237
Total	$	237	$	—	$	—	$	237

F-31

Pzena Investment Management, Inc.

Notes to Consolidated Financial Statements (Continued)

The following tables present 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	$	25,328	$	733	$	—	$	26,061
Liabilities
Securities Sold Short		714		—		—		714
Total	$	714	$	—	$	—	$	714

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

Note 10 — Property and Equipment

Property and equipment, net, is comprised of the following:

	As of
	December 31, 2021			December 31, 2020
	(in thousands)
Leasehold Improvements	$	6,967		$	6,929
Furniture and Fixtures		1,591			1,591
Computer Hardware		880			745
Computer Software		879			879
Office Equipment		212			212
Capitalized Internal-Use Software Development Costs		245			—
Total		10,773			10,356
Less: Accumulated Depreciation and Amortization		(7,086	)		(5,980	)
Total	$	3,687		$	4,376

Depreciation and amortization is included in general and administrative expense and totaled $1.2 million for each of the years ended December 31, 2021, and 2020.

During the year ended December 31, 2021, the Company capitalized $0.2 million of internal-use software development costs. During the year ended December 31, 2021, no amortization expense was recognized related to capitalized internal-use software costs. As of and for the year ended December 31, 2020, the Company did not have capitalized internal-use software development costs.

Note 11 — Related Party Transactions

For the years ended December 31, 2021, and 2020, the Company earned $1.2 million and $0.8 million, respectively, in investment advisory fees from unconsolidated VIEs which receive investment management services from the Company.

During the year ended December 31, 2021, and 2020, the Company offered 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 units held by the employee. These loans are full recourse in nature and totaled $3.6 million and $2.6 million at December 31, 2021, and 2020, respectively.

F-32

Pzena Investment Management, Inc.

Notes to Consolidated Financial Statements (Continued)

The operating company, as the 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. The Company recognized $1.3 million of such expenses for each of the years ended December 31, 2021 and 2020.

The operating company manages the 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 the 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. The aggregate value of the fees that the Company waived related to the Company’s executive officers, other employees, and family members, was approximately $1.2 million for the year ended December 31, 2021, and $0.8 million in the year ended December 31, 2020.

Pursuant to a tax receivable agreement signed between the members of the operating company and the Company, 85% of the cash savings generated by tax elections discussed in Note 13 — Income Taxes, are distributed to the selling and converting shareholders upon the realization of this benefit. For the years ended December 31, 2021, and 2020, $0.4 million and $0.5 million, respectively, of such payments were made to certain directors, executive officers and employees of the Company.

On December 17, 2021, the Company entered into a revolving line of credit agreement with the operating company, in which, the Company agrees to make loans to the operating company on a revolving basis from time to time in such amounts as the operating company may request for such purposes as it may require in the ordinary course of its business. The credit facility includes a $15 million line of credit with a five-year term, maturing on December 17, 2026. Principal amounts outstanding under the facility accrue interest at the variable Secured Overnight Financing Rate (SOFR) plus 1.10%. As of December 31, 2021, there were total borrowings of $9,990,000 under the credit facility. As intercompany accounts and transactions are eliminated upon consolidation, there is no corresponding balance presented or included on the Consolidated Statements of Financial Condition.

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, and, therefore, no accrual has been made in the consolidated financial statements.

During the year ended December 31, 2015, the Company moved to its new corporate headquarters. The new office space is leased under a non-cancellable operating lease agreement that expires on December 31, 2025. The Company reflects 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. For the years ended December 31, 2021 and 2020, sublease income decreased annual lease expense by approximately $0.3 million and $0.4 million, respectively, 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.

F-33

Pzena Investment Management, Inc.

Notes to Consolidated Financial Statements (Continued)

During June 2019, the Company signed a non-cancellable lease to the business development and client service office in London lease 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 July 2021, the Company signed an extension of the non-cancellable lease to the business development and client service office in London which commences on November 1, 2021 and expires on October 31, 2023.

During September 2021, the Company signed a non-cancellable lease for the business development and client service office in Ireland to obtain office space that expires on August 31, 2023. In accordance with ASC 842, Leases, the lease term commenced on September 1, 2021 and the Company recorded a Right-of-use Asset and Lease Liability on the consolidated statements of financial condition associated with the new lease.

Lease expenses were $3.0 million and $2.9 million, respectively, for the years ended December 31, 2021, and 2020, and are included in general and administrative expense. Lease expense for each of the years ended December 31, 2021 and 2020, was net of $0.3 million and $0.4 million, respectively, in 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 Years Ended December 31,
	2021		2020
	(in thousands)
Operating lease expense	$	2,503	$	2,282
Supplemental cash flow information:
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	2,521	$	2,330
Right-of-use assets obtained in exchange for lease obligations	$	939	$	—

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

	As of
	December 31, 2021
	(in thousands)
Operating lease right-of-use assets	$	10,014
Operating lease liabilities	$	10,323
Weighted-average remaining lease term (in years)		3.8
Weighted-average discount rate		4.3	%

Future minimum lease payments are as follows:

Year Ending December 31,	Minimum Payments
	(in thousands)
2022		3,026
2023		2,981
2024		2,607
2025		2,607
2026		-
2027 and thereafter		-
Total undiscounted lease payments		11,221
Less discount		(898	)
Total lease liabilities	$	10,323

F-34

Pzena Investment Management, Inc.

Notes to Consolidated Financial Statements (Continued)

Note 13 — Income Taxes

The operating company is a limited liability company that has elected to be treated as a partnership for tax purposes. Neither it nor the Company’s other consolidated subsidiaries have made a provision for federal or state income taxes because it is the individual responsibility of each of these entities’ members (including the Company) to separately report their proportionate share of the respective entity’s taxable income or loss. The operating company has made a provision for New York City UBT and its U.K. consolidated subsidiary has made a provision for U.K. corporate taxes. The Company, as a “C” corporation under the Internal Revenue Code, is liable for federal, state and local taxes on the income derived from its economic interest in its operating company, which is net of UBT and U.K. taxes. Correspondingly, in its consolidated financial statements, the Company reports both the operating company’s provision for UBT and U.K. taxes, as well as its provision for federal, state and local corporate taxes. The components of the income tax expense are as follows:

	For the Year Ended December 31,
	2021			2020
	(in thousands)
Current Provision:
Unincorporated and Other Business Taxes1	$	1,710		$	937
Local Corporate Tax		118			—
State Corporate Tax		123			15
Federal Corporate Tax		1,060			(103	)
Total Current Provision	$	3,011		$	849
Deferred Provision:
Unincorporated and Other Business Taxes1	$	(126	)	$	(79	)
Local Corporate Tax		447			304
State Corporate Tax		467			267
Federal Corporate Tax		3,999			2,946
Total Deferred Provision	$	4,787		$	3,438
Total Income Tax Expense	$	7,798		$	4,287

1During each of the years ended December 31, 2021 and 2020, the operating company recognized a $2.5 million and $1.6 million tax benefit associated with the reversal of uncertain tax position liabilities and interest related to unincorporated and other business tax expenses, respectively.

F-35

Pzena Investment Management, Inc.

Notes to Consolidated Financial Statements (Continued)

A reconciliation between the provision for income taxes reported for financial reporting purposes, and the application of the statutory U.S. Federal tax rate to the reported income before income taxes for the years ended December 31, 2021 and 2020, were as follows:

	For the Year Ended December 31,
	2021						2020
	Amount			% of Pretax Income			Amount			% of Pretax Income
	(in thousands, except % amounts)
Federal Corporate Tax	$	23,998			21.0	%	$	11,723			21.0	%
State and Local Corporate Tax, net of Federal Benefit		1,155			1.0	%		586			1.0	%
Unincorporated and Other Business Tax1		1,251			1.1	%		678			1.2	%
Non-Controlling Interests		(18,438	)		(16.1	)%		(8,959	)		(16.0	)%
Non-Deductible Share-Based Compensation		20			0.0	%		22			0.0	%
Other		(189	)		-0.2	%		237			0.4	%
Income Tax Expense	$	7,798			6.8	%	$	4,287			7.7	%

1During each of the years ended December 31, 2021 and 2020, the operating company recognized a $2.5 million and $1.6 million tax benefit associated with the reversal of uncertain tax position liabilities and interest related to unincorporated and other business tax expenses, respectively.

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.

A reconciliation of the beginning and ending amount of total unrecognized tax benefits for the years ended December 31, 2021 and 2020 are as follows:

	For the Year Ended December 31, 2021
	(in thousands)
Balance at December 31, 2020	$	7,612
Decreases Related to Prior Year Tax Positions		(1,870	)
Increases Related to Current Year Tax Positions		2,593
Balance at December 31, 2021	$	8,335

	For the Year Ended December 31, 2020
	(in thousands)
Balance at December 31, 2019	$	7,193
Decreases Related to Prior Year Tax Positions		(1,210	)
Increases Related to Current Year Tax Positions		1,629
Balance at December 31, 2020	$	7,612

The Company recognizes accrued interest and penalties related to unrecognized tax benefits as a component of Income Tax Expense on the consolidated statements of operations. As of December 31, 2021 and 2020, the Company had $8.3 million and $7.6 million in unrecognized tax benefits, that, if recognized, would affect the provision for income taxes. As of December 31, 2021 and 2020, the Company had interest related to unrecognized tax benefits of $1.2 million and $1.2 million, respectively. As a result of legislative changes, changes in judgment related to recognition or measurement, or potential settlements with taxing authorities, it is reasonably possible that the company's gross unrecognized tax benefits balance may change within the next twelve months by a range of zero to $4.5 million.

F-36

Pzena Investment Management, Inc.

Notes to Consolidated Financial Statements (Continued)

The Company and the operating company are generally no longer subject to U.S. Federal or state and local income tax examinations by tax authorities for any year prior to 2018. All tax years subsequent to, and including, 2018 are considered open and subject to examination by tax authorities.

During the twelve months ended December 31, 2020, the Company generated $0.8 million in net operating loss carryforwards available for U.S. Federal, state and local income tax reporting purposes. As of December 31, 2021, the Company had no remaining net operating loss carryforwards available for U.S. Federal, state and local income tax reporting purposes.

The acquisition of the Class B units of the operating company, noted below, has allowed the Company to make an election under Section 754 of the Internal Revenue Code (“Section 754”) to step up its tax bases in the net assets acquired. This step up is deductible for tax purposes over a 15-year period.

Pursuant to a tax receivable agreement signed between the members of the operating company and the Company, 85% of the cash savings generated by this election will be distributed to the selling and converting shareholders upon the realization of this benefit.

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.

As discussed in Note 6, Shareholders’ Equity, on December 22, 2021, June 10, 2021, and December 22, 2020, certain of the operating company’s members exchanged an aggregate of 30,414, 760,000, and 494,316, respectively, of their Class B units for an equivalent number of shares of Class A common stock of the Company. The Company elected to step up its tax basis in the incremental assets acquired in accordance with Section 754. Based on the exchange-date fair values of the Company’s common stock and the tax basis of the operating company, this election gave rise to a $2.4 million deferred tax asset and corresponding $2.1 million liability to converting shareholders on June 10, 2021 and a $0.8 million deferred tax asset and corresponding $0.4 million liability to converting shareholders on December 22, 2020. There was no impact to the deferred tax asset or liability to converting shareholders associated with the December 22, 2021 exchange-date. As required by the Income Taxes Topic of the FASB ASC, the Company recorded the effects of these transactions in equity.

As of December 31, 2021 and 2020, the net values of all deferred tax assets were approximately $25.9 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 December 31, 2021 and 2020, the Company did not have a valuation allowance recorded against its deferred tax assets.

The change in the Company’s deferred tax assets for the year ended December 31, 2021, is summarized as follows:

	Section 754			Other			Total
	(in thousands)
Balance at December 31, 2020	$	24,255		$	5,576		$	29,831
Deferred Tax (Expense)		(4,452	)		(334	)		(4,786	)
Tax Impact of Transactions with Non-Controlling Shareholders		—			(1,599	)		(1,599	)
Unit Exchange		2,493			(53	)		2,440
Balance at December 31, 2021	$	22,296		$	3,590		$	25,886

F-37

Pzena Investment Management, Inc.

Notes to Consolidated Financial Statements (Continued)

The change in the Company’s deferred tax liabilities, which is included in other liabilities on the Company’s consolidated statements of financial condition, for the year ended December 31, 2021, is summarized as follows:

	Total
	(in thousands)
Balance at December 31, 2020	$	(1	)
Deferred Tax (Expense)		(1	)
Balance at December 31, 2021	$	(2	)

The change in the Company’s deferred tax assets for the year ended December 31, 2020 is summarized as follows:

	Section 754			Other			Total
	(in thousands)
Balance at December 31, 2019	$	27,953		$	4,730		$	32,683
Deferred Tax (Expense)		(4,204	)		771		$	(3,433	)
Tax Impact of Transactions with Non-Controlling Shareholders		—			(239	)	$	(239	)
Unit Exchange		506			314		$	820
Balance at December 31, 2020	$	24,255		$	5,576		$	29,831

The change in the Company’s deferred tax liabilities for the year ended December 31, 2020 is summarized as follows:

	Total
	(in thousands)
Balance at December 31, 2019	$	(2	)
Deferred Tax (Expense)		1
Balance at December 31, 2020	$	(1	)

As of December 31, 2021 and 2020, the net values of the liability to selling and converting shareholders were approximately $24.7 million and $25.7 million, respectively. The change in the Company’s liability to selling and converting shareholders for the years ended December 31, 2021 and 2020, is summarized as follows:

	For the Year Ended December 31,
	2021			2020
	(in thousands)
Beginning Balance	$	25,701		$	28,652
Unit Exchanges		2,119			430
Tax Receivable Agreement Payments		(2,486	)		(2,881	)
Change in Liability		(655	)		(500	)
Ending Balance	$	24,679		$	25,701

F-38

Pzena Investment Management, Inc.

Notes to Consolidated Financial Statements (Continued)

Note 14 — Subsequent Events

The Company evaluated the need for disclosures and/or adjustments resulting from subsequent events through the date the financial statements were issued.

On January 21, 2022, the operating company entered into an amendment to its existing lease for its corporate headquarters at 320 Park Avenue, 8th Floor, New York, New York. We currently occupy approximately 45,050 square feet of space under a non-cancellable operating lease, the term of which expires on December 31, 2025. In January 2022, we entered into a lease amendment which extends the term until October 31, 2036 and provides for a total of approximately 74,000 square feet of space. The total additional lease payments provided for in the lease amendment aggregate approximately $78 million over the extended term after accounting for any rent abatement periods. The operating company plans to sublet a portion of the expanded space, however its obligations on the lease are not subject to finding suitable sublessee(s).

On February 1, 2022, the Company declared a year-end dividend of $0.53 per share of its Class A common stock which was paid on February 25, 2022 to holders of record on February 11, 2022.

F-39

EX-10.22

Exhibit 10.22

PZENA INVESTMENT MANAGEMENT, LLC

PROFITS INTEREST AWARD AGREEMENT

This PROFITS INTEREST AWARD AGREEMENT (this “Agreement”), dated as of [·], (the “Date of Grant”), is delivered by Pzena Investment Management, LLC, a Delaware limited liability company (the “Company”) to [·] (the “Participant”).

RECITALS

WHEREAS, pursuant to the terms of the [Pzena Investment Management, LLC Amended and Restated 2006 Equity Incentive Plan] [Pzena Investment Management, Inc. Equity Incentive Plan] (the “Plan”), the Company desires to make a restricted unit grant of the Company’s Class B-1 Units to the Participant (the “Grant”), and this Agreement sets forth the terms and conditions of the Grant to the Participant.

NOW, THEREFORE, the parties to this Agreement, intending to be legally bound hereby, agree as follows:

1.Conditions to Receiving Grant. As a condition of receiving this Grant, the Participant hereby agrees that the Participant shall execute an instrument agreeing to be bound by the terms, conditions and obligations contained in the Plan and the Company’s Amended and Restated Operating Agreement, dated as of December 30, 2019, or any amendment or restatement thereof (the “Operating Agreement”), in each case in such form as the Committee (as defined in the Plan) determines, with respect to the Units (as defined below).

2.Restricted Unit Grant. Subject to the terms and conditions set forth in this Agreement, the Committee hereby grants the Participant [·] of the Company’s Class B-1 Units, which are [LTIP Units][Other Stock-Based Awards] (as defined in the Plan) (collectively, the “Units”), subject to the restrictions and conditions set forth in this Agreement. The Units shall have a Threshold Value, as defined in the Operating Agreement, of [__]. The Units issued to the Participant under this Agreement are intended to be treated as a profits interest for federal income tax purposes pursuant to Revenue Procedures 93-27 and 2001-43, and accordingly will have a $0 capital account as of the Date of Grant.

3.Vesting and Nonassignability of Units.

(a)The Units shall [be vested immediately, or shall vest ratably or cliff with vesting depending on continued employment or specified service type requirements]

As used in this Agreement, “employed by, or provide service to, the Company” shall mean employment with the Company or service as an employee or consultant or key advisor who performs services for the Company or any of its subsidiaries (so that, for purposes of satisfying conditions under this Agreement, the Participant shall not be considered to have terminated employment or service until the Participant ceases to be an employee, consultant and key advisor).

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(b)[For non-immediately vesting awards, if the Participant’s employment or specified service with the Company terminates for any reason before the Units are fully vested, the Units that are not then vested shall be forfeited and shall no longer be deemed outstanding.]

(c)Except as set forth in the Operating Agreement or unless the Committee approves otherwise, in their sole discretion, during the period before the Units are fully vested (the “Restriction Period”), the Units may not be assigned, transferred, pledged or otherwise disposed of by the Participant. The Participant may only transfer the Units based on the express approval of the Committee, and any attempt to assign, transfer, pledge or otherwise dispose of the Units contrary to the provisions hereof, and the levy of any execution, attachment or similar process upon the Units, shall be null, void and without effect. All Units, whether or not vested, shall be subject to the transfer restrictions set forth in the Operating Agreement.

4.Effect of Vesting; Distributions.

(a)During the Restriction Period, the Participant shall receive any distributions with respect to the Units as provided in the Operating Agreement.

(b)The obligations of the Company to issue or deliver Units under this Agreement shall be subject to all applicable laws, rules, and regulations and such approvals by governmental agencies as may be deemed appropriate by the Committee, including such actions as Company counsel shall deem necessary or appropriate to comply with any relevant laws and regulations. The Company may require that the Participant represent that the Participant is holding the Units for the Participant’s own account and not with a view to or for sale in connection with any distribution of Units, or such other representations as the Committee deems appropriate.

(c)All obligations of the Company under this Agreement shall be subject to the rights of the Company as set forth in Section 7 below to withhold amounts required to be withheld for any taxes, if applicable.

5.Forfeiture and Exchange.The Units are subject to the exchange requirements and forfeiture terms as set forth in the Operating Agreement. [Notwithstanding anything contained herein or the Operating Agreement to the contrary, the Units shall not be subject to exchange as set forth in the Operating Agreement until the second anniversary of the Date of Grant.]

6.Grant Subject to Committee Determinations and Plan Provisions. The grant of the Units under this Agreement is made pursuant to the Plan and is subject to interpretations, regulations and determinations established from time to time by the Committee in good faith including, but not limited to, provisions pertaining to (a) rights and obligations with respect to withholding taxes, (b) the registration, qualification or listing of the Units, (c) changes in capitalization of the Company, and (d) other requirements of applicable law. The Committee shall have the authority to interpret and construe the grant of the Units under this Agreement, and its decisions shall be conclusive as to any questions arising hereunder.

7.Withholding. The Participant shall be required to pay to the Company, or make other arrangements satisfactory to the Company to provide for the payment of, any federal (including

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FICA), state, local or other taxes that the Company is required to withhold with respect to the grant or vesting of the Units.

8.Tax Consequences and Election Under Section 83(b).

(c)The Participant shall execute and timely file with the Internal Revenue Service an election under Section 83(b) of the Internal Revenue Code of 1986, as amended (the “Code”), substantially in the form attached hereto as Exhibit A. Participant shall deliver to the Company with this executed Agreement, a copy of the executed Section 83(b) election.

THE PARTICIPANT ACKNOWLEDGES THAT IT IS THE PARTICIPANT’S SOLE RESPONSIBILITY AND NOT THE COMPANY’S TO TIMELY FILE THE ELECTION UNDER SECTION 83(b), EVEN IF THE PARTICIPANT REQUESTS THE COMPANY OR ITS REPRESENTATIVES TO MAKE THIS FILING ON THE PARTICIPANT’S BEHALF.

(a)The Participant has reviewed with the Participant’s own tax advisors the federal, state, local and foreign tax consequences of this investment and the transactions contemplated by this Agreement. The Participant is relying solely on such advisors and not on any statements or representations of the Company or any of its agents. The Participant understands that the Participant (and not the Company) shall be responsible for the Participant’s own tax liability that may arise as a result of this investment or the transactions contemplated by this Agreement. The Participant acknowledges that the Participant will be considered the owner of the Units for tax purposes and will be subject to tax on the Participant’s share of the Company’s income without regard to vesting and without regard to whether an election is made under section 83(b) of the Code.

The Participant agrees to comply with any valuation determination that the Company makes with regard to the Units and further acknowledges that in the event of forfeiture, certain allocations of income and loss may be required for the Company to comply with the requirements of Code section 704 and the regulations thereunder.

9.Other Restrictions on Sale or Transfer of Units.

(c)The Participant is acquiring the Units solely for investment purposes, with no present intention of distributing or reselling any of the Units or any interest therein. The Participant acknowledges that the Units have not been registered under the Securities Act of 1933, as amended (the “Securities Act”).

(a)The Participant is aware of the applicable limitations under the Securities Act relating to a subsequent sale, transfer, pledge or other assignment or encumbrance of the Units. The Participant further acknowledges that the Units must be held indefinitely unless they are subsequently registered under the Securities Act and applicable state securities laws or an exemption from such registration is available.

(b)Subject to the other restrictions in the Operating Agreement or this Agreement, including Section 3 of this Agreement, the Participant will not sell, transfer, pledge, donate, assign, mortgage, hypothecate or otherwise encumber the Units unless the Units are registered under the

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Securities Act or the Company is given an opinion of counsel reasonably acceptable to the Company that such registration is not required under the Securities Act.

(c)The Participant realizes that there is no public market for the Units, that no market may ever develop for them, and that they have not been approved or disapproved by the Securities and Exchange Commission or any governmental agency.

(d)The Participant is aware of the applicable limitations under the Plan and the Company’s Operating Agreement relating to transfers of the Units. The Participant acknowledges and agrees that the Company may require the Participant to provide additional representations, warranties or covenants relating to the securities into which the Units are exchangeable in connection with any exchange thereof permitted under the Operating Agreement.

10.No Benefits Under Tax Receivable Agreement. The Participant acknowledges and agrees that no Units granted under this Agreement shall be entitled to any benefits under the Tax Receivable Agreement, dated October 30, 2007, by and among Pzena Investment Management, Inc., the Company and the Continuing Members and Exiting Members named on the signature pages thereto, as amended from time to time. This Section 10 shall be treated as part of the Operating Agreement as described in Section 761(c) of the Code and Sections 1.704-1(b)(2)(ii)(h) and 1.761-1(c) of the Treasury Regulations.

11.No Employment or Other Rights. Neither the grant of Units nor this Agreement shall confer upon the Participant any right to be retained by or in the employ or service of the Company and shall not interfere in any way with the right of the Company to terminate the Participant’s employment or service at any time.

12.Arbitration. All disputes relating to, arising from, or connected in any manner with this Agreement or the Participant’s employment 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 12 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 12 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 12 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).

13.Transfers in Violation of Agreement. Any transfer or attempted transfer of any Unit in violation of any provision of this Agreement or the Operating Agreement shall be void, and the

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Company will not record such transfer on its books or treat any purported transferee of such Unit as the owner of such Unit for any purpose.

14.Amendment and Waiver. The provisions of this Agreement may be amended or waived only with the prior written consent of the Company and the Participant.

15.Assignment by Company. The rights and protections of the Company hereunder shall extend to any successors or assigns of the Company and to the Company’s parents, subsidiaries, and affiliates. This Agreement may be assigned by the Company without the Participant’s consent.

16.Applicable Law. The validity, construction, interpretation and effect of this instrument shall be governed by and construed in accordance with the laws of the State of Delaware, without giving effect to the conflicts of laws provisions thereof.

17.Notice. Any notice to the Company provided for in this instrument shall be addressed to the Company at the address set forth in the Operating Agreement, Attention: CEO, and any notice to the Participant shall be addressed to such Participant at the current address shown on the Company’s records, or to such other address as the Participant may designate to the Company in writing. Any notice shall be delivered by hand, sent by telecopy or enclosed in a properly sealed envelope addressed as stated above, registered and deposited, postage prepaid, in a post office regularly maintained by the United States Postal Service.

[Signature Page Follows]

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DB1/ 109856585.5

IN WITNESS WHEREOF, the Company has caused its duly authorized officer to execute this instrument, and the Participant has placed his signature hereon evidencing his agreement to the terms hereof, effective as of the Date of Grant.

PZENA INVESTMENT MANAGEMENT, LLC

By: Pzena Investment Management, Inc., its Managing Member

By:

Name: Richard S. Pzena

Title: Chief Executive Officer

I hereby accept the grant of Units described in this Agreement, and I agree to be bound by the terms of the Plan and this Agreement effective as of the Date of Grant. I have read the Plan and the Company’s Operating Agreement and I agree to be bound by the terms of the Operating Agreement and this Agreement, effective as of the Date of Grant. I hereby further agree that all the decisions and determinations of the Committee shall be final and binding.

Participant: [·]

[Signature Page to Profits Interest Award Agreement]

EXHIBIT A

INSTRUCTIONS FOR FILING SECTION 83(B) ELECTION

Attached is a form of election under section 83(b) of the Internal Revenue Code. If you wish to make such an election, you should complete, sign and date the election and then proceed as follows:

1. Execute three counterparts of your completed election (plus one extra counterpart for each person other than you, if any who receives property that is the subject of your election), retaining at least one photocopy for your records.

2. Send one counterpart to the Internal Revenue Service Center with which you will file your Federal income tax return for the current year via certified mail, return receipt requested. THE ELECTION SHOULD BE SENT IMMEDIATELY, AS YOU ONLY HAVE 30 DAYS FROM THE ISSUANCE/PURCHASE/GRANT DATE WITHIN WHICH TO MAKE THE ELECTION – NO WAIVERS, LATE FILINGS OR EXTENSIONS ARE PERMITTED.

3. Deliver one counterpart of the completed election to the Company for its files.

4. If anyone other than you (e.g., one of your family members) will receive property that is the subject of your election, deliver one counterpart of the completed election to each such person.

Section 83(b) Election Form

DB1/ 109856585.5

This election is being made under section 83(b) of the Internal Revenue Code of 1986, as amended, pursuant to Treasury Regulation section 1.83-2.

(1)

Name of taxpayer making election:

Address:

Social Security Number:

Tax Year for which election is being made:

(2) The property with respect to which the election is being made: [__] Class B-1 Units (the “Units”) of Pzena Investment Management, LLC (the “Company”).

(3) Date the property was transferred: [DATE].

(4) Forfeiture provision: The Units are subject to forfeiture to the Company if the taxpayer ceases to be employed by, or provide service to, the Company during the restriction period. The restriction period lapses [INSERT SCHEDULE]

(5) The fair market value at the time of the transfer of the Units (determined without regard to any restriction other than a restriction that by its terms will never lapse) is $0.00 per Unit.

(6) The amount paid for the Units is $0.00 per Unit.

(7) A copy of this statement has been furnished to the Company.

(8) The amount to include in gross income is $0.

(8) This statement is executed as of ______________________.

The undersigned taxpayer will file this election with the Internal Revenue Service office with which taxpayer files his or her annual income tax return not later than 30 days after the date of transfer of the property. A copy of the election also will be furnished to the Company. Additionally, the undersigned will include a copy of the election with his or her income tax return for the taxable year in which the property is transferred. The undersigned is the person performing the services in connection with which the property was transferred.

____________________________

Taxpayer

DB1/ 109856585.5

EX-10.34

Exhibit 10.34

SECOND AMENDMENT OF LEASE

THIS SECOND AMENDMENT OF LEASE (this “Amendment”) is made as of the 21st day of January, 2022, between 320 PARK AVENUE LLC, a Delaware limited liability company (as successor-in-interest to Mutual of America Life Insurance Company), having an office at 320 Park Avenue, New York, New York 10022 (hereinafter referred to as “Landlord”), and PZENA INVESTMENT MANAGEMENT, LLC, a Delaware limited liability company, having an office at 320 Park Avenue, 8th Floor, New York, New York 10022 (hereinafter referred to as “Tenant”).

WHEREAS, Landlord and Tenant entered into a lease, dated as of June 13, 2014 (the “Original Lease”) for the entire rentable area of the eighth (8th) floor (the “Initial Demised Premises”) in the building (the “Building”) known as 320 Park Avenue, New York, New York;

WHEREAS, Landlord and Tenant entered into a First Amendment of Lease, dated as of November 8, 2018 (the “First Amendment;” the Original Lease, together with the First Amendment, as modified by this Amendment, is sometimes referred to herein as the “Lease”) pursuant to which a portion of the ninth (9th) floor of the Building consisting of 8,042 rentable square feet (the “9th Floor Premises”) was added to the Initial Demised Premises (the Initial Demised Premises, together with the 9th Floor Premises, collectively, the “Original Demised Premises”); and

WHEREAS, Landlord and Tenant desire, among other things, (a) for Landlord to lease, and for Tenant to hire and take, additional space, consisting of the entirety of the seventh (7th) floor of the Building, consisting of 36,996 rentable square feet, as more particularly shown as the cross-hatched space on the floor plan annexed hereto as Exhibit A and made a part hereof (hereinafter referred to as the “7th Floor Premises”), (b) to extend the term of the Lease, (c) for Tenant to surrender the 9th Floor Premises, and (d) for Tenant to have the right to use and occupy the Building setbacks on the 7th floor of the Building that are appurtenant to the 7th floor portion of the Demised Premises (the “Setbacks”), in each case, on the terms and conditions hereinafter set forth.

NOW, THEREFORE, in consideration of the mutual covenants herein contained, and other good and valuable consideration the receipt and sufficiency of which are hereby conclusively acknowledged, Landlord and Tenant hereby agree (and amend and modify the Original Lease) as follows:

1.Extension of Lease Term; Fixed Rent; Lease Modifications for the Original Demised Premises; etc.

b.Effective as of the date hereof, the Lease Term shall be deemed to be amended for the Initial Demised Premises only so that the term of the Lease with respect to the Initial Demised Premises only is extended through and including October 31, 2036, and the Expiration Date referred to in the Lease with respect to the Initial Demised Premises only shall be deemed to be October 31, 2036 unless such term is sooner terminated as provided in the Lease or

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by law, or as the same may be renewed in accordance the terms of Article 34 of the Original Lease (as modified by this Amendment) (the “Expiration Date”).

c.Commencing on January 1, 2026 (the “Renewal Date”), the “Fixed Rent” payable by Tenant with respect to the Initial Demised Premises only shall be as [see Schedule 1 attached]:

d.Notwithstanding anything to the contrary contained herein, if Tenant shall not then be in default of any of Tenant’s obligations under the Lease beyond the expiration of any applicable notice and cure periods, Landlord hereby excuses Tenant’s obligation to pay Fixed Rent and Recurring Additional Rent for or with respect to the Initial Demised Premises only for the period from the Renewal Date through and including September 30, 2026.

e.Effective as of the Renewal Date, Article 1 (and other provisions referencing such) of the Original Lease shall hereby be deemed modified as follows with respect to the Initial Demised Premises only:

i.The term “Base Operating Year” shall mean the calendar year 2022.

ii.The term “Base Tax Amount” shall mean the amount of Taxes with respect to the fiscal year commencing July 1, 2022, and ending June 30, 2023.

f.For the avoidance of doubt, the Fixed Rent and Additional Rent, Base Operating Year and Base Tax Amount for the Original Demised Premises shall remain as set forth in the Original Lease from the date hereof through and including December 31, 2025 (i.e., prior to the commencement of the Renewal Term).

2.7th Floor Premises; Commencement Date; Rent Concessions; Delivery Condition.

b.7th Floor Lease Term. Landlord hereby leases to Tenant, and Tenant hereby hires and lets from Landlord, the 7th Floor Premises, for the period commencing on the date on which Landlord delivers the 7th Floor Premises to Tenant vacant (free of all movable property, furniture, furnishings and trade fixtures), “broom-clean”, but otherwise in its “as-is” condition as of the date hereof (such date, the “7th Floor Commencement Date”) and ending on the Expiration Date (i.e., October 31, 2036) (the “7th Floor Lease Term”) as the same may be renewed in accordance the terms of Article 34 of the Lease (as modified by this Amendment). In no event shall the 7th Floor Commencement Date occur prior to May 1, 2022.

c.7th Floor Commencement Date. Effective as of the 7th Floor Commencement Date, Landlord is delivering possession of the 7th Floor Premises to Tenant in the condition set forth in Section 2(a) above, and, accordingly, the Lease is hereby amended so that the 7th Floor Premises shall be added to and become part of the premises demised under the Lease (with the Original Demised Premises and the 7th Floor Premises being hereafter sometimes collectively referred to as the “Demised Premises”). Landlord shall not be obligated to perform any work whatsoever to prepare the 7th Floor Premises for Tenant’s use and occupancy. Tenant agrees to accept possession on the 7th Floor Commencement Date of the 7th Floor Premises in “as is” and

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“where is” condition, provided that the 7th Floor Premises are vacant (free of all movable property, furniture, furnishings and trade fixtures) and “broom-clean”. All materials, work, labor, fixtures and installations required for completion of the 7th Floor Premises and the operation of Tenant’s business thereat, shall (subject to the provisions of Article 5 of the Original Lease) be furnished and performed by Tenant, at Tenant’s own cost and expense (any such work to prepare the 7th Floor Premises for Tenant’s use and occupancy performed by Tenant or Persons Within Tenant’s Control, the “7th Floor Initial Improvement Work”). Landlord agrees that the 7th Floor Initial Improvement Work shall be considered to be “Tenant’s Initial Work” for the purposes of Article 5 only of the Original Lease.

d.If Landlord shall be unable to deliver possession of the 7th Floor Premises on the Target Date (as hereinafter defined) or any particular or estimated date by reason of the fact that the 7th Floor Premises is not ready for occupancy, or for any other reason, then Landlord shall not be subjected to any liability for the failure to give possession on said date, except as set forth in this Section 2(c). Tenant agrees that Landlord shall have no liability whatsoever to Tenant in the event that the 7th Floor Commencement Date shall not have occurred on the Target Date or any other particular date, and no such failure shall affect the validity of this Amendment, the Lease or the obligations of Tenant hereunder or thereunder, or be deemed to extend the Lease Term applicable to the 7th Floor Premises and/or the Original Demised Premises, but neither the rent reserved and covenanted to be paid hereunder (with respect only to the 7th Floor Premises) nor the 7th Floor Premises Rent Concession Period (as hereinafter defined) shall commence until the 7th Floor Premises Rent Commencement Date and the 7th Floor Commencement Date, respectively, shall each have each occurred. Landlord expects that the 7th Floor Commencement Date shall occur on May 1, 2022 (the “Target Date”). For each day, beginning on the day that is the thirtieth (30th) day following the Target Date through and including the day immediately prior to the 7th Floor Commencement Date, the 7th Floor Rent Concession Period shall be extended by one day for each day until the 7th Floor Commencement shall occur, subject to extension by any Force Majeure Event. Landlord shall provide at least thirty (30) days’ notice of the actual date that the 7th Floor Commencement Date shall occur. Without limiting the generality of the foregoing, Tenant expressly waives the provisions of Section 223-a of the Real Property Law, and agrees that the provisions of this Section 2 are intended to constitute an express “provision to the contrary” within the meaning of said Section 223-a.

d.Promptly following the 7th Floor Commencement Date, Landlord and Tenant shall execute and deliver a supplementary agreement (in the form annexed hereto as Exhibit B, and pertaining to the matters set forth therein) setting forth the 7th Floor Commencement Date and the 7th Floor Premises Rent Commencement Date, but the failure to so execute or deliver said supplementary agreement shall not in any way reduce Tenant's obligations or Landlord’s rights under the Lease.

e.7th Floor Fixed Rent. Fixed Rent for the 7th Floor Premises only (the “7th Floor Fixed Rent”) shall be paid in the following amounts (but otherwise in accordance with the terms of the Original Lease applicable to payment of Fixed Rent): [see Schedule 2 attached]:

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f.7th Floor Rent Concession. Notwithstanding anything to the contrary contained herein, if and for so long as Tenant shall not then be in default beyond the expiration of any applicable notice and cure periods with respect to any of Tenant’s obligations under this Lease,Landlord hereby excuses Tenant’s obligation to pay the 7th Floor Fixed Rent or any Recurring Additional Rent for or with respect to the 7th Floor Premises only for the period (the “7th Floor Premises Rent Concession Period”)from the 7th Floor Commencement Date through and including the date that occurs thirteen (13) months from the 7th Floor Commencement Date (with the day immediately following the expiration of the 7th Floor Premises Rent Concession Period being referred to as the “7th Floor Premises Rent Commencement Date”).

g.General. Tenant shall pay additional rent for the 7th Floor Premises in a manner consistent (without duplication of cost or obligation) with additional rent for the Initial Demised Premises, subject to the provisions of this Amendment. In the event that Tenant’s obligation to pay 7th Floor Fixed Rent shall commence on a date which shall be other than the first day of a calendar month, the same shall be prorated accordingly. In the event that the 7th Floor Lease Term shall expire or sooner terminate (other than a termination resulting from a default by Tenant under the Lease) on a date that shall be other than the last day of a calendar month, Tenant’s obligation to pay 7th Floor Fixed Rent therefore shall be prorated at the then prevailing rental rate.

h.Base Operating Year; Base Tax Amount; Tenant’s Share for the 7th Floor; Definitions. Effective as of the 7th Floor Premises Rent Commencement Date, Article 1 (and other provisions referencing such terms) of the Original Lease shall hereby be deemed modified as follows with respect to the 7th Floor Premises only; it being agreed that Article 1 (and other provisions referencing such terms) shall remain unmodified with respect to the Original Demised Premises until the Renewal Date (as defined above):

i.The term “Base Operating Year” shall, for the 7th Floor Premises only, mean the calendar year 2022.

ii.The term “Base Tax Amount” shall, for the 7th Floor Premises only, mean the amount of Taxes with respect to the fiscal year commencing July 1, 2022, and ending June 30, 2023.

iii.The term “Tenant’s Operating Share” shall, for the 7th Floor Premises only, mean 5.02%, for so long as Landlord shall own the entire Building. If a portion or portions of the Building (but not the entire Building) shall be sold, transferred or conveyed, then Tenant’s Operating Share shall be changed to that percentage which shall be equal to a fraction, the numerator of which shall be the Rentable Square Feet, and the denominator of which shall be the aggregate rentable square feet of office space in that portion of the Building owned by Landlord at such time (and from time to time), as determined by a reputable, independent architect engaged by Landlord.

iv.The term “Tenant’s Tax Share” shall, for the 7th Floor Premises only, mean 4.83%, for so long as Landlord shall own the entire Building. If a portion or portions of the Building (but not the entire Building) shall be sold, transferred or conveyed, then Tenant's Tax Share shall be changed to that percentage which shall be equal to a fraction, the numerator of which

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shall be the Rentable Square Feet, and the denominator of which shall be the aggregate rentable square feet of office space and retail space in that portion of the Building owned by Landlord at such time (and from time to time), as determined by a reputable, independent architect engaged by Landlord.

v.The term “Rentable Square Feet” for the 7th Floor Premises shall be deemed to mean 36,996 square feet.

vi.“7th Floor Security Deposit Amount” shall mean, subject to Section 8 below, One Million Three Hundred Fifty-Five Thousand Four Hundred Sixty-Two and 67/100 Dollars ($1,355,462.67).

i.Freight Elevator. Landlord shall provide Tenant with up to eighty (80) hours of Overtime Freight Elevator Service at no charge in connection with Tenant’s Improvements (as hereinafter defined) and/or Tenant’s move-in to the 7th Floor Premises and/or Tenant’s surrender of the 9th Floor Premises. In addition, Tenant may use the freight elevator during Business Hours in connection with the performance of the 7th Floor Initial Improvement Work solely for transportation of persons (and not for the receiving or transporting of deliveries), subject to Landlord’s reasonable discretion.

j.Base Electric Charge. As used in Section 20.03B(i) of the Original Lease, with respect to the 7th Floor Premises only, the term “Base Electric Charge” shall mean the amount of $139,986.00 per annum (except during the period which shall begin on the 7th Floor Commencement Date and end on the day immediately preceding the date on which Tenant shall first occupy the 7th Floor Premises for the purpose of conducting Tenant’s business operations therein, during which period the term “Base Electric Charge” shall mean the amount of $69,993.00 per annum). Tenant shall pay Landlord’s Electricity Cost plus five percent (5%) thereof for electricity in the 7th Floor Premises in accordance with Section 20.02B of the Lease.

k.Date for Commencement of Additional Rent. Tenant shall commence payment of the Tax Payment and the Operating Expense Payment with respect to the 7th Floor Premises only on the 7th Floor Premises Rent Commencement Date.

l.Setbacks.

i.Landlord hereby grants to Tenant, and Tenant hereby accepts from Landlord, a non-transferable license (“License”) to use and occupy the Setbacks from and after the 7th Floor Commencement Date and (subject to the provisions of this Amendment) continuing through and including the Expiration Date solely for the purposes of (i) installing non-permanent landscaping and other decorative installations and (ii) providing outdoor space for employees to utilize during Business Hours and until 11 p.m. on Business Days, Saturdays, Sundays and Holidays, subject to (1) seasonal and/or periodic usage restrictions during periods in which weather, high wind conditions or other natural events make it infeasible or unsafe (in the sole and absolute discretion of Landlord) to use the Setbacks, and (2) complaints from any tenants, and/or occupants of the Building as to the emanation of noise or other disturbances from the Setbacks (collectively, the“Permitted Setback Use”) and for no other purposes (Tenant hereby specifically

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agreeing that in no event shall the Setbacks be used for storage purposes of any kind), and in all events subject to the then existing certificate of occupancy for the Building. Tenant shall, at its sole expense, use and install all such landscaping and other decorative installations (subject to Section 2(l)(vii) hereof), and maintain and repair all landscaping and any other installations and personal property installed by, through or under Tenant (which installations and personal property shall in all events be subject to the provisions of Section 2(l)(vii)) during the term of this License in compliance with all applicable laws (including, without limitation, all present and future rules and regulations of any local, state, or federal authority having jurisdiction with respect thereto), any rules and regulations currently in effect or that Landlord may promulgate specifically with respect to Tenant’s use of the Setbacks for the Permitted Setback Use (subject to, and in accordance with, the provisions of Article 26 of the Lease), any requirements of Landlord’s insurers, any direction of any public officer pursuant to law, and any applicable roofing warranties or guaranties (collectively, the “Licensed Area Requirements”). All damage or injury to the Setbacks caused by or arising from any act or omission of Tenant, or of any Person Within Tenant's Control, including those which are structural, extraordinary and unforeseen, shall be promptly repaired, restored or replaced by Tenant, at Tenant's own cost and expense; provided, that to the extent that any structural elements of the Setbacks and/or the Building shall suffer damage or injury caused by or arising from any act or omission of Tenant or of any Person Within Tenant’s Control, Tenant shall promptly notify Landlord of the same, and Landlord shall repair the same (or, if necessary (as determined by Landlord in its reasonable discretion), replace the affected structural elements), and Tenant shall reimburse Landlord, as Additional Rent, for any and all reasonable, out-of-pocket costs and expenses incurred by Landlord in connection therewith within thirty (30) days after demand therefor. All repairs undertaken by Tenant shall be of quality or class equal to the original work or construction. Furthermore, in connection with any repairs or maintenance or exercise of its rights under this License, Tenant must not damage, nor permit any other party to damage, the Setbacks or any other part of the roof or Building. Tenant shall, at its sole expense, obtain and maintain all permits, licenses, variances, authorizations, and approvals (collectively, the “Permits”) that may be required to use the Setbacks for the Permitted Setback Use, and to maintain or repair the Setbacks in compliance with all Licensed Area Requirements. Subject to the provisions of this Section 2(l)(i), Tenant, at its sole expense, shall keep and maintain the Setbacks in good condition, order, and repair, and shall remove and properly dispose of any debris from the Setbacks. Tenant shall, at its sole cost and expense, (i) keep all drains free of debris and all tiles in good condition, (ii) clean, secure and remove all garbage from the Setbacks following each and every use of the Setbacks by Tenant, (iii) place all garbage for pickup in accordance with this Lease or as otherwise instructed by Landlord, and (iv) promptly pay all violations, fines or other penalties that may be imposed upon Landlord or Tenant in connection with any failure on Tenant’s part to dispose of garbage or debris properly, keep the Setbacks clean and free of garbage and debris or similar matters.

ii.Tenant hereby expressly agrees that, should the 7th floor of the Building no longer be a part of the Demised Premises, then this License shall automatically terminate as to the Setbacks.

iii.Tenant shall reimburse Landlord, as Additional Rent, for any and all reasonable, out-of-pocket costs and expenses incurred by Landlord arising from Tenant’s use of the Setbacks (e.g., costs incurred by Landlord in connection with the provision of additional

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Building security personnel as a result of an event held by Tenant on a portion of the Setbacks) within thirty (30) days after demand therefor.

iv.This License does not and shall not be deemed to constitute a lease or a conveyance of the Setbacks by Landlord to Tenant, or to confer upon Tenant any right, title, estate or interest in all or any portion of the Setbacks. Tenant acknowledges and agrees that the Setbacks shall not constitute, or be deemed or construed to constitute, a part of the Demised Premises, it being understood and agreed that Tenant’s use of the Setbacks for the Permitted Setback Use is derived solely from the License granted herein.

v.Tenant acknowledges and agrees that Landlord shall not be obligated to perform any work or incur any expense to prepare any portion of the Setbacks for Tenant’s use, nor shall Landlord provide any Building services to the Setbacks, Tenant hereby agreeing that Tenant shall accept the same on the 7th Floor Commencement Date in “as is” and “where is” condition, and Tenant does not rely on any representations, warranties or promises made by Landlord or any person or entity purporting to act on behalf of Landlord (including, without limitation, Landlord’s employees and/or representatives of the Building manager) with respect to the condition of the Setbacks or otherwise. Landlord makes no representation as to the design, construction, development or use of the Setbacks, or whether the same shall be available for Tenant’s use for the Permitted Setback Use, or whether the same shall be safe for Tenant’s use (whether for the Permitted Setback use or otherwise), or whether applicable Legal Requirements allow the Setbacks to be used for the Permitted Setback Use, or, if applicable Legal Requirements do allow the Setbacks to be used for the Permitted Setback Use, that such Legal Requirements, or any Legal Requirements subsequently implemented, will allow for such use throughout the Lease Term.

vi.Prior to Tenant’s initial use of the Setbacks, Tenant shall provide Landlord with evidence showing that the Setbacks are covered by all of the insurance policies required to be obtained and carried by Tenant pursuant to the provisions of Article 8 of the Lease. The provisions of Article 11 of the Lease shall apply with respect to the Setbacks and the use thereof by Tenant or anyone acting claiming by, through or under Tenant.

vii.Tenant shall not (1) store or keep any equipment, furniture, supplies, refuse, or merchandise on the Setbacks, (2) enclose the Setbacks or any portion thereof, (3) perform any construction on the Setbacks or thereto (including, without limitation, the installation of landscaping) without Landlord’s prior written approval (which approval may be withheld in Landlord’s sole and absolute discretion); provided that, subject to the terms and conditions of this 2(l), Tenant shall be entitled to install on the Setbacks the items shown on Exhibit C annexed hereto and made a part hereof in the locations shown on such Exhibit C, subject to Landlord’s approval of the plans and specifications therefor and manner of installation thereof, (4) place anything on the ledges or railings on the Setbacks, (5) throw, drop or launch anything from the Setbacks. Once so approved, all personal property installed on, and all landscaping and other installations made to, the Setbacks by, through or under Tenant, Tenant, shall be of a high-quality appearance consistent with the design and quality of the Building and be so installed and/or made in a first-class manner. Landlord must approve in writing in advance the contractors, subcontractors or other third parties that Tenant proposes to perform any work, landscaping or

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alterations on the Setbacks (which approval may be withheld in Landlord’s sole and absolute discretion). Landlord may withdraw its approval of any work to be performed by Tenant without any duty to be reasonable if Landlord subsequently determines that such work will or is reasonably likely to (i) damage the structural integrity of the Setbacks, the roof, or any other part of the Building, tear or damage the membrane of the roof, cause any leaks in the Building or adversely affect or void any warranty or guaranty applicable to the Setbacks, the roof, or the Building, or (ii) violate any zoning ordinance or other applicable laws. Subject to the terms of this Section 2(l), Tenant’s use of the Setbacks shall also be subject to the following conditions: (i) no exterior lighting shall be permitted on the Setbacks without the prior written approval of Landlord (which approval may be withheld in Landlord’s sole and absolute discretion); (ii) no cooking or other similar processes shall be permitted on the Setbacks; (iii) no smoking shall be permitted on the Setbacks; (iv) Tenant shall not display, erect or inscribe any signs, signage or symbols of any kind in, on or about the Setbacks without Landlord’s prior written consent (which consent may be withheld in Landlord’s sole and absolute discretion), (v) Tenant shall not serve or sell (or permit to be served or sold) any alcoholic beverages in connection with the use of the Setbacks; and (vi) at no time shall Tenant’s use of the Setbacks interfere or adversely affect the normal conduct of business of any other tenants or occupants of the Building. Tenant may bring into the Setbacks food and non-alcoholic beverages that has been prepared in advance, provided that the presence of such food and non-alcoholic beverages in the Setbacks shall not violate the restrictions set forth in this paragraph or cause any unusual or other objectionable odors to emanate from the Setbacks. Tenant shall not, by its use of the Setbacks, endanger the safety of any person or the property of Landlord or any tenant or occupant of the Building. Tenant shall use the Setbacks at all times in a safe, sanitary and professional manner and in a manner that does not disturb the quiet enjoyment of the other tenants or occupants of the Building. In no event will Tenant’s use of the Setbacks exceed the maximum occupancy permitted by applicable legal requirements or otherwise violate the Licensed Area Requirements. Tenant shall take all necessary steps to minimize noise emanating from the Setbacks and in no event shall Tenant permit music (live or recorded) or other amplified sounds to be played, performed or made on or from the Setbacks.

viii.Tenant expressly acknowledges receipt of advice to the effect that Landlord uses portions of the Setbacks in connection with the operation and storage of the window­washing equipment for the Building (the “Equipment”) and, more generally, in connection with operating, maintaining and repairing the Building. In connection therewith, and in recognition of Landlord’s need to be able to access, move and operate the Equipment and to otherwise access the Setbacks in connection with Landlord’s operation of and performance of maintenance and repairs in and to the Building, Tenant shall incorporate the presence of such Equipment on the Setbacks and the movement and operation thereof, and Landlord’s need for access to the Equipment and the Setbacks more generally, into the design and installation of any Alterations, personal property and/or landscaping in, on or about the Setbacks. Without limiting the generality of the foregoing, Tenant agrees that nothing contained herein shall be construed to limit Landlord’s rights to access the Setbacks in accordance with the provisions of the Lease applicable to Landlord’s access to the Demised Premises for any purpose deemed necessary or desirable by Landlord in connection with Landlord’s operation of the Building. If Landlord must access mechanical or structural components of the Setbacks, the roof, or the Building located on or adjacent to the Setbacks, Tenant is solely responsible for any additional costs incurred by

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Landlord as a result of Tenant’s use of the Setbacks, including, without limitation, removing and replacing any planters or landscaping.

ix.Tenant hereby expressly agrees that, should Tenant do anything or permit anything to be done, whether by action or inaction, in breach of any representation, covenant, agreement, term, provision or condition of this Section 2(l) on the part of Tenant to be kept, observed or performed, and should Tenant breach any such representation, covenant, agreement, term, provision or condition and such breach not be fully remedied within thirty (30) days after Landlord shall have given to Tenant a notice specifying the same, then the License shall be deemed terminated effective as of the thirty-first (31st) day after the date on which such notice shall have been given to Tenant, and, thereafter, Tenant shall have no right to use or occupy any portion of the Setbacks.

x.Tenant specifically acknowledges and agrees that the Setbacks shall be used only by Tenant and any Approved Subtenants, and by no other person or entity.

xi.Upon the expiration or sooner termination of the License, Tenant shall surrender the Setbacks to Landlord in substantially the same condition as existed on the 7th Floor Commencement Date, reasonable wear and tear and damage by fire or other casualty excepted. Tenant hereby agrees that time shall be of the essence with respect to Tenant’s obligation to vacate and surrender possession of the Setbacks upon the expiration or sooner termination of the term of this License, and Tenant shall vacate and surrender possession of the Setbacks at such time in accordance with the provisions of this Section 2. Without limiting the generality of the foregoing, Tenant shall, prior to the expiration or sooner termination of the License and subject to the provisions of Section 2(l)(i) above, repair any and all damage to the Setbacks caused by the acts or omissions of Tenant and restore the same to the condition existing on the 7th Floor Commencement Date

3.Landlord’s Contribution.

b.Subject to the terms and conditions hereinafter set forth, Landlord agrees to provide a construction allowance (“Landlord’s Contribution”) to reimburse Tenant for the costs expended by Tenant to perform (subject to the provisions of Article 5 of the Original Lease): the 7th Floor Initial Improvement Work, demolition of the 7th Floor Premises, refurbishment of the base Building restrooms and/or such other work (if any) as shall be performed by Tenant or Persons Within Tenant’s Control to prepare the Initial Demised Premises for Tenant’s continued occupancy thereof (collectively, the “Tenant’s Improvements”) commencing on the 7th Floor Commencement Date, in an aggregate amount not to exceed $9,005,048.00. Landlord shall fund the portion of Landlord’s Contribution then being requisitioned in the manner set forth in Sections 3(b) and (c) below, but only if all of the following conditions shall have been satisfied:

i.Tenant (x) shall not then be in default with respect to any of the terms, covenants or conditions to be performed or observed by Tenant under this Lease (after notice of such default shall have been given), and (y) shall have submitted receipted invoices for such Tenant’s Improvements as are sought to be reimbursed;

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ii.Tenant shall have obtained, and at all times during the construction period shall maintain, all necessary and appropriate permits, licenses, authorizations and approvals from all governmental authorities having or asserting jurisdiction in connection with such construction, and shall have delivered true copies thereof to Landlord; and

iii.With respect to hard costs (as hereinafter defined), Tenant shall have delivered to Landlord, for approval by Landlord: (x) a completed requisition for payment (using the AIAG702 form, or any successor form, issued by the American Institute of Architects), certified and sworn to by Tenant’s architect stating or accompanied by: (1) the amount being requested, (2) receipted invoices for all labor and materials therefore performed as part of Tenant’s Improvements, (3) to the best of such architect’s knowledge, the amount of Landlord’s Contribution theretofore paid to Tenant, and (4) that the work completed to date has been performed in good and workmanlike manner in accordance with the plans and specifications approved by Landlord and in compliance with all Legal Requirements; and (y) waivers of lien from all contractors and materialmen who shall have furnished materials or supplies or performed work or services in connection with Tenant’s Improvements, in each case, pursuant to direct contracts with Tenant (provided however nothing in this subclause (y) shall release Tenant from any obligation with respect to liens in connection with Tenant’s Improvements pursuant to Section 5.03 of the Original Lease).

a.Within thirty (30) days after Tenant shall have complied with all of the conditions set forth in the foregoing Section 3(a), Landlord shall pay to Tenant an amount equal to that portion of Landlord’s Contribution which shall equal the cost of Tenant’s Improvements then completed in accordance with the provisions hereof, as certified by Tenant’s architect, less all amounts of Landlord’s Contribution previously disbursed; provided, however, that Landlord shall not be required to make more than one (1) payment per calendar month.

b.Within thirty (30) days following the last to occur of: (i) Tenant’s request for payment of the final installment of Landlord’s Contribution, (ii) completion of Tenant’s Improvements in accordance with the provisions of Article 5 of the Lease, (iii) the certification of Tenant’s architect that Tenant’s Improvements have been completed in a good and workmanlike manner, to the satisfaction of Tenant’s architect, in accordance with the plans and specifications approved by Landlord and in compliance with all Legal Requirements, (iv) delivery by Tenant to Landlord of waivers of lien from all contractors and materialmen who shall have furnished materials or supplies or performed work or services in connection with Tenant’s Improvements pursuant to direct contracts with Tenant, (v) delivery by Tenant to Landlord of true copies of any required final approvals of Tenant’s Improvements (including letters of completion or amended certificates of occupancy for each and every permit application filed by or on behalf of Tenant) by all governmental authorities having or asserting jurisdiction (including the New York City Department of Buildings), and (vi) delivery by Tenant to Landlord of “as built” drawings with respect to Tenant’s Improvements, the balance of Landlord’s Contribution that has not been previously disbursed (but, in the aggregate, not in excess of the total cost of Tenant’s Improvements) shall be disbursed to Tenant. Tenant expressly agrees that Landlord’s obligation to pay the final installment of Landlord’s Contribution shall be conditioned upon Tenant’s timely compliance with the requirements set forth in clauses (i) - (vi) of this Section 3(c).

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c.Landlord’s obligation to pay Landlord’s Contribution shall apply to that part of Tenant’s Improvements that consists of the demolition of the existing improvements located in the Demised Premises, installation of walls, partitions, fixtures, improvements and appurtenances permanently attached to or built into the Demised Premises, including without limitation the following: mechanical systems, flooring, ceilings, bathrooms, duct work, electrical wiring, alarms, sprinklers, plumbing, millwork, glazing and supplemental air-conditioning systems (if any), affixed carpeting and other floor and wall coverings (with all such work being referred to herein collectively as “hard costs”), and (ii) design fees, engineering fees, permit and filing fees, construction and/or project management fees (with all such fees being referred to herein collectively as “soft costs”); provided, however, that (a) in no event shall Landlord be required to pay more than fifteen (15%) percent (i.e., $1,350,757.20) of Landlord’s Contribution for any such “soft costs” incurred in connection with the performance of Tenant’s Improvements, and (b) neither such “hard costs” nor such “soft costs” shall include business and trade fixtures, machinery, equipment or other articles of personal property.

4.Surrender of the 9th Floor Premises.

b.Within thirty (30) days after the substantial completion of the 7th Floor Initial Improvement Work, Tenant shall vacate and surrender possession of, and all of Tenant’s right, title and interest in and to, the 9th Floor Premises to Landlord in the Surrender Condition (as hereinafter defined) as though such date (such actual date of surrender, the “9th Floor Surrender Date”) were the date originally set forth in the Lease as the expiration of the Term for the 9th Floor Premises. In order to wholly extinguish the Term of the Lease for the 9th Floor Premises, and effective as of the 9th Floor Surrender Date, Tenant hereby gives, grants and surrenders unto Landlord, Landlord’s heirs, distributees, personal representatives, successors and assigns, the 9th Floor Premises, and all of Tenant’s right, title and interest therein as of said date, TO HAVE AND TO HOLD unto Landlord, Landlord’s heirs, distributees, personal representatives, successors and assigns forever. On or before the 9th Floor Surrender Date, Tenant shall deliver to Landlord the Surrender Notice attached hereto as Exhibit “D” and made a part hereof. Tenant shall give Landlord at least thirty (30) days’ notice of the 9th Floor Surrender Date.

c.Tenant agrees that, on or before the 9th Floor Surrender Date, Tenant shall (a) deliver the 9th Floor Premises to Landlord vacant (free of all moveable property, furniture, furnishings and trade fixtures), “broom clean”, but otherwise in its “as-is” condition as of the date hereof (subject to reasonable wear and tear), and (b) deliver possession of the 9th Floor Premises to Landlord free and clear of all occupants and rights of occupancy (collectively, (a) and (b), the “Surrender Condition”). If the 9th Floor Premises shall not be in the Surrender Condition upon Tenant’s surrender thereof, then (i) Tenant shall be responsible to return the same to the Surrender Condition on or prior to the 9th Floor Surrender Date (or, at Landlord’s election, Landlord shall return the same to the Surrender Condition at Tenant’s reasonable cost, which cost shall be deemed additional rent payable by Tenant to Landlord within thirty (30) days after Landlord’s written request to Tenant therefor), and (ii) Landlord shall not be required to accept surrender of the 9th Floor Premises until the same is returned to the Surrender Condition.

d.Tenant covenants and warrants on behalf of Tenant, and on behalf of any and all of Tenant’s successors, predecessors and assigns, that Tenant (or Tenant’s predecessor) has

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not done or suffered, and shall not do or suffer, anything whereby the 9th Floor Premises or any fixtures, equipment or personalty incorporated therein have been, or shall be, encumbered in any way whatsoever.

e.(i) Provided that the surrender of the 9th Floor Premises shall occur in accordance with the provisions of this Agreement, then, from and after the 9th Floor Surrender Date, Tenant does, for Tenant, and for any and all of Tenant’s successors, predecessors, assigns, heirs, representatives, successors and guarantors, release and forever discharge Landlord, Landlord’s heirs, distributees, personal representatives, successors, predecessors and assigns, from all manner of actions, causes of action, suits, debts, dues, sums of money, accounts, reckonings, bonds, bills, specialties, covenants, contracts, controversies, agreements, promises, variances, trespasses, damages, acknowledgments, extents, executions, claims and demands whatsoever, in law, admiralty or in equity, which Tenant, or any of Tenant’s successors, predecessors or assigns ever had, now have, or may have, now or hereafter, for, upon or by reason of any matter, cause or thing whatsoever relating to Tenant’s occupancy of the 9th Floor Premises, from the beginning of the world through and including the 9th Floor Surrender Date, except (i) with respect to amounts payable by Landlord pursuant to Section 4(e) below, and (ii) with respect to third-party claims that arise prior to the 9th Floor Surrender Date that specifically survive the termination of the Lease with respect to the 9th Floor Premises only.

(ii) Provided that the surrender of the 9th Floor Premises shall occur in accordance with the provisions of this Agreement, then, from and after the 9th Floor Surrender Date, Landlord does, for Landlord, and for any and all of Landlord's successors, predecessors, assigns, heirs, representatives, successors and guarantors, release and forever discharge Tenant, Tenant's heirs, distributees, personal representatives, successors, predecessors and assigns, from all manner of actions, causes of action, suits, debts, dues, sums of money, accounts, reckonings, bonds, bills, specialties, covenants, contracts, controversies, agreements, promises, variances, trespasses, damages, acknowledgments, extents, executions, claims and demands whatsoever, in law, admiralty or in equity, which Landlord, or any of Landlord's successors, predecessors or assigns ever had, now have, or may have, now or hereafter, for, upon or by reason of any matter, cause or thing whatsoever relating to Tenant's occupancy of the 9th Floor Premises, from the beginning of the world through and including the 9th Floor Surrender Date, except with (i) respect to amounts payable by Tenant pursuant to Section 4(e) below and (ii) with respect to third-party claims that arise prior to the 9th Floor Surrender Date that specifically survive the termination of the Lease with respect to the 9th Floor Premises only.

f.Tenant’s liability for any and all amounts due under the Lease with respect to the 9th Floor Premises, including without limitation, Fixed Rent and Recurring Additional Rent, shall be apportioned as of the 9th Floor Surrender Date, by Landlord, in Landlord’s reasonable estimation, except that Tenant’s obligation to pay all Post-Surrender Amounts (hereinafter defined) shall survive the 9th Floor Surrender Date, and it shall remain Tenant’s obligation to pay all Post-Surrender Amounts to Landlord in full as and when such payments are required to be made pursuant to the Lease and this Amendment. For the purposes of this Amendment, the term “Post-Surrender Amounts” shall mean such amounts as are due from Tenant to Landlord pursuant to the Lease or this Amendment, and that are intended to be paid after the 9th Floor Surrender Date. Furthermore (a) Landlord shall remain liable to distribute to Tenant

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any refund or credit (or pro-rated portion thereof based on the 9th Floor Surrender Date) of (i) any Tenant’s Tax Payment made by Tenant with respect to any Tax Year, and (ii) any Operating Expense Payment made by Tenant with respect to any Operating Year, in each case, for which Tenant is due such refund with respect to the 9th Floor Premises pursuant to the terms of the Lease, and (b) Tenant shall remain liable to pay to Landlord for any underpayment or additional fees (or pro-rated portion thereof based on the 9th Floor Surrender Date) of (x) any Tenant’s Tax Payment made by Tenant with respect to any Tax Year, and (y) any Operating Expense Payment made by Tenant with respect to any Operating Year, in each case, for which Tenant has underpaid or is required to pay additional fees with respect to the 9th Floor Premises pursuant to the terms of the Lease.

g.Tenant shall indemnify and hold Landlord harmless from any and all liability for real property transfer tax, if any, that may be due and owing to the City or State of New York as a result of the surrender of the 9th Floor Premises. Tenant hereby irrevocably constitutes and appoints Landlord (and any partner or officer of Landlord) as Tenant’s agent and attorney-in-fact (coupled with an interest) to execute and file such tax returns as may be required by law.

5.Lease Modifications. From and after the date hereof:

b.The following shall be added to Section 32.01 of the Original Lease after the phrase “governmental preemption,” and before the phrase “by reason of any Legal Requirements”:

“inability to obtain labor or materials for any reason beyond Landlord’s reasonable control, acts of God, war, fire, bioterrorism, terrorist acts or other casualty, any actual or threatened health emergency, including, but not limited to, epidemics, pandemic, famine, disease, plague, quarantine, and other health risk, including, but not limited, to health risks declared or recognized by the Centers for Disease Control, the World Health Organization,”

c.All references in the Lease to (A) “this Lease”, shall refer to the Original Lease, as amended by this Amendment, (B) “Demised Premises” shall be deemed to refer collectively (but without duplication of cost or obligation) to the Original Demised Premises and the 7th Floor Premises (except where expressly stated otherwise in the other provisions of this Amendment), (C) “Term” or “Lease Term” shall be deemed to refer to the co-terminous term for the 7th Floor Lease Term and the term for the Initial Demised Premises (except where expressly stated otherwise in the other provisions of this Amendment), and (D) the “Expiration Date” shall be deemed to refer collectively to the Expiration Date for the Initial Demised Premises and the 7th Floor Premises, which are the same, and subject to renewal pursuant to and in accordance with the terms and conditions set forth in Article 34 of the Original Lease (as amended by this Amendment). All references in the Lease to the “Security Deposit Amount” shall be deemed to collectively refer to the Security Deposit Amount, the Expansion Security Deposit Amount (as such term is defined in the First Amendment) and the 7th Floor Security Deposit Amount.

d.Modifying the provisions of Article 10 of the Lease, Tenant shall have the right (i) to create within the Demised Premises up to four (4) separately demised portions of

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the Demised Premises (collectively, the “Sublet Spaces”) (in addition to the premises occupied by Tenant) for temporary sublet, which Sublet Spaces shall not exceed, in the aggregate, 20,000 Rentable Square Feet (which, for avoidance of doubt, one of the four Sublet Spaces may include part or all of the portion of the Original Demised Premises now sublet to OceanSound Partners), and (ii) to sublet the Sublet Spaces to subtenants (“Approved Subtenants”) upon notice to Landlord in accordance with the provisions of Article 10 under the Lease and subject to the terms of the next sentence. Provided that any proposed sublease of the Sublet Spaces occurs within the first five (5) years after the 7th Floor Commencement Date, (x) Landlord shall not unreasonably withhold, delay or condition consent to any such proposed subtenant, and (y) the following provisions of the Lease shall not apply to the applicable proposed subletting of the Sublet Spaces: (I) recapture rights under Section 10.03, (II) the profit-sharing rights under Section 10.07, or (III) the limitations of Section 10.11. Vacant Sublet Spaces shall not be deemed to be Tenant’s “abandonment” or “not in occupancy” under any provision of the Lease. Tenant shall be liable for all costs or expenses to legally demise the Sublet Spaces and any such alterations (which may, at Tenant’s option, be part of the 7th Floor Initial Improvement Work) shall be performed in accordance with Article 5 of the Lease.

a.Tenant shall have reasonable non-exclusive access during the Lease Term (a) to a proportional share of the electrical and telecommunications closet(s) located on the 7th and 8th floors of the Building that service the Demised Premises, and (b) reasonable and non-exclusive access to a proportional share of existing vertical riser space, from the beginning of such vertical riser space to the 7th and 8th floors of the Building for Tenant’s voice and data requirements and for purposes of connecting telecom systems in the 7th Floor Premises and the Initial Demised Premises (to be installed and maintained by Tenant at Tenant’s expense in accordance with the provisions of Article 5 hereof). To the extent Landlord determines, in its reasonable judgement, that a standby Building engineer must be present during such access, Landlord’s standard charges therefor shall apply and be paid by Tenant to Landlord, as additional rent, within thirty (30) days after Landlord’s delivery of an invoice therefor to Tenant.

3.Condenser Water. Tenant shall have the right, exercisable only by delivery of written notice (the “Condenser Water Notice”) to Landlord within thirty (30) days after the 7th Floor Premises Rent Commencement Date to request that Landlord reserve sufficient additional condenser water capacity for up to a maximum of twenty (20) additional tons of supplemental air-conditioning in the 7th Floor Premises. If Tenant makes such election, Tenant shall pay Landlord for such additional condenser water in accordance with the provisions of Section 18.01F of the Original Lease.

6.Renewal Term. Modifying and supplementing Article 34 of the Original Lease, Tenant shall have the option to renew the Lease for the 7th Floor Premises as part of Tenant’s Renewal Option in accordance with the provisions of Article 34 of the Lease (it being agreed and understood that Tenant’s Renewal Option with respect to the 9th Floor is null and void and of no further force or effect). For the avoidance of doubt, (a) Tenant shall have one (1) five (5) year Renewal Option, with the Renewal Term commencing on November 1, 2036 and ending on October 31, 2041, and (b) Tenant must exercise such Renewal Option for the Initial Demised Premises and the 7th Floor Premises together.

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7.Security Deposit Amount.

b.Upon execution of this Amendment, Tenant shall deliver to Landlord the 7th Floor Security Deposit Amount. Article 33 of the Original Lease shall govern with respect to any use, application or retainage by Landlord, or any return thereof to Tenant, of the Security Deposit Amount, including, without limitation, the 7th Floor Security Deposit Amount.

a.Notwithstanding anything to the contrary contained herein, the remaining Expansion Security Deposit Amount (after any deduction of any amounts in connection with the surrender of the 9th Floor Premises in accordance with the terms of the Lease, if any) shall be continue to be held by Landlord, and Landlord shall have no obligation to return the Expansion Security Deposit Amount (or any portion thereof) to Tenant following the surrender of the 9th Floor Premises. In satisfaction of Tenant’s obligation to deliver the 7th Floor Security Deposit Amount, Landlord shall accept a new Letter of Credit, or an amendment of the existing Letter of Credit previously deposited by Tenant with Landlord, in each case, in the amount of the 7th Floor Security Deposit Amount. Subject to the provisions of Subsection 33.03C of the Original Lease in all respects, if no Event of Default shall have occurred at any time during the Lease Term, and provided that Tenant shall not then be in default with respect to any of the terms, provisions, covenants, agreements and conditions of the Lease, Tenant shall be permitted, in accordance with the provisions of Subsection 33.03C of the Original Lease, to reduce the amount of the Security Deposit Amount on the fourth (4th) anniversary of the 7th Floor Commencement Date to $1,035,888.00, it being agreed, however, that at no time during the Lease Term shall the Letter of Credit furnished to Landlord with respect to the 7th Floor Security Deposit Amount be reduced to an amount less than $1,035,888.00.

8.Signage. The initially named Tenant under the Lease (i.e., Pzena Investment Management, LLC) and any Approved Subtenants, shall be permitted to install identification signage on the entry doors to the 7th Floor Premises, the Original Demised Premises and the Sublet Spaces, and directional signage in the 7th floor elevator lobby and in the 8th floor elevator lobby, subject to Landlord’s approval as to the precise location, dimensions and motif thereof, such approval not to be unreasonably withheld. Notwithstanding the foregoing, provided that Tenant shall have obtained Landlord’s prior written approval to such signage (which approval shall not be unreasonably withheld), Tenant shall have the right to install signage in the 7th floor elevator lobby and the 8th floor elevator lobby identifying Tenant and/or any permitted occupant(s) of the Demised Premises. Any additional signage requested by Tenant shall be governed by the provisions of Subsection 10.15 of the Original Lease.

9.Brokers. Tenant represents and warrants to Landlord that Tenant has not employed, dealt or negotiated with any broker in connection with this Amendment other than Savills and Jones Lang LaSalle Brokerage, Inc. (collectively, the “Second Amendment Designated Broker”) in connection with this Amendment, and Tenant shall indemnify, protect, defend and hold Landlord harmless from and against any and all liability, damage, cost and expense (including reasonable attorneys’ fees and disbursements) arising out of any claim for a fee or commission by any broker or other party in connection with this Amendment and the extension of the Lease of the Initial Demised Premises and the leasing by Tenant of the 7th Floor Premises. The provisions of this Section 10 shall not apply to the Second Amendment Designated

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Broker. Landlord agrees to pay the Second Amendment Designated Broker’s commission in accordance with separate agreements between Landlord and the Second Amendment Designated Broker. Landlord represents to Tenant that Landlord has not employed, dealt or negotiated with any broker (other than the Second Amendment Designated Broker) in connection with this Amendment; it being understood and agreed that mailings by Landlord to brokers with respect to Landlord’s desire to lease the 7th Floor Premises shall not be deemed a breach of the foregoing representation. For the avoidance of doubt, (x) the provisions of Section 21.01 of the Original Lease shall be deemed to apply only to the Original Lease and (y) the provisions of Section 6 of the First Amendment shall be deemed to apply only to the First Amendment and for the 9th Floor Premises, in each case, as opposed to this Amendment for the extension of the Lease of the Initial Demised Premises and the leasing of the 7th Floor Premises.

10.Cafeteria and Amenities Center. Tenant and Approved Subtenants shall have the right, subject to all applicable provisions of this Lease (including, without limitation, the then-current Building rules and any and all rules, regulations and procedures promulgated by Landlord specifically with respect to the use and operation of the Amenity Space (as hereinafter defined)), to use the Amenity Space in common with Landlord and other tenants of the Building. Notwithstanding the foregoing provisions of this Paragraph 11, Tenant hereby expressly acknowledges and agrees that the Amenity Space is being offered for Tenant’s use as an accommodation, and only insofar as the same may now or hereafter exist and/or be offered to other tenants in the Building, and in the event that any Amenity Space shall be reduced in scope or availability or shall cease to exist (in Landlord’s sole discretion), then this Lease and Tenant’s obligations and Landlord’s rights under this Lease shall not in any manner be affected or diminished thereby. If, at any point during the Lease Term, Landlord shall install, operate, maintain and/or provide in the Building any additional amenity and shall make use of the same available to occupants of the Building other than Landlord and its employees, then Tenant shall be offered use of the same, subject to such fees as Landlord may charge (the “Fees”) and such reasonable rules, regulations and procedures as Landlord may promulgate with respect thereto. As used herein, “Amenity Space” shall mean (individually or collectively, as the case may require), any existing, currently contemplated and all future Building amenities, including, without limitation, (i) a dining area, “grab and go” food service, and/or conference and event space on the 16th floor of the Building, (ii) a lobby coffee bar, or (iii) additional event or conference space in the Building. Notwithstanding anything to the contrary contained herein, Landlord may operate a fitness center in the Building and access thereto by Tenant and/or other tenants in the Building shall be permitted or restricted in Landlord’s sole discretion. All costs associated with the operation and maintenance of the Amenity Space (“Amenity Space Costs”) may be included in Operating Expenses, provided such costs are reasonable and competitive with services offered in comparable Class A office buildings in Midtown Manhattan. Notwithstanding the foregoing, if during any Operating Year in which Landlord includes Amenity Space Costs in Operating Expenses, Tenant paid to Landlord any Fees for Tenant’s ordinary office usage (i.e., excluding usage for any parties, events, conferences or other gatherings in which guests who do not regularly work in the Building are in attendance) (such Fees, “Ordinary Use Fees”) of the Amenity Space or any part thereof, then Landlord shall deduct the amount of such Ordinary Use Fees from Amenity Space Costs for the applicable Operating Year (provided that in no event shall Amenity Space Costs be reduced below $0 by virtue of the foregoing).

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11.Miscellaneous.

a.Except as expressly modified herein, Landlord and Tenant affirm that the Lease is in full force and effect. Tenant represents to Landlord that, to Tenant’s knowledge, Tenant has not sent to Landlord any notice of default with respect to Landlord’s obligations under the Lease, which default has not been cured. Landlord represents to Tenant that Landlord, to Landlord’s knowledge, has not sent to Tenant any notice of default with respect to Tenant’s obligations under the Lease, which default has not been cured or deemed cured. By entering into this Amendment, Landlord does not and shall not be deemed either (i) to waive or forgive any default, rent arrears or other condition with respect to the Lease or the use of the Demised Premises, whether or not in existence or known to Landlord at the date hereof, or (ii) to consent to any matter as to which Landlord’s consent is required under the terms of the Lease, except such as may heretofore have been waived in writing, or consented to in writing, by Landlord.

b.All capitalized terms and other terms not otherwise defined herein shall have the respective meanings ascribed to them in the Original Lease. No subsequent alteration, amendment, change or addition to the Original Lease or to this Amendment shall be binding upon Landlord or Tenant unless in writing and signed by both Landlord and Tenant. This Amendment shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns.

c.Except as may be expressly modified or amended by this Amendment, all of the terms, covenants and conditions of the Lease are hereby ratified and confirmed and, except insofar as reference to the contrary is made in any such instrument, all references to the “Lease” in any future correspondence or notice shall be deemed to refer to the Lease as modified by this Amendment. All obligations of Landlord and Tenant with respect to the 9th Floor Premises shall remain in full force and effect through the 9th Floor Surrender Date.

d.This Amendment may be executed in counterparts, all of which together shall constitute the original, but this Amendment shall not be binding upon either party hereto unless and until such time as this Amendment or counterparts thereof shall have been executed by both parties and delivered to the other.

e.To facilitate execution of this Amendment, the parties may exchange counterparts of the same by facsimile or electronic mail (e-mail) (which shall include, but not be limited to, electronic attachments in ‘pdf’ format containing counterparts of the signature page to this Amendment), which shall be effective as original signature pages for all purposes. Following such execution of this Amendment, each party shall deliver to the others an actual signed original counterpart of this Amendment.

[Remainder of Page Intentionally Left Blank]

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IN WITNESS WHEREOF, Landlord and Tenant have duly executed this Amendment as of the date first above written.

320 PARK AVENUE LLC, Landlord
By:	/s/Anne Marie Carroll
Name: Anne Marie Carroll
Title: Authorized Signatory
PZENA INVESTMENT MANAGEMENT, LLC, Tenant
By:		/s/ Richard S. Pzena
		Name: Richard S. Pzena
		Title: Managing Principal

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EX-21.1

Exhibit 21.1

Subsidiaries of Pzena Investment Management, Inc.

Pzena Investment Management, LLC, a Delaware limited liability company.

Pzena Investment Management, Pty Ltd, is a proprietary limited company incorporated in Australia.

Pzena Investment Management, Ltd is a private limited company incorporated in England and Wales.

Pzena Investment Management Europe Limited is a private company limited by shares incorporated in Ireland.

Pzena Financial Services, LLC, a Delaware limited liability company.

EX-23.1

Exhibit 23.1

Consent of Independent Registered Public Accounting Firm

We hereby consent to the incorporation by reference in the Registration Statement on Forms S-3 (No. 333-221340, No. 33-205165, No. 333-194885, No. 333-186957, No. 333-172257 and No. 333-155354) and Forms S-8 (No. 333-235756, No. 333-221339, No. 333-163370 and No. 333-147027) of Pzena Investment Management, Inc. of our report dated March 8, 2022 relating to the financial statements and the effectiveness of internal control over financial reporting, which appears in the 2021 Annual Report to Shareholders, which is incorporated in this Annual Report on Form 10-K for the year ended December 31, 2021.

/s/ PricewaterhouseCoopers LLP

New York, New York

March 8, 2022

EX-31.1

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

I, Richard S. Pzena, certify that:

1.I have reviewed this annual report on Form 10-K 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.

Date: March 8, 2022	/s/ Richard S. Pzena
	Richard S. Pzena Chief Executive Officer (principal executive officer)

EX-31.2

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

I, Jessica R. Doran, certify that:

1.I have reviewed this annual report on Form 10-K 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.

Date: March 8, 2022	/s/ Jessica R. Doran
	Jessica R. Doran 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 Annual Report on Form 10-K of Pzena Investment Management, Inc. (the “Company”) for the fiscal year ended December 31, 2021, as filed with the Securities and Exchange Commission (the “Report”), I, Richard S. Pzena, as Chief Executive Officer of the Company, certify, 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.

A signed original of this written statement required by section 906 has been provided to Pzena Investment Management, Inc. and will be retained by Pzena Investment Management, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

Date: March 8, 2022	/s/ Richard S. Pzena
	Richard S. Pzena Chief Executive Officer (principal executive officer)

EX-32.2

Exhibit 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

In connection with the Annual Report on Form 10-K of Pzena Investment Management, Inc. (the “Company”) for the fiscal year ended December 31, 2021, as filed with the Securities and Exchange Commission (the “Report”), I, Jessica R. Doran, as Chief Financial Officer of the Company, certify, 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.

A signed original of this written statement required by section 906 has been provided to Pzena Investment Management, Inc. and will be retained by Pzena Investment Management, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

Date: March 8, 2022	/s/ Jessica R. Doran
	Jessica R. Doran Chief Financial Officer (principal financial and accounting officer)

XML

Document and Entity Information - USD ($)
$ in Millions

12 Months Ended

Dec. 31, 2021

Mar. 07, 2022

Jun. 30, 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 Well-known Seasoned Issuer

No

Entity Voluntary Filers

No

Entity Current Reporting Status

Yes

Entity Filer Category

Accelerated Filer

Trading Symbol

PZN

Entity Emerging Growth Company

false

Entity Small Business

true

ICFR Auditor Attestation Flag

true

Entity Shell Company

false

Entity Public Float

$ 191.7

Document Fiscal Year Focus

2021

Document Fiscal Period Focus

FY

Document Type

10-K

Amendment Flag

false

Document Period End Date

Dec. 31, 2021

City Area Code

212

Document Annual Report

true

Document Transition Report

false

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

Entity File Number

001-33761

Entity Incorporation, State or Country Code

DE

Entity Tax Identification Number

20-8999751

Entity Interactive Data Current

Yes

Local Phone Number

355-1600

Security Exchange Name

NYSE

Title of 12(b) Security

Class A Common Stock, par value $.01 per share

Documents Incorporated by Reference

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Registrant’s definitive proxy statement relating to its 2022 annual meeting of shareholders (the “2022 Proxy Statement”) are incorporated by reference into Part III of this Annual Report on Form 10-K where indicated. The 2022 Proxy Statement will be filed with the U.S. Securities and Exchange Commission within 120 days after the end of the fiscal year to which this report relates.

Auditor Firm ID

238

Auditor Name

PricewaterhouseCoopers LLP

Auditor Location

New York, New York, USA

Common Class A

Document Information [Line Items]

Entity Common Stock, Shares Outstanding

17,238,355

Common Class B

Document Information [Line Items]

Entity Common Stock, Shares Outstanding

56,603,740

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CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION - USD ($) $ in Thousands		Dec. 31, 2021	Dec. 31, 2020
ASSETS
Cash and Cash Equivalents ($1,030 and $2,201)	[1]	$ 81,133	$ 65,534
Restricted Cash		1,056	1,050
Due from Broker	[1]	55	87
Advisory Fees Receivable		41,127	36,524
Investments ($27,483 and $1,131)	[1]	95,506	34,104
Receivable from Related Parties		3,871	2,880
Other Receivables ($40 and $8)	[1]	265	154
Prepaid Expenses and Other Assets		1,700	2,569
Right-of-use Asset		10,014	11,578
Deferred Tax Assets		25,886	29,831
Property and Equipment, Net of Accumulated Depreciation of $7,086 and $5,980 respectively		3,687	4,376
TOTAL ASSETS		264,300	188,687
Liabilities:
Accounts Payable and Accrued Expenses ($62 and $28)	[1]	44,167	36,317
Due to Broker ($0 and $2)	[1]		56
Securities Sold Short, at Fair Value		237	714
Liability to Selling and Converting Shareholders		24,679	25,701
Lease Liability		10,323	11,905
Deferred Compensation Liability		6,840	5,039
TOTAL LIABILITIES		86,246	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		3,989	5,190
Retained Earnings		38,420	25,611
Accumulated Other Comprehensive Loss		7	132
Total Pzena Investment Management, Inc.'s Equity		42,588	31,106
Non-Controlling Interests		135,466	77,849
TOTAL EQUITY		178,054	108,955
TOTAL LIABILITIES AND EQUITY		264,300	188,687
Common Class A
Equity:
Common Stock		$ 172	$ 173

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

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CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (Parenthetical) - USD ($) $ in Thousands		Dec. 31, 2021	Dec. 31, 2020
ASSETS
Cash	[1]	$ 81,133	$ 65,534
Due from Broker	[1]	55	87
Investments	[1]	95,506	34,104
Other Receivables	[1]	265	154
Property and equipment, accumulated depreciation		7,086	5,980
LIABILITIES AND EQUITY
Accounts Payable and Accrued Expenses	[1]	$ 44,167	36,317
Due to Broker	[1]		$ 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)		17,306,455	17,328,899
Common Stock, Shares Outstanding (in shares)		17,306,455	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)		55,203,277	54,313,620
Common Stock, Shares Outstanding (in shares)		55,203,277	54,313,620
Variable Interest Entity, Primary Beneficiary
ASSETS
Cash		$ 1,030	$ 2,201
Investments		27,483	1,131
Other Receivables		40	8
LIABILITIES AND EQUITY
Accounts Payable and Accrued Expenses		62	28
Due to Broker		$ 0	$ 2

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

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CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands		12 Months Ended
		Dec. 31, 2021	Dec. 31, 2020
Income Statement [Abstract]
REVENUE		$ 199,334	$ 138,619
EXPENSES
Compensation and Benefits Expenses		77,072	68,487
General and Administrative Expenses		16,403	14,859
TOTAL OPERATING EXPENSES		93,475	83,346
Operating Income		105,859	55,273
OTHER INCOME
Interest Income		210	466
Interest Expense		(2)	(16)
Dividend Income		976	329
Net Realized and Unrealized Gains from Investments		4,392	630	[1]
Equity in the Earnings/ (Losses) of Affiliates		2,170	(929)	[1]
Other Income		670	72
Total Other Income		8,416	552
Income Before Income Taxes		114,275	55,825
Income Tax Expense		7,798	4,287
Net Income		106,477	51,538	[1]
Less: Net Income Attributable to Non-Controlling Interests		87,798	42,664
Net Income Attributable to Pzena Investment Management, Inc.		18,679	8,874
Supplemental Income Statement Elements [Abstract]
Net Income for Basic Earnings per Share		$ 18,679	$ 8,874
Basic Earnings per Share		$ 1.07	$ 0.52
Basic Weighted Average Shares Outstanding		17,414,694	17,208,174
Net Income for Diluted Earnings per Share		$ 83,661	$ 40,766
Diluted Earnings per Share		$ 1.00	$ 0.52
Diluted Weighted Average Shares Outstanding	[2]	84,007,638	79,143,710
Cash Dividends per Share of Class A Common Stock		$ 0.34	$ 0.55

[1] Net consolidation (Deconsolidation) of Sponsored Investment Funds have been reclassified to conform to the current year presentation.

[2] The Company issues restricted shares of Class A common stock and the operating company issues 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 diluted earnings per share.

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Statement of Comprehensive Income [Abstract]
NET INCOME	$ 106,477	$ 51,538	[1]
OTHER COMPREHENSIVE INCOME
Foreign Currency Translation Adjustment	(866)	565
Total Other Comprehensive (Loss)/ Income	(866)	565
Comprehensive Income	105,611	52,103
Less: Comprehensive Income Attributable to Non-Controlling Interests	87,057	43,094
Total Comprehensive Income Attributable to Pzena Investment Management, Inc.	$ 18,554	$ 9,009

[1] Net consolidation (Deconsolidation) of Sponsored Investment Funds have been reclassified to conform to the current year presentation.

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CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY - USD ($) $ in Thousands	Total		Common Class A	Common Class B	Common Stock Common Class A	Common Stock 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]
Unit Conversion	390	[1]			$ 5		1,007			(622)
Unit Conversion (in shares)					494,316	(494,316)
Amortization of Non-Cash Compensation	8,166				$ 1		1,838			6,327
Amortization of Non-Cash Compensation (in shares)					20,000	859,811
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	2,295						523			1,772
Sale of Shares Under Equity Incentive Plan (in shares)				554,860		554,860
Modification, shares					16,806	(16,806)
Directors' Shares	455						103			352
Net Income	51,538	[1]							8,874	42,664
Foreign Currency Translation Adjustments	$ 565							135		430
Options Exercised (in shares)	19,661					603
Repurchase and Retirement of Class A Common Stock	$ (7,663)				$ (12)		(1,723)			(5,928)
Repurchase and Retirement Shares/Units (in shares)			(1,211,573)	(107,204)	1,211,573	107,204
Repurchase and Retirement of Class B Units	(640)						(131)			(509)
Effect of Deconsolidation	(1,685)									(1,685)
Contributions from Non-Controlling Interests	1,013									1,013
Distributions to Non-Controlling Interests	(47,590)									(47,590)
Class A Cash Dividends Declared and Paid	(9,702)								(9,702)
Tax Impact of Transactions with Non-Controlling Shareholders	(239)						(239)
Other							(1,907)			1,907
Ending Balance at Dec. 31, 2020	108,955				$ 173		5,190	132	25,611	77,849
Ending Balance (in shares) at Dec. 31, 2020			17,328,899	54,313,620	17,328,899	54,313,620
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Unit Conversion	321				$ 8		1,430			(1,117)
Unit Conversion (in shares)					790,414	(790,414)
Amortization of Non-Cash Compensation	8,989						1,977			7,012
Amortization of Non-Cash Compensation (in shares)					24,201	851,263
Issuance of Shares under Equity Incentive Plan	3,852						879			2,973
Issuance of Shares under Equity Incentive Plan (in shares)					12,353	810,857
Sale of Shares Under Equity Incentive Plan	315						68			247
Sale of Shares Under Equity Incentive Plan (in shares)				49,081		49,081
Directors' Shares	646						141			505
Directors' Shares (in shares)					16,144
Net Income	106,477								18,679	87,798
Foreign Currency Translation Adjustments	$ (866)							(125)		(741)
Options Exercised (in shares)	61,334					32,947
Repurchase and Retirement of Class A Common Stock	$ (8,655)				$ (9)		(1,895)			(6,751)
Repurchase and Retirement Shares/Units (in shares)			(865,556)	(64,077)	(865,556)	(64,077)
Repurchase and Retirement of Class B Unit Options	(491)						(107)			(384)
Effect of Consolidation	9,730									9,730
Contributions from Non-Controlling Interests	30,023									30,023
Distributions to Non-Controlling Interests	(73,773)									(73,773)
Class A Cash Dividends Declared and Paid	(5,870)								(5,870)
Tax Impact of Transactions with Non-Controlling Shareholders	(1,599)						(1,599)
Other							(2,095)			2,095
Ending Balance at Dec. 31, 2021	$ 178,054				$ 172		$ 3,989	$ 7	$ 38,420	$ 135,466
Ending Balance (in shares) at Dec. 31, 2021			17,306,455	55,203,277	17,306,455	55,203,277

[1] Net consolidation (Deconsolidation) of Sponsored Investment Funds have been reclassified to conform to the current year presentation.

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CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Parenthetical) - $ / shares	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Statement of Stockholders' Equity [Abstract]
Class A Cash Dividends Declared and Paid (in USD per share)	$ 0.34	$ 0.55

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CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands		12 Months Ended
		Dec. 31, 2021	Dec. 31, 2020
OPERATING ACTIVITIES
Net Income		$ 106,477	$ 51,538	[1]
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:
Depreciation		1,180	1,214	[1]
Non-Cash Compensation		15,824	13,204	[1]
Directors' Share Grants		646	455	[1]
Net Realized and Unrealized Gains from Investments		(4,392)	(630)	[1]
Equity in the Losses/ (Earnings) of Affiliates		(2,170)	929	[1]
Non-Cash Performance Fees		(29)
Foreign Currency Translation Adjustment		(866)	565	[1]
Noncash Lease Expense		2,503	2,282	[1]
Change in Liability to Selling and Converting Shareholders		(607)	(213)	[1]
Deferred Income Taxes		4,787	3,432	[1]
Changes in Operating Assets and Liabilities:
Advisory Fees Receivable		(4,603)	(3,637)	[1]
Due from Broker		32	(113)	[1]
Prepaid Expenses and Other Assets		800	273	[1]
Due to Broker		(56)	16	[1]
Accounts Payable, Accrued Expenses, and Other Liabilities		6,686	(8,442)	[1]
Tax Receivable Agreement Payments		(2,476)	(2,881)	[1]
Change in Lease Liability		(2,521)	(2,330)	[1]
Purchases of Investments		(61,449)	(23,935)	[1]
Proceeds from Sale of Investments		17,061	19,602	[1]
Net Cash Provided by Operating Activities		76,827	51,329	[1]
INVESTING ACTIVITIES
Purchases of Investments		(18,981)	(25,169)	[1]
Proceeds from Sale of Investments		17,172	50,371	[1]
Net Consolidations (Deconsolidations) of Sponsored Investment Funds		578	(123)	[1]
Payments (to)/ from Related Parties		(1,049)	(1,011)	[1]
Purchase of Property and Equipment		(491)	(43)	[1]
Net Cash(Used In)/ Provided by Investing Activities		(2,771)	24,025	[1]
FINANCING ACTIVITIES
Repurchase and Retirement of Class A Common Stock		(8,655)	(7,662)	[1]
Repurchase and Retirement of Class B Units		(491)	(640)	[1]
Sale of Shares under Equity Incentive Plan		315	2,295	[1]
Distributions to Non-Controlling Interests		(73,773)	(47,590)	[1]
Contributions from Non-Controlling Interests		30,023	1,013	[1]
Dividends		(5,870)	(9,702)	[1]
Net Cash Used in Financing Activities		(58,451)	(62,286)	[1]
NET CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH		15,605	13,068	[1]
CASH, CASH EQUIVALENTS AND RESTRICTED CASH — Beginning of Year	[1]	66,584	53,516
Net Change in Cash, Cash Equivalents and Restricted Cash		15,605	13,068	[1]
CASH, CASH EQUIVALENTS AND RESTRICTED CASH — End of Year		82,189	66,584	[1]
Supplementary Cash Flow Information:
Unit Conversion		321	390	[1]
Issuance of Shares under Equity Incentive Plan		3,852	3,842	[1]
Income Taxes Paid		698	562	[1]
Supplementary Schedule of Non-Cash Investing Transactions:
Increase in Noncontrolling Interests Due to Net Consolidation (Deconsolidation) of Sponsored Investment Vehicles		$ 9,730	$ (1,685)	[1]

[1] Net consolidation (Deconsolidation) of Sponsored Investment Funds have been reclassified to conform to the current year presentation.

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Organization

12 Months Ended

Dec. 31, 2021

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Organization

Note 1 — Organization

Pzena Investment Management, Inc. (the “Company”) functions as 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 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 which is registered under the Investment Advisers Act of 1940 and is headquartered in New York, New York. As of December 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 has consolidated the results of operations and financial condition of the following entities as of December 31, 2021:

Legal Entity	Type of Entity (Date of Formation)	Ownership at December 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 (1/08/2015)		100.0	%
Pzena Investment Management Europe Limited	Irish Private Company Limited by Shares (07/08/2021)		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 International Small Cap Value Fund, a series of Advisors Series Trust	Open-end Management Investment Company, series of Delaware Statutory Trust (6/28/2018)		51.3	%
Pzena International Value Fund, a series of Advisors Series Trust	Open-end Management Investment Company, series of Delaware Statutory Trust (6/27/2021)		50.7	%
Pzena Global Focused Value Fund	Australian Registered Investment Scheme (6/10/2016)		15.9	%

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Significant Accounting Policies

12 Months Ended

Dec. 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. The consolidation guidance requires an analysis to determine if an entity should be evaluated for consolidation using the voting interest entity (“VOE”) model or the variable interest entity (“VIE”) model. Under the VOE model, controlling financial interest is generally defined as a majority ownership of voting interests. Under the VIE model, controlling financial interest is established if the entity is determined to be the primary beneficiary, which is defined as (i) the power to direct activities that most significantly impact the economic performance of the entity and (ii) the right to receive potentially significant benefits or the obligation to absorb potentially significant losses.

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 or a voting 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.

During June of 2021, the Company provided the initial cash investment for the launch of a Pzena mutual fund, the Pzena International Value Fund. Due to its series fund structure, registration, and compliance with the requirements of the Investment Company Act of 1940, the fund is analyzed for consolidation under the voting interest model. As a result of the Company's initial interests, it consolidated the Pzena International Value Fund through September 17, 2021. During September of 2021, due to additional subscriptions into the Pzena International Value Fund, the Company's ownership decreased below the threshold for consolidation under the voting interest model. As the Company was no longer deemed to control the fund, it deconsolidated the entity and removed the related assets, liabilities and non-controlling interest from the Company’s consolidated statements of financial condition and classified the Company's remaining investment as an equity method investment. During December of 2021, due to additional contributions from the Company into the Pzena International Value Fund, the Company's ownership increased above the threshold for consolidation under the voting interest model. As of December 31, 2021, Pzena International Value Fund’s $20.1 million in net assets were included in the Company’s consolidated statements of financial condition.

During September of 2021, the Company redeemed its investment in Pzena Investment Management Special Situations, 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 December of 2021, the Company provided the initial cash investment for the launch of the Pzena Emerging Markets Select Value Fund, a new sub-fund through Pzena Value Funds plc. Due to its fund structure, the fund is analyzed for consolidation under the voting interest model. As a result of the Company's initial interests, it consolidated the Pzena Emerging Markets Select Value Fund as of December 31, 2021. At December 31, 2021, Emerging Markets Select Value Fund’s $10.3 million in net assets were included in the Company’s Consolidated Statements of Financial Condition.

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 noncontrolling 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 December 31, 2021 and 2020, Pzena Global Focused Value Fund’s $26.7 million and $3.6 million, respectively, 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 continue to 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 $234.7 million and $265.9 million at December 31, 2021 and 2020, respectively.

As of December 31, 2021 and 2020, in order to satisfy certain of the Company's obligations under its deferred compensation programs, the operating company had $1.8 million and $3.2 million in investments, respectively, in certain of these firm-sponsored vehicles, for which the Company was not deemed to be the primary beneficiary. The Company's exposure to risk in the non-consolidated VIEs is generally limited to any equity investment and any uncollected management fees. As of December 31, 2021 and 2020, the Company's maximum exposure to loss as a result of its involvement with the non-consolidated VIEs was $2.2 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 the Company’s consolidated financial condition or results of operations.

Management’s Use of Estimates:

The preparation of 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 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 their contractual terms. Advisory fee income also includes performance fees that may be earned by the Company depending on the investment return of 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 preferred method identified in 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 is presented net of fund expense cap reimbursements.

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

	For the Years Ended December 31,
Revenue	2021			2020
	(in thousands)
Separately Managed Accounts
Asset-Based Fees	$	102,841		$	74,725
Performance-Based Fees		—			—
Total Separately Managed Fees		102,841			74,725
Sub-Advised Accounts
Asset-Based Fees	$	80,990		$	52,741
Impact of Fulcrum Fees1		(3,776	)		(4,027	)
Performance-Based Fees		—			—
Total Sub-Advised Fees		77,214			48,714
Pzena Funds
Asset-Based Fees	$	20,096		$	15,154
Expense Cap Reimbursements		(909	)		(1,052	)
Performance-Based Fees		92			1,078
Total Pzena Funds Fees		19,279			15,180
Total	$	199,334		$	138,619

1Represents 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 December 31, 2021 and 2020, Cash and Cash Equivalents was $81.1 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 December 31, 2021, and 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.

	For the Years Ended December 31,
	2021		2020		2019
	(in thousands)
Cash and Cash Equivalents	$	81,133	$	65,534	$	52,480
Restricted Cash		1,056		1,050		1,036
Total	$	82,189	$	66,584	$	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 and trading debt securities 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, 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 are recorded at the amount of capital reported by the private investment partnership or mutual fund. The capital account reflects any contributions paid to, distributions received from, and equity earnings of, the entities. The earnings of these investments are recognized in 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. For the years ended December 31, 2021 and 2020, no impairment losses were recognized.

Securities Valuation:

Investments in equity securities 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 securities 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, 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. For the years ended December 31, 2021 and 2020, there were no client relationships representing more than 10% of the Company's revenue. At December 31, 2021 and 2020, no allowance for doubtful accounts has been deemed necessary.

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, 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. Capitalized internal-use software development costs are amortized on a straight-line basis over three years from the date of implementation.

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 a “C” corporation under the Internal Revenue Code, and is 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.

Judgment is required in evaluating the Company's uncertain tax positions and determining its provision for income taxes. The Company establishes reserves 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.

The Company’s purchase of membership units of the operating company concurrent with the 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 (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 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 deductions 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 computation of inside basis requires management to make judgments in estimating the components included in the inside basis as of the date of the Exchange (i.e., cash received by the Company on hypothetical sale of assets, allocation of gain/loss to the Company at the time of the Exchange taking into account complex partnership tax rules). In addition, management estimates the period of time that may generate cash tax savings of such tax attributes and the realizability of the tax attributes. 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.

Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount that is more-likely-than-not to be realized. At December 31, 2021 and 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.

Foreign Currency:

The functional 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/ (loss) 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 the consolidated statements of operations. For the year ended December 31, 2021, the Company recorded $0.9 million of other comprehensive losses associated with foreign currency translation adjustments. For the year ended December 31, 2020, the Company recorded approximately $0.6 million of other comprehensive income 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

12 Months Ended

Dec. 31, 2021

Share-based Payment Arrangement [Abstract]

Compensation and Benefits

Note 3 — Compensation and Benefits

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

	For the Years Ended December 31,
	2021		2020
	(in thousands)
Cash Compensation and Other Benefits	$	61,248	$	55,283
Non-Cash Compensation		15,824		13,204
Total Compensation and Benefits Expense	$	77,072	$	68,487

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 awards of Class B-1 units of the operating company, Delayed Exchange Class B units, phantom Delayed Exchange Class B units, options to purchase shares of Class A common stock, and shares of Class A common stock awarded for the years ended December 31, 2021 and 2020, are as follows:

	For the Years Ended December 31,
	2021				2020
	Amount		Fair Value1		Amount		Fair Value1
Class B-1 Units2		1,456,753	$	2.41		2,092,879	$	3.98
Delayed Exchange Class B Units3		810,857	$	4.68		620,543	$	5.95
Deferred Compensation Phantom Delayed Exchange Class B Units4		—	$	—		188,283	$	4.67
Options to Purchase Shares of Class A Common Stock5		—	$	—		146,804	$	2.03
Restricted Shares of Class A Common Stock6		17,706	$	4.67		16,806	$	4.74

1Represents the weighted average grant date estimated fair value per share, unit, or option.

2Represents 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. Of the units issued during the year ended December 31, 2021, 1,400,305 units vest on the fifth anniversary of the grant date, 38,462 units vest ratably over four years, and 17,986 units vested immediately. Of the units issued during the year ended December 31, 2020, 2,032,879 units vest on the fifth anniversary of the grant date and 60,000 units vest ratably over four years. 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.

3Represents Class B units issued under the 2006 Equity Incentive Plan (as defined below). 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.

4Represents phantom Delayed Exchange Class B units issued under the 2006 Equity Incentive Plan and pursuant to the Bonus Plan (as defined below). These phantom units vest ratably over four years, but may not be exchanged pursuant to the Amended and Restated Operating Agreement of the operating company until seven years after the date they vest. These units are also not entitled to any benefits under the Tax Receivable Agreement between the Company and members of the operating company.

5Represents 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.

6Represents shares of Class A common stock issued under the 2007 Equity Incentive Plan. Of the shares issued during the year ended December 31, 2021, 12,353 shares vest immediately and 5,353 shares vest ratably over four years. The 16,806 shares issued during the year ended December 31, 2020, vest ratably over four years. 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, 2021, $6.8 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, 2022 are as follows:

	January 1,
	2022
	Amount		Fair Value1
Delayed Exchange Class B Units2		1,084,675	$	6.16
Restricted Shares of Class A Common Stock3		17,057	$	6.16

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

2Represents 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.

3Represents 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, Class B-1 units, phantom Class B units, and options to purchase Class B units. The Company also issues Delayed Exchange Class B units pursuant to the 2006 Equity Incentive Plan. These Delayed Exchange Class B units 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 they vest. These Delayed Exchange Class B units are also not entitled to any benefit under the Tax Receivable Agreement between the Company and current, future and past members of the operating company. The 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, and contingently vesting options to acquire shares of Class A common stock.

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 as 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. As of December 31, 2021 and 2020, the liability associated with deferred compensation investment accounts was $6.8 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 the 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. Elections of deferred stock units result in the issuance of phantom shares of Class A common stock. Distributions under the Director Plan shall be made in a single distribution of shares of our 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. Amounts deferred in any calendar year are amortized over the calendar year and reflected as General and Administrative Expense. During the second quarter of 2020, the Company’s Board of Directors agreed to waive compensation for the full year of 2020, which resulted in the forfeiture of 49,673 phantom shares of Class A common stock. During the fourth quarter of 2020, the Board of Directors elected to re-instate 50% of their compensation for the year of 2020. For the years ended December 31, 2021 and 2020, the directors were awarded 75,038 and 78,416 phantom shares of Class A common stock, respectively, reflecting the annual deferral of compensation and additional phantom shares issued as of each date, and in the amount of dividends and/or special dividends and distributions that are paid with respect to Class A common stock of the Company. As of December 31, 2021 and 2020, there were 597,412 and 533,444 phantom shares of Class A common stock outstanding, respectively. During the year ended December 31, 2021, the Company distributed 11,070 shares of Class A common stock under the Director Plan. There were no distributions made under the Director Plan during the year ended December 31, 2020. During the year ended December 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.

The Company uses a fair value method in recording the expense associated with the granting of Class B units, Class B-1 units, Delayed Exchange Class B units, phantom Delayed Exchange Class B units, options to purchase Class A common stock and Class B units, options to purchase Delayed Exchange Class B units, and shares of Class A common stock under the 2006 and 2007 Equity Incentive Plans; phantom Delayed Exchange Class B units under the Bonus Plan; and phantom shares of Class A common stock under the Director Plan.

The fair value of awarded restricted shares of Class A common stock under the 2007 Equity Incentive Plan and phantom shares of Class A common stock under the Director Plan is determined based on the closing market price of our Class A common stock on the date of grant. The fair value of awarded Class B and Class B-1 units under the 2006 and 2007 Equity Incentive Plans are determined by reference to the market price of our Class A common stock on the date of grant, since Class B and Class B-1 units are exchangeable for shares of our Class A common stock, adjusted for the impact of award terms on the value of the award. Certain of the restricted shares of Class A common stock are not entitled to dividends or dividend equivalents while unvested. The fair value of these awards is determined based on the closing market price of our Class A common stock on the date of grant, net of the present value of the dividends using the applicable risk-free interest rate. The Delayed Exchange Class B Units have a seven years exchange limitation and are not entitled to any benefits under the tax receivable agreement. The fair value of these awards is determined based on the closing market price of our Class A common stock on the date of grant, net of the effects of these terms. The Class B-1 units are entitled to distributions for the duration of the holder’s employment and will participate in additional value to the extent there has been appreciation subsequent to the issuance of the Class B-1 unit. The fair value of these awards is determined based on the present value of expected future dividends, an option pricing model where the strike price reflects the threshold value over which appreciation is recognized, and the impact of award terms on the value of the award. The Company also issued options to purchase Delayed Exchange Class B units. The fair value of these options is determined using an option pricing model where the strike price reflects the fair value of Delayed Exchange Class B units on the date of grant. Certain of the phantom Delayed Exchange Class B units are not entitled to dividends or dividend equivalents while unvested.

The option model used in the fair value of Options to Purchase Shares of Class A Common Stock, Class B-1 units, and the Delayed Exchange Class B units is determined by using an appropriate option pricing model on the grant date. For each of the years ended December 31, 2021 and 2020, the Company issued options and units valued using the Black-Scholes option pricing model with the following weighted average assumptions:

	2021			2020
	January 1,			January 1,
Weighted Average Time Until Exercise	10 years			10 years
Expected Volatility		45	%		44	%
Risk-Free Rate		0.90	%		1.90	%
Dividend Yield		4.40	%		4.40	%

Weighted Average Time Until Exercise — The expected term is based on the Company’s historical experience and the particular terms of its option awards.

Expected Volatility — Due to the lack of sufficient historical data for the Company’s own shares, the Company based its expected volatility on a representative peer group.

Risk-Free Rate — The risk-free rate for periods within the expected term of the options is based on the interest rate of a traded zero-coupon U.S. Treasury bond with a term equal to the options’ expected term on the date of grant.

Dividend Yield — The dividend yield is based on the Company’s anticipated dividend payout over the expected term of the option awards.

The following is a summary of the Class B-1 unit activity for the two years ended December 31, 2021:

	For the Years Ended December 31,
	2021				2020
	Units Outstanding		Weighted Average Threshold Price		Units Outstanding		Weighted Average Threshold Price
Beginning Balance		5,775,952	$	8.15		3,683,073	$	8.15
Units Granted1		1,456,753		7.06		2,092,879		8.15
Units Cancelled		—		—		—		—
Units Forfeited		—		—		—		—
Units Exercised		—		—		—		—
Ending Balance		7,232,705	$	7.93		5,775,952	$	8.15

1Amounts reflected include the impact of a modification as of May 1, 2020, which resulted in the cancellation of 166,804 Class B-1 units.

The weighted average grant-date fair value per Class B-1 unit issued in 2021 and 2020 was $2.41 and $3.98, respectively. During the years ended December 31, 2021 and 2020, no Class B-1 units were exercised.

Exercise prices for Class B-1 units outstanding and exercisable as of December 31, 2021 are as follows:

	Units Outstanding				Units Exercisable
	Number Outstanding as of December 31, 2021		Weighted Average Threshold Price		Number Exercisable as of December 31, 2021		Weighted Average Threshold Price
$5.00 – $10.00		7,214,719	$	7.92		3,709,776	$	8.15
$10.00 – $15.00		17,986		11.01		17,986		11.01
$5.00 – $15.00		7,232,705	$	7.93		3,727,762	$	8.16

Based on the closing market price of the Company’s Class A common stock on December 31, 2021, the aggregate intrinsic value of the Company’s Class B-1 units was as follows:

	Units Outstanding		Units Exercisable
	(in thousands)
Aggregate Intrinsic Value	$	11,164	$	4,914

The following is a summary of the option activity for the two years ended December 31, 2021:

	For the Years Ended December 31,
	2021					2020
	Options Outstanding			Weighted Average Exercise Price		Options Outstanding			Weighted Average Exercise Price
Beginning Balance		6,762,389		$	8.27		6,779,677		$	8.24
Options Granted1		—			—		189,539			7.65
Options Cancelled		—			—		(8,426	)		7.58
Options Forfeited		—			—		(178,740	)		6.57
Options Exercised		(61,334	)		4.77		(19,661	)		7.58
Ending Balance		6,701,055		$	8.30		6,762,389		$	8.27

1Options granted for the year ended December 31, 2020 include 189,539 options to purchase shares of Class A common stock.

The weighted average grant-date fair values per option issued in 2020 was $1.84. The 61,334 options exercised in 2021 resulted in 32,947 net Class B units issued, as a result of the redemption of 28,387 Class B units for the cashless exercise of the options. The 19,661 options exercised in 2020 resulted in 603 net Class B units issued, as a result of the redemption of 19,058 Class B units for the cashless exercise of the options. The 187,166 options to purchase Class B units that were cancelled or forfeited during 2020 were in connection with employee departures and

option expirations. During the year ended December 31, 2021, 500,000 contingently vesting options vested. During the year ended December 31, 2020, no contingently vesting options vested.

Exercise prices for options outstanding and exercisable as of December 31, 2021 are as follows:

	Options Outstanding						Options Exercisable
	Number Outstanding as of December 31, 2021		Weighted- Average Remaining Contractual Life		Weighted Average Exercise Price		Number Exercisable as of December 31, 2021		Weighted- Average Remaining Contractual Life		Weighted Average Exercise Price
$5.00 – $10.00		5,308,921		5.7	$	7.02		1,215,769		6.1	$	6.90
$10.00 – $15.00		1,392,134		1.7		13.19		522,134		0.6		12.88
$5.00 – $15.00		6,701,055		4.8	$	8.30		1,737,903		4.4	$	8.69

Based on the closing market price of the Company’s Class A common stock on December 31, 2021, the aggregate intrinsic value of the Company’s options was as follows:

	Options Outstanding		Options Exercisable
	(in thousands)
Aggregate Intrinsic Value	$	12,989	$	3,130

Phantom Delayed Exchange Class B units issued pursuant to the Bonus Plan, which vest ratably over four years, are summarized as follows:

	For the Years Ended December 31,
	2021					2020
	Phantom Units Outstanding			Weighted Average Price		Phantom Units Outstanding			Weighted Average Price
Beginning Balance		472,302		$	5.57		503,869		$	6.33
Phantom Delayed Exchange Class B Units Issued1		-			-		188,283			4.67
Vesting of Phantom Delayed Exchange Class B Units1		(201,523	)		5.97		(208,879	)		6.56
Phantom Delayed Exchange Class B Units Forfetied1		-			-		(10,971	)		6.04
Ending Balance		270,779		$	5.29		472,302		$	5.57

1Represents phantom Delayed Exchange Class B units issued under the 2006 Equity Incentive Plan. These phantom units vest ratably over four years, but may not be exchanged pursuant to the Amended and Restated Operating Agreement of the operating company until seven years after the date they vest. These units are also not entitled to any benefits under the Tax Receivable Agreement between the Company and members of the operating company.

Phantom Class B units and Phantom Delayed Exchange Class B units issued pursuant to the 2006 Equity Incentive Plan, which vest ratably over 10 years and are not eligible to receive dividends or dividend equivalents until vested, are summarized as follows:

	For the Years Ended December 31,
	2021					2020
	Phantom Units Outstanding			Weighted Average Price		Phantom Units Outstanding			Weighted Average Price
Beginning Balance		3,108,154		$	4.00		3,734,050		$	4.05
Phantom Delayed Exchange Class B Units Issued		—			—		—			—
Vesting of Phantom Class B Units		(626,158	)		4.29		(625,896	)		4.29
Phantom Class B Units Forfeited		—			—		—			—
Ending Balance		2,481,996		$	3.93		3,108,154		$	4.00

As of December 31, 2021 and 2020, the Company had approximately $42.1 million and $34.8 million, respectively, in unrecorded compensation expense related to unvested awards issued pursuant to its Bonus Plan; Class B units, option grants, and phantom Class B units issued under the 2006 Equity Incentive Plan; and restricted Class A common stock issued under the 2007 Equity Incentive Plan. The Company anticipates that this unrecorded cost will amortize over the respective vesting periods of the awards.

As of December 31, 2021, the total units and shares remaining available for future issuance under the equity incentive plans are as follows:

Plan	Number of Securities Remaining Available For Future Issuance Under Equity Incentive Plans
Pzena Investment Management, LLC 2006 Equity Incentive Plan		4,984,985
Pzena Investment Management, Inc. 2007 Equity Incentive Plan		6,555,791
Total		11,540,776

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Employee Benefit Plans

12 Months Ended

Dec. 31, 2021

Retirement Benefits [Abstract]

Employee Benefit Plans

Note 4 — Employee Benefit Plans

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. During the years ended December 31, 2021 and 2020, the expense recognized in connection with this plan was $1.3 million and $1.1 million, respectively.

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Earnings per Share

12 Months Ended

Dec. 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 years ended December 31, 2021 and 2020, the Company’s basic earnings per share was determined as follows:

	For the Years Ended December 31,
	2021		2020
	(in thousands, except share and per share amounts)
Net Income Allocated to:
Class A Common Stock	$	18,657	$	8,868
Participating Shares of Restricted Class A Common Stock		22		6
Net Income for Basic Earnings Per Share	$	18,679	$	8,874
Basic Weighted-Average Shares Outstanding		17,394,327		17,196,939
Add: Participating Shares of Restricted Class A Common Stock1		20,367		11,235
Total Basic Weighted-Average Shares Outstanding		17,414,694		17,208,174
Basic Earnings per Share	$	1.07	$	0.52

1Certain 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 Class A common stock, phantom Delayed Exchange Class B units, outstanding Class B unit options, options to purchase Class A common stock, and restricted Class A common stock, to the extent they would have a dilutive effect on earnings per share for the reporting period. Net income for diluted earnings per share generally assumes 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 any prior period and other adjustments. 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 years ended December 31, 2021 and 2020, the Company’s diluted net income was determined as follows:

	For the Years Ended December 31,
	2021			2020
	(in thousands)
Net Income Attributable to Non-Controlling Interests of Pzena Investment Management, LLC	$	86,781		$	42,421
Less: Assumed Corporate Income Taxes		(21,799	)		(10,529	)
Assumed After-Tax Income of Pzena Investment Management, LLC		64,982			31,892
Net Income of Pzena Investment Management, Inc.		18,679			8,874
Diluted Net Income	$	83,661		$	40,766

Under the two-class method, 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 Class B units for purposes of calculating earnings per share. Dividend equivalent distributions paid per share on the Company’s unvested Class B units are equal to the dividends paid per share of Class A common stock of the Company.

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

	For the Years Ended December 31,
	2021		2020
	(In thousands, except share and per share amounts)
Diluted Net Income Allocated to:
Class A Common Stock	$	76,421	$	37,732
Participating Shares of Restricted Class A Common Stock		22		6
Participating Class B Units and Class B-1 Units		7,218		3,028
Total Diluted Net Income Attributable to Shareholders	$	83,661	$	40,766
Basic Weighted-Average Shares Outstanding		17,414,694		17,208,174
Dilutive Effect of Class B Units		55,037,164		54,156,631
Dilutive Effect of Options1		1,586,602		12,637
Dilutive Effect of Phantom Units		2,687,583		1,874,199
Dilutive Effect of Restricted Shares of Class A Common Stock2		33,231		12,660
Dilutive Weighted-Average Shares Outstanding		76,759,274		73,264,301
Add: Participating Class B Units and Class B-1 Units3		7,248,364		5,879,409
Total Dilutive Weighted-Average Shares Outstanding		84,007,638		79,143,710
Diluted Earnings per Share	$	1.00	$	0.52

1Represents the dilutive effect of options to purchase Class B units, Delayed Exchange Class B units, and Class A common stock.

2Certain 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.

3Unvested Class B Units granted to employees have nonforfeitable rights to dividends 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.

Approximately 0.3 million options to purchase Class B units, 0.6 million options to purchase shares of Class A common stock, and 0.5 million contingent options to purchase shares of Class A common stock were excluded from the calculation of diluted earnings per share for the year ended December 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 5.5 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 Class A common stock were excluded from the calculation of diluted earnings per share for the year ended December 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

12 Months Ended

Dec. 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, first issued on December 31, 2019, 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. Based on the closing price of the Company’s Class A common stock as of as of December 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 approximately 23.5%, 74.9%, and 1.6% respectively, of the

economic interest in the December 31, 2021 value of the operating company. As of December 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 21.6%, 69.3%, and 9.1%, respectively, of the right to the future income and distributions. As of December 31, 2020, the holders of Class A common stock (through the Company) and the holders of Class B units of the operating company held approximately 24.2% and 75.8%, respectively, of the economic interest in the December 31, 2020 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 has a corresponding share of the Company’s Class B common stock, par value $0.000001 per share. 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 this 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 in accordance 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.

On December 22, 2021, June 10, 2021 and December 22, 2020, certain of the operating company’s members exchanged an aggregate of 30,414, 760,000, and 494,316, respectively, of their Class B units for an equivalent number of shares of Class A common stock of the Company. These acquisitions of additional operating company membership interests were treated as reorganizations of entities under common control as required by the Business Combinations Topic of the FASB ASC.

The incremental assets and liabilities assumed in the exchanges were recorded on December 22, 2021, June 10, 2021, and December 22, 2020 as follows:

	December 22,  2021			June 10,  2021			December 22,  2020
	(in thousands)
Pzena Investment Management, LLC Members' Capital	$	372		$	9,279		$	6,694
Pzena Investment Management, LLC Accumulated Deficit		(324	)		(8,210	)		(6,072	)
Realizable Deferred Tax Asset		-			2,493			506
Net Tax Receivable Liability to Converting Unitholders		-			(2,119	)		(430	)
Total	$	48		$	1,443		$	698
Common Stock, at Par	$	-		$	8		$	5
Additional Paid-in Capital		48			1,435			693
Total	$	48		$	1,443		$	698

The Company announced a share repurchase program on April 24, 2012. The Board of Directors authorized the Company to repurchase 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 5, 2014, the Board of Directors authorized the Company to repurchase an additional $20 million of the Company's outstanding Class A common stock and Class B units of the operating company. 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. On July 20, 2021, the Company announced that its Board of Directors approved an increase of $40 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 year ended December 31, 2021, the Company purchased and retired 865,556 shares of Class A common stock and 64,077 Class B units at an average price per share of $9.99 and $7.66, respectively. During the year ended December 31, 2020, the Company purchased and retired 1,211,573 shares of Class A common stock and 107,204 Class B units at an average price per share of $6.32 and $5.97, respectively. The Company records the repurchase of shares and units at cost based on the trade date of the transaction.

During the years ended December 31, 2021 and 2020, 49,081 and 554,860 Delayed Exchange Class B units were issued for approximately $0.3 million and $2.3 million in cash, respectively, to certain employee members pursuant to the 2006 Equity Incentive Plan.

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Non-Controlling Interests

12 Months Ended

Dec. 31, 2021

Noncontrolling Interest [Abstract]

Non-Controlling Interests

Note 7 — Non-Controlling Interests

Non-Controlling Interests in the operations of the Company’s operating company and consolidated subsidiaries are comprised of the following:

	For the Years Ended December 31,
	2021		2020
	(in thousands)
Non-Controlling Interests of Pzena Investment Management, LLC	$	86,781	$	42,421
Non-Controlling Interests of Consolidated Subsidiaries		1,017		243
Non-Controlling Interests	$	87,798	$	42,664

Distributions to non-controlling interests represent tax allocations and dividend equivalents paid to the members of the operating company, as well as redemptions by investors in the Company’s consolidated subsidiaries.

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Investments

12 Months Ended

Dec. 31, 2021

Investments, Debt and Equity Securities [Abstract]

Investments

Note 8 — Investments

The following is a summary of Investments:

	As of
	December 31, 2021		December 31, 2020
	(in thousands)
Equity Investments, at Fair Value
Equity Securities	$	82,900	$	18,739
Mutual Funds		7,319		7,314
Total Equity Investments, at Fair Value	$	90,219	$	26,053
Investment in Equity Method Investees		5,287		8,051
Total	$	95,506	$	34,104

Investment Securities, Trading

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

	Cost		Unrealized Gain/(Loss)			Fair Value
	(in thousands)
Equity Securities	$	80,480	$	2,420		$	82,900
Mutual Funds		7,328		(9	)		7,319
Total Equity Investments, at Fair Value	$	87,808	$	2,411		$	90,219

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

	Cost		Unrealized Gain/(Loss)			Fair Value
	(in thousands)
Equity Securities	$	259	$	(22	)	$	237
Total Securities Sold Short, at Fair Value	$	259	$	(22	)	$	237

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:

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

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 Investments on the consolidated statements of financial condition. As of December 31, 2021, the Company's investments range between 1% and 8% of the capital of these entities and have an aggregate carrying value of $5.3 million.

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Fair Value Measurements

12 Months Ended

Dec. 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 transparency 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 certain cash equivalents and equity investments held at fair value. Cash investments in actively traded money market funds are measured at net asset values. Equity securities are exchange-traded securities with quoted prices in active markets. The fair value of investments in mutual funds are based on 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 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 tables present these instruments’ fair value at December 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		82,163		737		—		82,900
Mutual Funds		7,319		—		—		7,319
Total	$	89,490	$	737	$	—	$	90,227
Liabilities
Securities Sold Short		237		—		—		237
Total	$	237	$	—	$	—	$	237

The following tables present 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	$	25,328	$	733	$	—	$	26,061
Liabilities
Securities Sold Short		714		—		—		714
Total	$	714	$	—	$	—	$	714

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

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Property and Equipment

12 Months Ended

Dec. 31, 2021

Property, Plant and Equipment [Abstract]

Property and Equipment

Note 10 — Property and Equipment

Property and equipment, net, is comprised of the following:

	As of
	December 31, 2021			December 31, 2020
	(in thousands)
Leasehold Improvements	$	6,967		$	6,929
Furniture and Fixtures		1,591			1,591
Computer Hardware		880			745
Computer Software		879			879
Office Equipment		212			212
Capitalized Internal-Use Software Development Costs		245			—
Total		10,773			10,356
Less: Accumulated Depreciation and Amortization		(7,086	)		(5,980	)
Total	$	3,687		$	4,376

Depreciation and amortization is included in general and administrative expense and totaled $1.2 million for each of the years ended December 31, 2021, and 2020.

During the year ended December 31, 2021, the Company capitalized $0.2 million of internal-use software development costs. During the year ended December 31, 2021, no amortization expense was recognized related to capitalized internal-use software costs. As of and for the year ended December 31, 2020, the Company did not have capitalized internal-use software development costs.

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Related Party Transactions

12 Months Ended

Dec. 31, 2021

Related Party Transactions [Abstract]

Related Party Transactions

Note 11 — Related Party Transactions

For the years ended December 31, 2021, and 2020, the Company earned $1.2 million and $0.8 million, respectively, in investment advisory fees from unconsolidated VIEs which receive investment management services from the Company.

During the year ended December 31, 2021, and 2020, the Company offered 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 units held by the employee. These loans are full recourse in nature and totaled $3.6 million and $2.6 million at December 31, 2021, and 2020, respectively.

The operating company, as the 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. The Company recognized $1.3 million of such expenses for each of the years ended December 31, 2021 and 2020.

The operating company manages the 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 the 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. The aggregate value of the fees that the Company waived related to the Company’s executive officers, other employees, and family members, was approximately $1.2 million for the year ended December 31, 2021, and $0.8 million in the year ended December 31, 2020.

Pursuant to a tax receivable agreement signed between the members of the operating company and the Company, 85% of the cash savings generated by tax elections discussed in Note 13 — Income Taxes, are distributed to the selling and converting shareholders upon the realization of this benefit. For the years ended December 31, 2021, and 2020, $0.4 million and $0.5 million, respectively, of such payments were made to certain directors, executive officers and employees of the Company.

On December 17, 2021, the Company entered into a revolving line of credit agreement with the operating company, in which, the Company agrees to make loans to the operating company on a revolving basis from time to time in such amounts as the operating company may request for such purposes as it may require in the ordinary course of its business. The credit facility includes a $15 million line of credit with a five-year term, maturing on December 17, 2026. Principal amounts outstanding under the facility accrue interest at the variable Secured Overnight Financing Rate (SOFR) plus 1.10%. As of December 31, 2021, there were total borrowings of $9,990,000 under the credit facility. As intercompany accounts and transactions are eliminated upon consolidation, there is no corresponding balance presented or included on the Consolidated Statements of Financial Condition.

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Commitments and Contingencies

12 Months Ended

Dec. 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, and, therefore, no accrual has been made in the consolidated financial statements.

During the year ended December 31, 2015, the Company moved to its new corporate headquarters. The new office space is leased under a non-cancellable operating lease agreement that expires on December 31, 2025. The Company reflects 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. For the years ended December 31, 2021 and 2020, sublease income decreased annual lease expense by approximately $0.3 million and $0.4 million, respectively, 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 lease 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 July 2021, the Company signed an extension of the non-cancellable lease to the business development and client service office in London which commences on November 1, 2021 and expires on October 31, 2023.

During September 2021, the Company signed a non-cancellable lease for the business development and client service office in Ireland to obtain office space that expires on August 31, 2023. In accordance with ASC 842, Leases, the lease term commenced on September 1, 2021 and the Company recorded a Right-of-use Asset and Lease Liability on the consolidated statements of financial condition associated with the new lease.

Lease expenses were $3.0 million and $2.9 million, respectively, for the years ended December 31, 2021, and 2020, and are included in general and administrative expense. Lease expense for each of the years ended December 31, 2021 and 2020, was net of $0.3 million and $0.4 million, respectively, in 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 Years Ended December 31,
	2021		2020
	(in thousands)
Operating lease expense	$	2,503	$	2,282
Supplemental cash flow information:
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	2,521	$	2,330
Right-of-use assets obtained in exchange for lease obligations	$	939	$	—

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

	As of
	December 31, 2021
	(in thousands)
Operating lease right-of-use assets	$	10,014
Operating lease liabilities	$	10,323
Weighted-average remaining lease term (in years)		3.8
Weighted-average discount rate		4.3	%

Future minimum lease payments are as follows:

Year Ending December 31,	Minimum Payments
	(in thousands)
2022		3,026
2023		2,981
2024		2,607
2025		2,607
2026		-
2027 and thereafter		-
Total undiscounted lease payments		11,221
Less discount		(898	)
Total lease liabilities	$	10,323

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Income Taxes

12 Months Ended

Dec. 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. Neither it nor the Company’s other consolidated subsidiaries have made a provision for federal or state income taxes because it is the individual responsibility of each of these entities’ members (including the Company) to separately report their proportionate share of the respective entity’s taxable income or loss. The operating company has made a provision for New York City UBT and its U.K. consolidated subsidiary has made a provision for U.K. corporate taxes. The Company, as a “C” corporation under the Internal Revenue Code, is liable for federal, state and local taxes on the income derived from its economic interest in its operating company, which is net of UBT and U.K. taxes. Correspondingly, in its consolidated financial statements, the Company reports both the operating company’s provision for UBT and U.K. taxes, as well as its provision for federal, state and local corporate taxes. The components of the income tax expense are as follows:

	For the Year Ended December 31,
	2021			2020
	(in thousands)
Current Provision:
Unincorporated and Other Business Taxes1	$	1,710		$	937
Local Corporate Tax		118			—
State Corporate Tax		123			15
Federal Corporate Tax		1,060			(103	)
Total Current Provision	$	3,011		$	849
Deferred Provision:
Unincorporated and Other Business Taxes1	$	(126	)	$	(79	)
Local Corporate Tax		447			304
State Corporate Tax		467			267
Federal Corporate Tax		3,999			2,946
Total Deferred Provision	$	4,787		$	3,438
Total Income Tax Expense	$	7,798		$	4,287

1During each of the years ended December 31, 2021 and 2020, the operating company recognized a $2.5 million and $1.6 million tax benefit associated with the reversal of uncertain tax position liabilities and interest related to unincorporated and other business tax expenses, respectively.

A reconciliation between the provision for income taxes reported for financial reporting purposes, and the application of the statutory U.S. Federal tax rate to the reported income before income taxes for the years ended December 31, 2021 and 2020, were as follows:

	For the Year Ended December 31,
	2021						2020
	Amount			% of Pretax Income			Amount			% of Pretax Income
	(in thousands, except % amounts)
Federal Corporate Tax	$	23,998			21.0	%	$	11,723			21.0	%
State and Local Corporate Tax, net of Federal Benefit		1,155			1.0	%		586			1.0	%
Unincorporated and Other Business Tax1		1,251			1.1	%		678			1.2	%
Non-Controlling Interests		(18,438	)		(16.1	)%		(8,959	)		(16.0	)%
Non-Deductible Share-Based Compensation		20			0.0	%		22			0.0	%
Other		(189	)		-0.2	%		237			0.4	%
Income Tax Expense	$	7,798			6.8	%	$	4,287			7.7	%

1During each of the years ended December 31, 2021 and 2020, the operating company recognized a $2.5 million and $1.6 million tax benefit associated with the reversal of uncertain tax position liabilities and interest related to unincorporated and other business tax expenses, respectively.

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.

A reconciliation of the beginning and ending amount of total unrecognized tax benefits for the years ended December 31, 2021 and 2020 are as follows:

	For the Year Ended December 31, 2021
	(in thousands)
Balance at December 31, 2020	$	7,612
Decreases Related to Prior Year Tax Positions		(1,870	)
Increases Related to Current Year Tax Positions		2,593
Balance at December 31, 2021	$	8,335

	For the Year Ended December 31, 2020
	(in thousands)
Balance at December 31, 2019	$	7,193
Decreases Related to Prior Year Tax Positions		(1,210	)
Increases Related to Current Year Tax Positions		1,629
Balance at December 31, 2020	$	7,612

The Company recognizes accrued interest and penalties related to unrecognized tax benefits as a component of Income Tax Expense on the consolidated statements of operations. As of December 31, 2021 and 2020, the Company had $8.3 million and $7.6 million in unrecognized tax benefits, that, if recognized, would affect the provision for income taxes. As of December 31, 2021 and 2020, the Company had interest related to unrecognized tax benefits of $1.2 million and $1.2 million, respectively. As a result of legislative changes, changes in judgment related to recognition or measurement, or potential settlements with taxing authorities, it is reasonably possible that the company's gross unrecognized tax benefits balance may change within the next twelve months by a range of zero to $4.5 million.

The Company and the operating company are generally no longer subject to U.S. Federal or state and local income tax examinations by tax authorities for any year prior to 2018. All tax years subsequent to, and including, 2018 are considered open and subject to examination by tax authorities.

During the twelve months ended December 31, 2020, the Company generated $0.8 million in net operating loss carryforwards available for U.S. Federal, state and local income tax reporting purposes. As of December 31, 2021, the Company had no remaining net operating loss carryforwards available for U.S. Federal, state and local income tax reporting purposes.

The acquisition of the Class B units of the operating company, noted below, has allowed the Company to make an election under Section 754 of the Internal Revenue Code (“Section 754”) to step up its tax bases in the net assets acquired. This step up is deductible for tax purposes over a 15-year period.

Pursuant to a tax receivable agreement signed between the members of the operating company and the Company, 85% of the cash savings generated by this election will be distributed to the selling and converting shareholders upon the realization of this benefit.

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.

As discussed in Note 6, Shareholders’ Equity, on December 22, 2021, June 10, 2021, and December 22, 2020, certain of the operating company’s members exchanged an aggregate of 30,414, 760,000, and 494,316, respectively, of their Class B units for an equivalent number of shares of Class A common stock of the Company. The Company elected to step up its tax basis in the incremental assets acquired in accordance with Section 754. Based on the exchange-date fair values of the Company’s common stock and the tax basis of the operating company, this election gave rise to a $2.4 million deferred tax asset and corresponding $2.1 million liability to converting shareholders on June 10, 2021 and a $0.8 million deferred tax asset and corresponding $0.4 million liability to converting shareholders on December 22, 2020. There was no impact to the deferred tax asset or liability to converting shareholders associated with the December 22, 2021 exchange-date. As required by the Income Taxes Topic of the FASB ASC, the Company recorded the effects of these transactions in equity.

As of December 31, 2021 and 2020, the net values of all deferred tax assets were approximately $25.9 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 December 31, 2021 and 2020, the Company did not have a valuation allowance recorded against its deferred tax assets.

The change in the Company’s deferred tax assets for the year ended December 31, 2021, is summarized as follows:

	Section 754			Other			Total
	(in thousands)
Balance at December 31, 2020	$	24,255		$	5,576		$	29,831
Deferred Tax (Expense)		(4,452	)		(334	)		(4,786	)
Tax Impact of Transactions with Non-Controlling Shareholders		—			(1,599	)		(1,599	)
Unit Exchange		2,493			(53	)		2,440
Balance at December 31, 2021	$	22,296		$	3,590		$	25,886

The change in the Company’s deferred tax liabilities, which is included in other liabilities on the Company’s consolidated statements of financial condition, for the year ended December 31, 2021, is summarized as follows:

	Total
	(in thousands)
Balance at December 31, 2020	$	(1	)
Deferred Tax (Expense)		(1	)
Balance at December 31, 2021	$	(2	)

The change in the Company’s deferred tax assets for the year ended December 31, 2020 is summarized as follows:

	Section 754			Other			Total
	(in thousands)
Balance at December 31, 2019	$	27,953		$	4,730		$	32,683
Deferred Tax (Expense)		(4,204	)		771		$	(3,433	)
Tax Impact of Transactions with Non-Controlling Shareholders		—			(239	)	$	(239	)
Unit Exchange		506			314		$	820
Balance at December 31, 2020	$	24,255		$	5,576		$	29,831

The change in the Company’s deferred tax liabilities for the year ended December 31, 2020 is summarized as follows:

	Total
	(in thousands)
Balance at December 31, 2019	$	(2	)
Deferred Tax (Expense)		1
Balance at December 31, 2020	$	(1	)

As of December 31, 2021 and 2020, the net values of the liability to selling and converting shareholders were approximately $24.7 million and $25.7 million, respectively. The change in the Company’s liability to selling and converting shareholders for the years ended December 31, 2021 and 2020, is summarized as follows:

	For the Year Ended December 31,
	2021			2020
	(in thousands)
Beginning Balance	$	25,701		$	28,652
Unit Exchanges		2,119			430
Tax Receivable Agreement Payments		(2,486	)		(2,881	)
Change in Liability		(655	)		(500	)
Ending Balance	$	24,679		$	25,701

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Subsequent Events

12 Months Ended

Dec. 31, 2021

Subsequent Events [Abstract]

Subsequent Events

Note 14 — Subsequent Events

The Company evaluated the need for disclosures and/or adjustments resulting from subsequent events through the date the financial statements were issued.

On January 21, 2022, the operating company entered into an amendment to its existing lease for its corporate headquarters at 320 Park Avenue, 8th Floor, New York, New York. We currently occupy approximately 45,050 square feet of space under a non-cancellable operating lease, the term of which expires on December 31, 2025. In January 2022, we entered into a lease amendment which extends the term until October 31, 2036 and provides for a total of approximately 74,000 square feet of space. The total additional lease payments provided for in the lease amendment aggregate approximately $78 million over the extended term after accounting for any rent abatement periods. The operating company plans to sublet a portion of the expanded space, however its obligations on the lease are not subject to finding suitable sublessee(s).

On February 1, 2022, the Company declared a year-end dividend of $0.53 per share of its Class A common stock which was paid on February 25, 2022 to holders of record on February 11, 2022.

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Significant Accounting Policies (Policies)

12 Months Ended

Dec. 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. The consolidation guidance requires an analysis to determine if an entity should be evaluated for consolidation using the voting interest entity (“VOE”) model or the variable interest entity (“VIE”) model. Under the VOE model, controlling financial interest is generally defined as a majority ownership of voting interests. Under the VIE model, controlling financial interest is established if the entity is determined to be the primary beneficiary, which is defined as (i) the power to direct activities that most significantly impact the economic performance of the entity and (ii) the right to receive potentially significant benefits or the obligation to absorb potentially significant losses.

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 or a voting 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.

During June of 2021, the Company provided the initial cash investment for the launch of a Pzena mutual fund, the Pzena International Value Fund. Due to its series fund structure, registration, and compliance with the requirements of the Investment Company Act of 1940, the fund is analyzed for consolidation under the voting interest model. As a result of the Company's initial interests, it consolidated the Pzena International Value Fund through September 17, 2021. During September of 2021, due to additional subscriptions into the Pzena International Value Fund, the Company's ownership decreased below the threshold for consolidation under the voting interest model. As the Company was no longer deemed to control the fund, it deconsolidated the entity and removed the related assets, liabilities and non-controlling interest from the Company’s consolidated statements of financial condition and classified the Company's remaining investment as an equity method investment. During December of 2021, due to additional contributions from the Company into the Pzena International Value Fund, the Company's ownership increased above the threshold for consolidation under the voting interest model. As of December 31, 2021, Pzena International Value Fund’s $20.1 million in net assets were included in the Company’s consolidated statements of financial condition.

During September of 2021, the Company redeemed its investment in Pzena Investment Management Special Situations, 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 December of 2021, the Company provided the initial cash investment for the launch of the Pzena Emerging Markets Select Value Fund, a new sub-fund through Pzena Value Funds plc. Due to its fund structure, the fund is analyzed for consolidation under the voting interest model. As a result of the Company's initial interests, it consolidated the Pzena Emerging Markets Select Value Fund as of December 31, 2021. At December 31, 2021, Emerging Markets Select Value Fund’s $10.3 million in net assets were included in the Company’s Consolidated Statements of Financial Condition.

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 noncontrolling 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 December 31, 2021 and 2020, Pzena Global Focused Value Fund’s $26.7 million and $3.6 million, respectively, 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 continue to 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 $234.7 million and $265.9 million at December 31, 2021 and 2020, respectively.

As of December 31, 2021 and 2020, in order to satisfy certain of the Company's obligations under its deferred compensation programs, the operating company had $1.8 million and $3.2 million in investments, respectively, in certain of these firm-sponsored vehicles, for which the Company was not deemed to be the primary beneficiary. The Company's exposure to risk in the non-consolidated VIEs is generally limited to any equity investment and any uncollected management fees. As of December 31, 2021 and 2020, the Company's maximum exposure to loss as a result of its involvement with the non-consolidated VIEs was $2.2 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 the Company’s consolidated financial condition or results of operations.

Management's Use of Estimates

Management’s Use of Estimates:

The preparation of 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 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 their contractual terms. Advisory fee income also includes performance fees that may be earned by the Company depending on the investment return of 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 preferred method identified in 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 is presented net of fund expense cap reimbursements.

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

	For the Years Ended December 31,
Revenue	2021			2020
	(in thousands)
Separately Managed Accounts
Asset-Based Fees	$	102,841		$	74,725
Performance-Based Fees		—			—
Total Separately Managed Fees		102,841			74,725
Sub-Advised Accounts
Asset-Based Fees	$	80,990		$	52,741
Impact of Fulcrum Fees1		(3,776	)		(4,027	)
Performance-Based Fees		—			—
Total Sub-Advised Fees		77,214			48,714
Pzena Funds
Asset-Based Fees	$	20,096		$	15,154
Expense Cap Reimbursements		(909	)		(1,052	)
Performance-Based Fees		92			1,078
Total Pzena Funds Fees		19,279			15,180
Total	$	199,334		$	138,619

1Represents 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 December 31, 2021 and 2020, Cash and Cash Equivalents was $81.1 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 December 31, 2021, and 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.

	For the Years Ended December 31,
	2021		2020		2019
	(in thousands)
Cash and Cash Equivalents	$	81,133	$	65,534	$	52,480
Restricted Cash		1,056		1,050		1,036
Total	$	82,189	$	66,584	$	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 and trading debt securities 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, 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 are recorded at the amount of capital reported by the private investment partnership or mutual fund. The capital account reflects any contributions paid to, distributions received from, and equity earnings of, the entities. The earnings of these investments are recognized in 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. For the years ended December 31, 2021 and 2020, no impairment losses were recognized.

Securities Valuation

Securities Valuation:

Investments in equity securities 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 securities 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, 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. For the years ended December 31, 2021 and 2020, there were no client relationships representing more than 10% of the Company's revenue. At December 31, 2021 and 2020, no allowance for doubtful accounts has been deemed necessary.

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, 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. Capitalized internal-use software development costs are amortized on a straight-line basis over three years from the date of implementation.

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 a “C” corporation under the Internal Revenue Code, and is 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.

Judgment is required in evaluating the Company's uncertain tax positions and determining its provision for income taxes. The Company establishes reserves 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.

The Company’s purchase of membership units of the operating company concurrent with the 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 (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 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 deductions 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 computation of inside basis requires management to make judgments in estimating the components included in the inside basis as of the date of the Exchange (i.e., cash received by the Company on hypothetical sale of assets, allocation of gain/loss to the Company at the time of the Exchange taking into account complex partnership tax rules). In addition, management estimates the period of time that may generate cash tax savings of such tax attributes and the realizability of the tax attributes. 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.

Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount that is more-likely-than-not to be realized. At December 31, 2021 and 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.

Foreign Currency

Foreign Currency:

The functional 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/ (loss) 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 the consolidated statements of operations. For the year ended December 31, 2021, the Company recorded $0.9 million of other comprehensive losses associated with foreign currency translation adjustments. For the year ended December 31, 2020, the Company recorded approximately $0.6 million of other comprehensive income 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 transparency 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 certain cash equivalents and equity investments held at fair value. Cash investments in actively traded money market funds are measured at net asset values. Equity securities are exchange-traded securities with quoted prices in active markets. The fair value of investments in mutual funds are based on 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 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)

12 Months Ended

Dec. 31, 2021

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Summary of entities

The Company has consolidated the results of operations and financial condition of the following entities as of December 31, 2021:

Legal Entity	Type of Entity (Date of Formation)	Ownership at December 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 (1/08/2015)		100.0	%
Pzena Investment Management Europe Limited	Irish Private Company Limited by Shares (07/08/2021)		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 International Small Cap Value Fund, a series of Advisors Series Trust	Open-end Management Investment Company, series of Delaware Statutory Trust (6/28/2018)		51.3	%
Pzena International Value Fund, a series of Advisors Series Trust	Open-end Management Investment Company, series of Delaware Statutory Trust (6/27/2021)		50.7	%
Pzena Global Focused Value Fund	Australian Registered Investment Scheme (6/10/2016)		15.9	%

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Significant Accounting Policies (Tables)

12 Months Ended

Dec. 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 years ended December 31, 2021, and 2020:

	For the Years Ended December 31,
Revenue	2021			2020
	(in thousands)
Separately Managed Accounts
Asset-Based Fees	$	102,841		$	74,725
Performance-Based Fees		—			—
Total Separately Managed Fees		102,841			74,725
Sub-Advised Accounts
Asset-Based Fees	$	80,990		$	52,741
Impact of Fulcrum Fees1		(3,776	)		(4,027	)
Performance-Based Fees		—			—
Total Sub-Advised Fees		77,214			48,714
Pzena Funds
Asset-Based Fees	$	20,096		$	15,154
Expense Cap Reimbursements		(909	)		(1,052	)
Performance-Based Fees		92			1,078
Total Pzena Funds Fees		19,279			15,180
Total	$	199,334		$	138,619

1Represents 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.

	For the Years Ended December 31,
	2021		2020		2019
	(in thousands)
Cash and Cash Equivalents	$	81,133	$	65,534	$	52,480
Restricted Cash		1,056		1,050		1,036
Total	$	82,189	$	66,584	$	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.

	For the Years Ended December 31,
	2021		2020		2019
	(in thousands)
Cash and Cash Equivalents	$	81,133	$	65,534	$	52,480
Restricted Cash		1,056		1,050		1,036
Total	$	82,189	$	66,584	$	53,516

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Compensation and Benefits (Tables)

12 Months Ended

Dec. 31, 2021

Summary of compensation and benefits expenses to employees and members

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

	For the Years Ended December 31,
	2021		2020
	(in thousands)
Cash Compensation and Other Benefits	$	61,248	$	55,283
Non-Cash Compensation		15,824		13,204
Total Compensation and Benefits Expense	$	77,072	$	68,487

Schedule of share based compensation activity

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 awards of Class B-1 units of the operating company, Delayed Exchange Class B units, phantom Delayed Exchange Class B units, options to purchase shares of Class A common stock, and shares of Class A common stock awarded for the years ended December 31, 2021 and 2020, are as follows:

	For the Years Ended December 31,
	2021				2020
	Amount		Fair Value1		Amount		Fair Value1
Class B-1 Units2		1,456,753	$	2.41		2,092,879	$	3.98
Delayed Exchange Class B Units3		810,857	$	4.68		620,543	$	5.95
Deferred Compensation Phantom Delayed Exchange Class B Units4		—	$	—		188,283	$	4.67
Options to Purchase Shares of Class A Common Stock5		—	$	—		146,804	$	2.03
Restricted Shares of Class A Common Stock6		17,706	$	4.67		16,806	$	4.74

1Represents the weighted average grant date estimated fair value per share, unit, or option.

2Represents 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. Of the units issued during the year ended December 31, 2021, 1,400,305 units vest on the fifth anniversary of the grant date, 38,462 units vest ratably over four years, and 17,986 units vested immediately. Of the units issued during the year ended December 31, 2020, 2,032,879 units vest on the fifth anniversary of the grant date and 60,000 units vest ratably over four years. 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.

3Represents Class B units issued under the 2006 Equity Incentive Plan (as defined below). 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.

4Represents phantom Delayed Exchange Class B units issued under the 2006 Equity Incentive Plan and pursuant to the Bonus Plan (as defined below). These phantom units vest ratably over four years, but may not be exchanged pursuant to the Amended and Restated Operating Agreement of the operating company until seven years after the date they vest. These units are also not entitled to any benefits under the Tax Receivable Agreement between the Company and members of the operating company.

5Represents 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.

6Represents shares of Class A common stock issued under the 2007 Equity Incentive Plan. Of the shares issued during the year ended December 31, 2021, 12,353 shares vest immediately and 5,353 shares vest ratably over four years. The 16,806 shares issued during the year ended December 31, 2020, vest ratably over four years. 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, 2021, $6.8 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, 2022 are as follows:

	January 1,
	2022
	Amount		Fair Value1
Delayed Exchange Class B Units2		1,084,675	$	6.16
Restricted Shares of Class A Common Stock3		17,057	$	6.16

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

2Represents 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.

3Represents 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.

Schedule of weighted average assumptions

For each of the years ended December 31, 2021 and 2020, the Company issued options and units valued using the Black-Scholes option pricing model with the following weighted average assumptions:

	2021			2020
	January 1,			January 1,
Weighted Average Time Until Exercise	10 years			10 years
Expected Volatility		45	%		44	%
Risk-Free Rate		0.90	%		1.90	%
Dividend Yield		4.40	%		4.40	%

Schedule of exercise prices for stock options outstanding and exercisable

Exercise prices for options outstanding and exercisable as of December 31, 2021 are as follows:

	Options Outstanding						Options Exercisable
	Number Outstanding as of December 31, 2021		Weighted- Average Remaining Contractual Life		Weighted Average Exercise Price		Number Exercisable as of December 31, 2021		Weighted- Average Remaining Contractual Life		Weighted Average Exercise Price
$5.00 – $10.00		5,308,921		5.7	$	7.02		1,215,769		6.1	$	6.90
$10.00 – $15.00		1,392,134		1.7		13.19		522,134		0.6		12.88
$5.00 – $15.00		6,701,055		4.8	$	8.30		1,737,903		4.4	$	8.69

Summary of the option activity

The following is a summary of the option activity for the two years ended December 31, 2021:

	For the Years Ended December 31,
	2021					2020
	Options Outstanding			Weighted Average Exercise Price		Options Outstanding			Weighted Average Exercise Price
Beginning Balance		6,762,389		$	8.27		6,779,677		$	8.24
Options Granted1		—			—		189,539			7.65
Options Cancelled		—			—		(8,426	)		7.58
Options Forfeited		—			—		(178,740	)		6.57
Options Exercised		(61,334	)		4.77		(19,661	)		7.58
Ending Balance		6,701,055		$	8.30		6,762,389		$	8.27

1Options granted for the year ended December 31, 2020 include 189,539 options to purchase shares of Class A common stock.

Schedule of aggregate intrinsic value

Based on the closing market price of the Company’s Class A common stock on December 31, 2021, the aggregate intrinsic value of the Company’s options was as follows:

	Options Outstanding		Options Exercisable
	(in thousands)
Aggregate Intrinsic Value	$	12,989	$	3,130

Summary of Phantom Class B Units and Phantom Delayed Exchange Class B Units that vest ratably

Phantom Delayed Exchange Class B units issued pursuant to the Bonus Plan, which vest ratably over four years, are summarized as follows:

	For the Years Ended December 31,
	2021					2020
	Phantom Units Outstanding			Weighted Average Price		Phantom Units Outstanding			Weighted Average Price
Beginning Balance		472,302		$	5.57		503,869		$	6.33
Phantom Delayed Exchange Class B Units Issued1		-			-		188,283			4.67
Vesting of Phantom Delayed Exchange Class B Units1		(201,523	)		5.97		(208,879	)		6.56
Phantom Delayed Exchange Class B Units Forfetied1		-			-		(10,971	)		6.04
Ending Balance		270,779		$	5.29		472,302		$	5.57

1Represents phantom Delayed Exchange Class B units issued under the 2006 Equity Incentive Plan. These phantom units vest ratably over four years, but may not be exchanged pursuant to the Amended and Restated Operating Agreement of the operating company until seven years after the date they vest. These units are also not entitled to any benefits under the Tax Receivable Agreement between the Company and members of the operating company.

Phantom Class B units and Phantom Delayed Exchange Class B units issued pursuant to the 2006 Equity Incentive Plan, which vest ratably over 10 years and are not eligible to receive dividends or dividend equivalents until vested, are summarized as follows:

	For the Years Ended December 31,
	2021					2020
	Phantom Units Outstanding			Weighted Average Price		Phantom Units Outstanding			Weighted Average Price
Beginning Balance		3,108,154		$	4.00		3,734,050		$	4.05
Phantom Delayed Exchange Class B Units Issued		—			—		—			—
Vesting of Phantom Class B Units		(626,158	)		4.29		(625,896	)		4.29
Phantom Class B Units Forfeited		—			—		—			—
Ending Balance		2,481,996		$	3.93		3,108,154		$	4.00

Units and shares remaining available for future issuance

As of December 31, 2021, the total units and shares remaining available for future issuance under the equity incentive plans are as follows:

Plan	Number of Securities Remaining Available For Future Issuance Under Equity Incentive Plans
Pzena Investment Management, LLC 2006 Equity Incentive Plan		4,984,985
Pzena Investment Management, Inc. 2007 Equity Incentive Plan		6,555,791
Total		11,540,776

Class B-1 Unit

Schedule of share based compensation activity

The following is a summary of the Class B-1 unit activity for the two years ended December 31, 2021:

	For the Years Ended December 31,
	2021				2020
	Units Outstanding		Weighted Average Threshold Price		Units Outstanding		Weighted Average Threshold Price
Beginning Balance		5,775,952	$	8.15		3,683,073	$	8.15
Units Granted1		1,456,753		7.06		2,092,879		8.15
Units Cancelled		—		—		—		—
Units Forfeited		—		—		—		—
Units Exercised		—		—		—		—
Ending Balance		7,232,705	$	7.93		5,775,952	$	8.15

1Amounts reflected include the impact of a modification as of May 1, 2020, which resulted in the cancellation of 166,804 Class B-1 units.

Schedule of exercise prices for stock options outstanding and exercisable

Exercise prices for Class B-1 units outstanding and exercisable as of December 31, 2021 are as follows:

	Units Outstanding				Units Exercisable
	Number Outstanding as of December 31, 2021		Weighted Average Threshold Price		Number Exercisable as of December 31, 2021		Weighted Average Threshold Price
$5.00 – $10.00		7,214,719	$	7.92		3,709,776	$	8.15
$10.00 – $15.00		17,986		11.01		17,986		11.01
$5.00 – $15.00		7,232,705	$	7.93		3,727,762	$	8.16

Schedule of aggregate intrinsic value

Based on the closing market price of the Company’s Class A common stock on December 31, 2021, the aggregate intrinsic value of the Company’s Class B-1 units was as follows:

	Units Outstanding		Units Exercisable
	(in thousands)
Aggregate Intrinsic Value	$	11,164	$	4,914

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Earnings per Share (Tables)

12 Months Ended

Dec. 31, 2021

Earnings Per Share [Abstract]

Summary of basic earnings per share

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

	For the Years Ended December 31,
	2021		2020
	(in thousands, except share and per share amounts)
Net Income Allocated to:
Class A Common Stock	$	18,657	$	8,868
Participating Shares of Restricted Class A Common Stock		22		6
Net Income for Basic Earnings Per Share	$	18,679	$	8,874
Basic Weighted-Average Shares Outstanding		17,394,327		17,196,939
Add: Participating Shares of Restricted Class A Common Stock1		20,367		11,235
Total Basic Weighted-Average Shares Outstanding		17,414,694		17,208,174
Basic Earnings per Share	$	1.07	$	0.52

1Certain 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 years ended December 31, 2021 and 2020, the Company’s diluted net income was determined as follows:

	For the Years Ended December 31,
	2021			2020
	(in thousands)
Net Income Attributable to Non-Controlling Interests of Pzena Investment Management, LLC	$	86,781		$	42,421
Less: Assumed Corporate Income Taxes		(21,799	)		(10,529	)
Assumed After-Tax Income of Pzena Investment Management, LLC		64,982			31,892
Net Income of Pzena Investment Management, Inc.		18,679			8,874
Diluted Net Income	$	83,661		$	40,766

Summary of diluted earnings per share

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

	For the Years Ended December 31,
	2021		2020
	(In thousands, except share and per share amounts)
Diluted Net Income Allocated to:
Class A Common Stock	$	76,421	$	37,732
Participating Shares of Restricted Class A Common Stock		22		6
Participating Class B Units and Class B-1 Units		7,218		3,028
Total Diluted Net Income Attributable to Shareholders	$	83,661	$	40,766
Basic Weighted-Average Shares Outstanding		17,414,694		17,208,174
Dilutive Effect of Class B Units		55,037,164		54,156,631
Dilutive Effect of Options1		1,586,602		12,637
Dilutive Effect of Phantom Units		2,687,583		1,874,199
Dilutive Effect of Restricted Shares of Class A Common Stock2		33,231		12,660
Dilutive Weighted-Average Shares Outstanding		76,759,274		73,264,301
Add: Participating Class B Units and Class B-1 Units3		7,248,364		5,879,409
Total Dilutive Weighted-Average Shares Outstanding		84,007,638		79,143,710
Diluted Earnings per Share	$	1.00	$	0.52

1Represents the dilutive effect of options to purchase Class B units, Delayed Exchange Class B units, and Class A common stock.

2Certain 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.

3Unvested Class B Units granted to employees have nonforfeitable rights to dividends 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.

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Shareholders' Equity (Tables)

12 Months Ended

Dec. 31, 2021

Stockholders' Equity Note [Abstract]

Incremental assets and liabilities assumed in exchanges

The incremental assets and liabilities assumed in the exchanges were recorded on December 22, 2021, June 10, 2021, and December 22, 2020 as follows:

	December 22,  2021			June 10,  2021			December 22,  2020
	(in thousands)
Pzena Investment Management, LLC Members' Capital	$	372		$	9,279		$	6,694
Pzena Investment Management, LLC Accumulated Deficit		(324	)		(8,210	)		(6,072	)
Realizable Deferred Tax Asset		-			2,493			506
Net Tax Receivable Liability to Converting Unitholders		-			(2,119	)		(430	)
Total	$	48		$	1,443		$	698
Common Stock, at Par	$	-		$	8		$	5
Additional Paid-in Capital		48			1,435			693
Total	$	48		$	1,443		$	698

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Non-Controlling Interests (Tables)

12 Months Ended

Dec. 31, 2021

Noncontrolling Interest [Abstract]

Non-controlling interest income

Non-Controlling Interests in the operations of the Company’s operating company and consolidated subsidiaries are comprised of the following:

	For the Years Ended December 31,
	2021		2020
	(in thousands)
Non-Controlling Interests of Pzena Investment Management, LLC	$	86,781	$	42,421
Non-Controlling Interests of Consolidated Subsidiaries		1,017		243
Non-Controlling Interests	$	87,798	$	42,664

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Investments (Tables)

12 Months Ended

Dec. 31, 2021

Investments, Debt and Equity Securities [Abstract]

Summary of investments

The following is a summary of Investments:

	As of
	December 31, 2021		December 31, 2020
	(in thousands)
Equity Investments, at Fair Value
Equity Securities	$	82,900	$	18,739
Mutual Funds		7,319		7,314
Total Equity Investments, at Fair Value	$	90,219	$	26,053
Investment in Equity Method Investees		5,287		8,051
Total	$	95,506	$	34,104

Investments, at Fair Value

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

	Cost		Unrealized Gain/(Loss)			Fair Value
	(in thousands)
Equity Securities	$	80,480	$	2,420		$	82,900
Mutual Funds		7,328		(9	)		7,319
Total Equity Investments, at Fair Value	$	87,808	$	2,411		$	90,219

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

	Cost		Unrealized Gain/(Loss)			Fair Value
	(in thousands)
Equity Securities	$	259	$	(22	)	$	237
Total Securities Sold Short, at Fair Value	$	259	$	(22	)	$	237

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:

	Cost		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)

12 Months Ended

Dec. 31, 2021

Fair Value Disclosures [Abstract]

Schedule of Fair Value Measurements

The following tables present these instruments’ fair value at December 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		82,163		737		—		82,900
Mutual Funds		7,319		—		—		7,319
Total	$	89,490	$	737	$	—	$	90,227
Liabilities
Securities Sold Short		237		—		—		237
Total	$	237	$	—	$	—	$	237

The following tables present 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	$	25,328	$	733	$	—	$	26,061
Liabilities
Securities Sold Short		714		—		—		714
Total	$	714	$	—	$	—	$	714

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Property and Equipment (Tables)

12 Months Ended

Dec. 31, 2021

Property, Plant and Equipment [Abstract]

Property and equipment

Property and equipment, net, is comprised of the following:

	As of
	December 31, 2021			December 31, 2020
	(in thousands)
Leasehold Improvements	$	6,967		$	6,929
Furniture and Fixtures		1,591			1,591
Computer Hardware		880			745
Computer Software		879			879
Office Equipment		212			212
Capitalized Internal-Use Software Development Costs		245			—
Total		10,773			10,356
Less: Accumulated Depreciation and Amortization		(7,086	)		(5,980	)
Total	$	3,687		$	4,376

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Commitments and Contingencies (Tables)

12 Months Ended

Dec. 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 Years Ended December 31,
	2021		2020
	(in thousands)
Operating lease expense	$	2,503	$	2,282
Supplemental cash flow information:
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	2,521	$	2,330
Right-of-use assets obtained in exchange for lease obligations	$	939	$	—

Information Regarding Operating Leases

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

	As of
	December 31, 2021
	(in thousands)
Operating lease right-of-use assets	$	10,014
Operating lease liabilities	$	10,323
Weighted-average remaining lease term (in years)		3.8
Weighted-average discount rate		4.3	%

Future Minimum Lease Payments

Future minimum lease payments are as follows:

Year Ending December 31,	Minimum Payments
	(in thousands)
2022		3,026
2023		2,981
2024		2,607
2025		2,607
2026		-
2027 and thereafter		-
Total undiscounted lease payments		11,221
Less discount		(898	)
Total lease liabilities	$	10,323

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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2021

Income Tax Disclosure [Abstract]

Components of income tax expense

The components of the income tax expense are as follows:

	For the Year Ended December 31,
	2021			2020
	(in thousands)
Current Provision:
Unincorporated and Other Business Taxes1	$	1,710		$	937
Local Corporate Tax		118			—
State Corporate Tax		123			15
Federal Corporate Tax		1,060			(103	)
Total Current Provision	$	3,011		$	849
Deferred Provision:
Unincorporated and Other Business Taxes1	$	(126	)	$	(79	)
Local Corporate Tax		447			304
State Corporate Tax		467			267
Federal Corporate Tax		3,999			2,946
Total Deferred Provision	$	4,787		$	3,438
Total Income Tax Expense	$	7,798		$	4,287

During each of the years ended December 31, 2021 and 2020, the operating company recognized a $2.5 million and $1.6 million tax benefit associated with the reversal of uncertain tax position liabilities and interest related to unincorporated and other business tax expenses,

Differences between provisions for income taxes reported for financial reporting purposes and applicable statutory rates

A reconciliation between the provision for income taxes reported for financial reporting purposes, and the application of the statutory U.S. Federal tax rate to the reported income before income taxes for the years ended December 31, 2021 and 2020, were as follows:

	For the Year Ended December 31,
	2021						2020
	Amount			% of Pretax Income			Amount			% of Pretax Income
	(in thousands, except % amounts)
Federal Corporate Tax	$	23,998			21.0	%	$	11,723			21.0	%
State and Local Corporate Tax, net of Federal Benefit		1,155			1.0	%		586			1.0	%
Unincorporated and Other Business Tax1		1,251			1.1	%		678			1.2	%
Non-Controlling Interests		(18,438	)		(16.1	)%		(8,959	)		(16.0	)%
Non-Deductible Share-Based Compensation		20			0.0	%		22			0.0	%
Other		(189	)		-0.2	%		237			0.4	%
Income Tax Expense	$	7,798			6.8	%	$	4,287			7.7	%

1During each of the years ended December 31, 2021 and 2020, the operating company recognized a $2.5 million and $1.6 million tax benefit associated with the reversal of uncertain tax position liabilities and interest related to unincorporated and other business tax expenses, respectively.

Schedule of unrecognized tax benefits roll forward

A reconciliation of the beginning and ending amount of total unrecognized tax benefits for the years ended December 31, 2021 and 2020 are as follows:

	For the Year Ended December 31, 2021
	(in thousands)
Balance at December 31, 2020	$	7,612
Decreases Related to Prior Year Tax Positions		(1,870	)
Increases Related to Current Year Tax Positions		2,593
Balance at December 31, 2021	$	8,335

	For the Year Ended December 31, 2020
	(in thousands)
Balance at December 31, 2019	$	7,193
Decreases Related to Prior Year Tax Positions		(1,210	)
Increases Related to Current Year Tax Positions		1,629
Balance at December 31, 2020	$	7,612

Deferred tax assets and liabilities

The change in the Company’s deferred tax assets for the year ended December 31, 2021, is summarized as follows:

	Section 754			Other			Total
	(in thousands)
Balance at December 31, 2020	$	24,255		$	5,576		$	29,831
Deferred Tax (Expense)		(4,452	)		(334	)		(4,786	)
Tax Impact of Transactions with Non-Controlling Shareholders		—			(1,599	)		(1,599	)
Unit Exchange		2,493			(53	)		2,440
Balance at December 31, 2021	$	22,296		$	3,590		$	25,886

The change in the Company’s deferred tax liabilities, which is included in other liabilities on the Company’s consolidated statements of financial condition, for the year ended December 31, 2021, is summarized as follows:

	Total
	(in thousands)
Balance at December 31, 2020	$	(1	)
Deferred Tax (Expense)		(1	)
Balance at December 31, 2021	$	(2	)

The change in the Company’s deferred tax assets for the year ended December 31, 2020 is summarized as follows:

	Section 754			Other			Total
	(in thousands)
Balance at December 31, 2019	$	27,953		$	4,730		$	32,683
Deferred Tax (Expense)		(4,204	)		771		$	(3,433	)
Tax Impact of Transactions with Non-Controlling Shareholders		—			(239	)	$	(239	)
Unit Exchange		506			314		$	820
Balance at December 31, 2020	$	24,255		$	5,576		$	29,831

The change in the Company’s deferred tax liabilities for the year ended December 31, 2020 is summarized as follows:

	Total
	(in thousands)
Balance at December 31, 2019	$	(2	)
Deferred Tax (Expense)		1
Balance at December 31, 2020	$	(1	)

Net value of the liability to selling and converting shareholders

The change in the Company’s liability to selling and converting shareholders for the years ended December 31, 2021 and 2020, is summarized as follows:

	For the Year Ended December 31,
	2021			2020
	(in thousands)
Beginning Balance	$	25,701		$	28,652
Unit Exchanges		2,119			430
Tax Receivable Agreement Payments		(2,486	)		(2,881	)
Change in Liability		(655	)		(500	)
Ending Balance	$	24,679		$	25,701

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Organization (Details)	12 Months Ended
	Dec. 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 (1/08/2015)
Operating company's ownership	100.00%
Pzena Investment Management Europe, Limited
Entity Information [Line Items]
Type of Entity (Date of Formation)	Irish Private Company Limited by Shares (07/08/2021)
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 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	51.30%
Pzena International 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 (6/27/2021)
Operating company's ownership	50.70%
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	15.90%

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Significant Accounting Policies - Basis of Presentation (Details) - USD ($)	Dec. 31, 2021	Dec. 31, 2020
Variable Interest Entity [Line Items]
Equity method investment, assets	$ 264,300,000	$ 188,687,000
Maximum loss exposure	2,200,000	3,600,000
Variable Interest Entity, Not Primary Beneficiary
Variable Interest Entity [Line Items]
Equity method investment, assets	1,800,000	3,200,000
Equity Method Investment, Nonconsolidated Investee or Group of Investees | Pzena International Value Fund
Variable Interest Entity [Line Items]
Equity method investment, assets	20,100,000
Equity Method Investment, Nonconsolidated Investee or Group of Investees | Pzena Global Focused Value Fund
Variable Interest Entity [Line Items]
Equity method investment, assets	26,700,000	3,600,000
Equity Method Investment, Nonconsolidated Investee or Group of Investees | VIEs that are not consolidated
Variable Interest Entity [Line Items]
Equity method investment, assets	234,700,000	$ 265,900,000
Equity Method Investment, Nonconsolidated Investee or Group of Investees | Emerging Markets Select Value Fund
Variable Interest Entity [Line Items]
Equity method investment, assets	$ 10,300,000

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Significant Accounting Policies - Additional Information (Details)	12 Months Ended
	Dec. 31, 2021 USD ($) Segment		Dec. 31, 2020 USD ($)		Dec. 31, 2019 USD ($)
Accounting Standards Update and Change in Accounting Principle [Abstract]
Change in Accounting Principle, Accounting Standards Update, Adopted [true false]	true
Change in Accounting Principle, Accounting Standards Update, Adoption Date	Jan. 01, 2021
Change in Accounting Principle, Accounting Standards Update, Immaterial Effect [true false]	true
Accounting Standards Update [Extensible Enumeration]	us-gaap:AccountingStandardsUpdate201912Member
Revenue Recognition
Contract measurement period (in years)	3 years
Cash and Cash Equivalents
Cash	$ 81,133,000	[1]	$ 65,534,000	[1]	$ 52,480,000
Restricted Cash	1,056,000		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
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%
Valuation allowance on deferred tax assets	$ 0		0
Foreign Currency
Other comprehensive losses (income) associated with foreign currency translation adjustments	$ (866,000)		$ 565,000
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
Internal-use Software Developments
Property Plant and Equipment
Property and equipment, useful life (years)	3 years

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

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Significant Accounting Policies - Disaggregation of Revenue (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Disaggregation of Revenue [Line Items]
Revenues	$ 199,334	$ 138,619
Asset-Based Fees
Disaggregation of Revenue [Line Items]
Revenues	102,841	74,725
Separately Managed Accounts
Disaggregation of Revenue [Line Items]
Revenues	102,841	74,725
Asset-Based Fees
Disaggregation of Revenue [Line Items]
Revenues	80,990	52,741
Impact of Fulcrum Fees
Disaggregation of Revenue [Line Items]
Revenues	(3,776)	(4,027)
Sub-Advised Accounts
Disaggregation of Revenue [Line Items]
Revenues	77,214	48,714
Asset-Based Fees
Disaggregation of Revenue [Line Items]
Revenues	20,096	15,154
Expense Cap Reimbursements
Disaggregation of Revenue [Line Items]
Revenues	(909)	(1,052)
Performance-Based Fees
Disaggregation of Revenue [Line Items]
Revenues	92	1,078
Pzena Funds
Disaggregation of Revenue [Line Items]
Revenues	$ 19,279	$ 15,180

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Significant Accounting Policies - Cash, Cash Equivalents, and Restricted Cash (Details) - USD ($) $ in Thousands	Dec. 31, 2021		Dec. 31, 2020		Dec. 31, 2019
Cash and Cash Equivalents
Cash	$ 81,133	[1]	$ 65,534	[1]	$ 52,480
Restricted Cash	1,056		1,050		1,036
Total	$ 82,189		$ 66,584	[2]	$ 53,516	[2]

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

[2] Net consolidation (Deconsolidation) of Sponsored Investment Funds have been reclassified to conform to the current year presentation.

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Compensation and Benefits - Schedule Compensation and Benefits Expense (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Share-based Payment Arrangement [Abstract]
Cash Compensation and Other Benefits	$ 61,248	$ 55,283
Non-Cash Compensation	15,824	13,204	[1]
Total Compensation and Benefits Expense	$ 77,072	$ 68,487

[1] Net consolidation (Deconsolidation) of Sponsored Investment Funds have been reclassified to conform to the current year presentation.

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Compensation and Benefits - Non-cash Compensation Awards (Details) - $ / shares			12 Months Ended
	Jan. 01, 2022	May 01, 2020	Dec. 31, 2021	Dec. 31, 2020
Compensation Arrangements [Line Items]
Shares available for future issuance			11,540,776
Class B-1 Units
Compensation Arrangements [Line Items]
Grants in period (in shares)			1,456,753	2,092,879
Equity Incentive Plan 2006
Compensation Arrangements [Line Items]
Shares available for future issuance			4,984,985
Equity Incentive Plan 2006 | Delayed Exchange Class B Units
Compensation Arrangements [Line Items]
Grants in period (in shares)			810,857	620,543
Grants in period, weighted average grant date fair value (USD per share)			$ 4.68	$ 5.95
Equity Incentive Plan 2006 | Delayed Exchange Class B Units | Subsequent Event
Compensation Arrangements [Line Items]
Grants in period (in shares)	1,084,675
Grants in period, weighted average grant date fair value (USD per share)	$ 6.16
Equity Incentive Plan 2006 | Deferred Compensation Phantom Delayed Exchange Class B Units
Compensation Arrangements [Line Items]
Grants in period (in shares)				188,283
Grants in period, weighted average grant date fair value (USD per share)				$ 4.67
Vesting period for units (in years)				4 years
Period after vesting for unit exchange (in years)				7 years
Equity Incentive Plan 2006 | Restricted Shares of Class A Common Stock | Subsequent Event
Compensation Arrangements [Line Items]
Grants in period (in shares)	17,057
Grants in period, weighted average grant date fair value (USD per share)	$ 6.16
2007 Equity Incentive Plan
Compensation Arrangements [Line Items]
Shares available for future issuance			6,555,791
2007 Equity Incentive Plan | Options to Purchase Shares of Class A Common Stock
Compensation Arrangements [Line Items]
Grants in period (in shares)				146,804
Grants in period, weighted average grant date fair value (USD per share)				$ 2.03
Vesting period for units (in years)		5 years
Shares available for future issuance		146,804
2007 Equity Incentive Plan | Restricted Shares of Class A Common Stock
Compensation Arrangements [Line Items]
Grants in period (in shares)			17,706	16,806
Grants in period, weighted average grant date fair value (USD per share)			$ 4.67	$ 4.74
Vesting period for units (in years)			4 years	4 years
Shares available for future issuance		16,806
Ratably vests over four years (in shares)			5,353	16,806
Vests in period (in shares)			12,353
2007 Equity Incentive Plan | Class B-1 Units
Compensation Arrangements [Line Items]
Grants in period (in shares)			1,456,753	2,092,879
Grants in period, weighted average grant date fair value (USD per share)			$ 2.41	$ 3.98
Shares cancelled		166,804
Vesting period for units (in years)			4 years	4 years
Vests on fifth anniversary (in shares)			1,400,305	2,032,879
Ratably vests over four years (in shares)			38,462	60,000
Vests in period (in shares)			17,986

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Compensation and Benefits - Narrative (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		12 Months Ended
	Dec. 31, 2020	Jun. 30, 2020	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Compensation Arrangements [Line Items]
Deferred compensation liability	$ 5,039		$ 6,840	$ 5,039
Shares available for future issuance			11,540,776
Options grants in the the period, weighted average grant date fair value (in dollars per share)				$ 1.84
Options Exercised (in shares)			61,334	19,661
Unrecorded compensation expense	$ 34,800		$ 42,100	$ 34,800
Phantom Shares of Class A Common Stock
Compensation Arrangements [Line Items]
Distributions made under Director Plan (in shares)			75,038	78,416
Phantom Shares of Class A Common Stock | Director Plan
Compensation Arrangements [Line Items]
Deferred compensation percentage of compensation directors elected			100.00%
Distributions made under Director Plan (in shares)			11,070	0
Shares forfeited		49,673
Shares outstanding (in shares)	533,444		597,412	533,444
Reinstated compensation percentage of compensation directors elected	50.00%
Class B-1 Unit
Compensation Arrangements [Line Items]
Weighted average grant date fair value	$ 3.98		$ 2.41	$ 3.98
Units Exercised (in shares)			0	0
Aggregate intrinsic value			$ 11,164
Options to Purchase Operating Company Class B Units
Compensation Arrangements [Line Items]
Shares forfeited				187,166
Net Class B units issued from exercise of options			32,947	603
Redemption of Class B units for cashless exercise of options (in shares)			28,387	19,058
Options to Purchase Operating Company Class B Units | Contingent Options to Purchase Shares of Class A Common Stock
Compensation Arrangements [Line Items]
Number of shares vested during period			500,000	0
Restricted Shares of Class A Common Stock | Director Plan
Compensation Arrangements [Line Items]
Shares available for future issuance			5,074
Vesting, description			These restricted shares will vest quarterly of the calendar year.
Equity Incentive Plan 2006
Compensation Arrangements [Line Items]
Cash compensation paid in the form of equity			$ 6,800
Shares available for future issuance			4,984,985
Equity Incentive Plan 2006 | Delayed Exchange Class B Units
Compensation Arrangements [Line Items]
Exchange limitation period			7 years
Equity Incentive Plan 2006 | Phantom Class B Units
Compensation Arrangements [Line Items]
Vesting period for units (in years)			10 years
Weighted average grant date fair value	$ 4.00		$ 3.93	$ 4.00	$ 4.05
Bonus plan
Compensation Arrangements [Line Items]
Vesting period for units (in years)			4 years
Bonus plan | Phantom Class B Units
Compensation Arrangements [Line Items]
Vesting period for units (in years)			4 years

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Compensation and Benefits - Fair Value Assumptions (Details)	Jan. 01, 2021	Jan. 01, 2020
Share-based Payment Arrangement [Abstract]
Weighted Average Time Until Exercise	10 years	10 years
Expected Volatility	45.00%	44.00%
Risk-Free Rate	0.90%	1.90%
Dividend Yield	4.40%	4.40%

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Compensation and Benefits - Class B-1 Unit Activity (Details) - Class B-1 Unit - $ / shares		12 Months Ended
	May 20, 2020	Dec. 31, 2021	Dec. 31, 2020
Units Outstanding
Beginning Balance (in shares)		5,775,952	3,683,073
Grants in period (in shares)		1,456,753	2,092,879
Units Cancelled (in shares)	(166,804)
Units Exercised (in shares)		0	0
Ending Balance (in shares)		7,232,705	5,775,952
Weighted Average Threshold Price
Beginning Balance (in dollars per share)		$ 8.15	$ 8.15
Units Granted (in dollars per share)		7.06	8.15
Ending Balance (in dollars per share)		$ 7.93	$ 8.15
Units Cancelled (in shares)	166,804

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Compensation and Benefits - Exercise prices Units outstanding and exercisable (Details)	12 Months Ended
	Dec. 31, 2021 $ / shares shares
Share Based Compensation Shares Authorized Under Stock Option Plans Exercise Price Range [Line Items]
Exercise price range, lower range limit (in dollars per share)	$ 5.00
Exercise price range, upper range limit (in dollars per share)	$ 15.00
Units outstanding | shares	6,701,055
Units exercisable | shares	1,737,903
$10.00 – $15.00
Share Based Compensation Shares Authorized Under Stock Option Plans Exercise Price Range [Line Items]
Exercise price range, lower range limit (in dollars per share)	$ 10.00
Exercise price range, upper range limit (in dollars per share)	$ 15.00
Units outstanding | shares	1,392,134
Units exercisable | shares	522,134
Class B-1 Unit
Share Based Compensation Shares Authorized Under Stock Option Plans Exercise Price Range [Line Items]
Exercise price range, lower range limit (in dollars per share)	$ 5.00
Exercise price range, upper range limit (in dollars per share)	$ 15.00
Units outstanding | shares	7,232,705
Units outstanding, weighted average threshold price	$ 7.93
Units exercisable | shares	3,727,762
Units exercisable, weighted average threshold price	$ 8.16
Class B-1 Unit | $5.00 – $10.00
Share Based Compensation Shares Authorized Under Stock Option Plans Exercise Price Range [Line Items]
Exercise price range, lower range limit (in dollars per share)	5.00
Exercise price range, upper range limit (in dollars per share)	$ 10.00
Units outstanding | shares	7,214,719
Units outstanding, weighted average threshold price	$ 7.92
Units exercisable | shares	3,709,776
Units exercisable, weighted average threshold price	$ 8.15
Class B-1 Unit | $10.00 – $15.00
Share Based Compensation Shares Authorized Under Stock Option Plans Exercise Price Range [Line Items]
Exercise price range, lower range limit (in dollars per share)	10.00
Exercise price range, upper range limit (in dollars per share)	$ 15.00
Units outstanding | shares	17,986
Units outstanding, weighted average threshold price	$ 11.01
Units exercisable | shares	17,986
Units exercisable, weighted average threshold price	$ 11.01

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Compensation and Benefits - Class B-1 Closing Market Price (Details) - Class B-1 Unit $ in Thousands	Dec. 31, 2021 USD ($)
Compensation Arrangements [Line Items]
Aggregate Intrinsic Value, Units Outstanding	$ 11,164
Aggregate Intrinsic Value, Units Exercisable	$ 4,914

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Compensation and Benefits - Option Activity (Details) - $ / shares	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Options Outstanding
Options Exercised (in shares)	(61,334)	(19,661)
Options
Options Outstanding
Beginning Balance (in shares)	6,762,389	6,779,677
Options Granted (in shares)		189,539
Options Canceled (in shares)		(8,426)
Options Forfeited (in shares)		(178,740)
Options Exercised (in shares)	(61,334)	(19,661)
Ending Balance (in shares)	6,701,055	6,762,389
Weighted Average Exercise Price
Beginning Balance (in dollars per share)	$ 8.27	$ 8.24
Options Granted (in dollars per share)		7.65
Options Canceled (in dollars per share)		7.58
Options Forfeited (in dollars per share)		6.57
Options Exercised (in dollars per share)	4.77	7.58
Ending Balance (in dollars per share)	$ 8.30	$ 8.27
Restricted Shares of Class A Common Stock
Options Outstanding
Options Granted (in shares)		189,539

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Compensation and Benefits - Option Pricing (Details)	12 Months Ended
	Dec. 31, 2021 $ / shares shares
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Exercise price range, lower range limit (in dollars per share)	$ 5.00
Exercise price range, upper range limit (in dollars per share)	$ 15.00
Outstanding (in shares) | shares	6,701,055
Weighted- Average Remaining Contractual Life	4 years 9 months 18 days
Weighted Average Exercise Price (in dollars per share)	$ 8.30
Exercisable (in shares) | shares	1,737,903
Weighted- Average Remaining Contractual Life	4 years 4 months 24 days
Weighted Average Exercise Price (in dollars per share)	$ 8.69
$5.00 – $10.00
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Exercise price range, lower range limit (in dollars per share)	5.00
Exercise price range, upper range limit (in dollars per share)	$ 10.00
Outstanding (in shares) | shares	5,308,921
Weighted- Average Remaining Contractual Life	5 years 8 months 12 days
Weighted Average Exercise Price (in dollars per share)	$ 7.02
Exercisable (in shares) | shares	1,215,769
Weighted- Average Remaining Contractual Life	6 years 1 month 6 days
Weighted Average Exercise Price (in dollars per share)	$ 6.90
$10.00 – $15.00
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Exercise price range, lower range limit (in dollars per share)	10.00
Exercise price range, upper range limit (in dollars per share)	$ 15.00
Outstanding (in shares) | shares	1,392,134
Weighted- Average Remaining Contractual Life	1 year 8 months 12 days
Weighted Average Exercise Price (in dollars per share)	$ 13.19
Exercisable (in shares) | shares	522,134
Weighted- Average Remaining Contractual Life	7 months 6 days
Weighted Average Exercise Price (in dollars per share)	$ 12.88

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Compensation and Benefits - Closing Market Price (Details) $ in Thousands	Dec. 31, 2021 USD ($)
Share-based Payment Arrangement [Abstract]
Options Outstanding	$ 12,989
Options Exercisable	$ 3,130

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Compensation and Benefits - Phantom Units Activity (Details) - $ / shares	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Bonus plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period for units (in years)	4 years
Bonus plan | Deferred Compensation Phantom Class B Units
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward]
Beginning Balance (in shares)	472,302	503,869
Ending Balance (in shares)		472,302
Weighted Average Price
Beginning Balance, Weighted Average Price (in dollars per share)	$ 5.57	$ 6.33
Ending Balance, Weighted Average Price (in dollars per share)	$ 5.29	$ 5.57
Bonus plan | Phantom Class B Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period for units (in years)	4 years
Bonus plan | Phantom Delayed Exchange Class B Units
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward]
Beginning Balance (in shares)	472,302
Phantom Delayed Exchange Class B Units Issued (in shares)	0	188,283
Vesting of Phantom Class B Units (in shares)	(201,523)	(208,879)
Phantom Delayed Exchange Class B Units Forfetied (in shares)	0	(10,971)
Ending Balance (in shares)	270,779	472,302
Weighted Average Price
Phantom Delayed Class B Units, Weighted Average Price (in dollars per share)	$ 0	$ 4.67
Vesting of Phantom Class B Units, Weighted Average Price (in dollars per share)	$ 5.97	6.56
Phantom Class B Units Forfeited, Weighted Average Price (in dollars per share)		$ 6.04
Pzena Investment Management, LLC 2006 Equity Incentive Plan | Phantom Class B Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period for units (in years)	10 years
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward]
Beginning Balance (in shares)	3,108,154	3,734,050
Phantom Delayed Exchange Class B Units Issued (in shares)
Vesting of Phantom Class B Units (in shares)	(626,158)	(625,896)
Phantom Delayed Exchange Class B Units Forfetied (in shares)
Ending Balance (in shares)	2,481,996	3,108,154
Weighted Average Price
Beginning Balance, Weighted Average Price (in dollars per share)	$ 4.00	$ 4.05
Vesting of Phantom Class B Units, Weighted Average Price (in dollars per share)	4.29	4.29
Ending Balance, Weighted Average Price (in dollars per share)	$ 3.93	4.00
Pzena Investment Management, LLC 2006 Equity Incentive Plan | Phantom Delayed Exchange Class B Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period for units (in years)	10 years
Weighted Average Price
Phantom Delayed Class B Units, Weighted Average Price (in dollars per share)	$ 0	0
Phantom Class B Units Forfeited, Weighted Average Price (in dollars per share)	$ 0	$ 0

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Compensation and Benefits - Total Units and Shares Remaining Available for Future Issuance (Details)	Dec. 31, 2021 shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total units and shares remaining available for future issuance	11,540,776
Pzena Investment Management, LLC 2006 Equity Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total units and shares remaining available for future issuance	4,984,985
2007 Equity Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total units and shares remaining available for future issuance	6,555,791

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Employee Benefit Plans (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Retirement Benefits [Abstract]
Profit sharing and savings plan expenses recognized	$ 1.3	$ 1.1

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Earnings per Share - Calculation (Details) - USD ($) $ / shares in Units, $ in Thousands		12 Months Ended
		Dec. 31, 2021	Dec. 31, 2020
Computation of basic earnings per share [Abstract]
Net Income for Basic Earnings Per Share		$ 18,679	$ 8,874
Basic Weighted Average Shares Outstanding (in shares)		17,414,694	17,208,174
Basic Earnings per Share (in dollars per share)		$ 1.07	$ 0.52
Common Class A
Computation of basic earnings per share [Abstract]
Net Income for Basic Earnings Per Share		$ 18,657	$ 8,868
Basic Weighted Average Shares Outstanding (in shares)		17,394,327	17,196,939
Participating Shares of Restricted Class A Common Stock
Computation of basic earnings per share [Abstract]
Net Income for Basic Earnings Per Share		$ 22	$ 6
Basic Weighted Average Shares Outstanding (in shares)	[1]	20,367	11,235

[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.

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Earnings per Share - Diluted Net Income (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Diluted Net Income [Abstract]
Less: Net Income Attributable to Non-Controlling Interests	$ 87,798	$ 42,664
Net Income of Pzena Investment Management, Inc.	18,679	8,874
Diluted Net Income	83,661	40,766
Pzena Investment Management, LLC
Diluted Net Income [Abstract]
Net Income Attributable to Non-Controlling Interests	86,781	42,421
Less: Assumed Corporate Income Taxes	(21,799)	(10,529)
Less: Net Income Attributable to Non-Controlling Interests	64,982	31,892
Net Income of Pzena Investment Management, Inc.	18,679	8,874
Diluted Net Income	$ 83,661	$ 40,766

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Earnings per Share - Diluted Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands		12 Months Ended
		Dec. 31, 2021	Dec. 31, 2020
Diluted Net Income Allocated to:
Total Diluted Net Income Attributable to Shareholders		$ 83,661	$ 40,766
Basic Weighted Average Shares Outstanding (in shares)		17,414,694	17,208,174
Dilutive Effect of B Units (in shares)		55,037,164	54,156,631
Dilutive Effect of Options (in shares)	[1]	1,586,602	12,637
Dilutive Effect of Phantom Class B Units & Phantom Shares of Class A Common Stock (in shares)		2,687,583	1,874,199
Dilutive Effect of Restricted Shares of Class A Common Stock (in shares)	[2]	33,231	12,660
Diluted Weighted Average Common Shares Outstanding (in shares)		76,759,274	73,264,301
Participating Class B Units and Class B-1 Units (in shares)	[3]	7,248,364	5,879,409
Diluted Weighted-Average Shares Outstanding (in shares)	[4]	84,007,638	79,143,710
Diluted Earnings per Share (in dollars per share)		$ 1.00	$ 0.52
Options to Purchase Class B Units
Diluted Net Income Allocated to:
Antidilutive securities excluded from diluted EPS (in shares)		300,000	5,500,000
Options to Purchase Shares of Class A Common Stock
Diluted Net Income Allocated to:
Antidilutive securities excluded from diluted EPS (in shares)		600,000	200,000
Contingent Options to Purchase Shares of Class A Common Stock
Diluted Net Income Allocated to:
Antidilutive securities excluded from diluted EPS (in shares)		500,000	1,000,000.0
Common Class A
Diluted Net Income Allocated to:
Total Diluted Net Income Attributable to Shareholders		$ 76,421	$ 37,732
Basic Weighted Average Shares Outstanding (in shares)		17,394,327	17,196,939
Participating Shares of Restricted Class A Common Stock
Diluted Net Income Allocated to:
Total Diluted Net Income Attributable to Shareholders		$ 22	$ 6
Basic Weighted Average Shares Outstanding (in shares)	[5]	20,367	11,235
Participating Class B Units and Class B-1 Units
Diluted Net Income Allocated to:
Total Diluted Net Income Attributable to Shareholders		$ 7,218	$ 3,028

[1] Represents the dilutive effect of options to purchase Class B units, Delayed Exchange Class B units, and 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 dividends 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] The Company issues restricted shares of Class A common stock and the operating company issues 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 diluted earnings per share.

[5] 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)				12 Months Ended
	Dec. 22, 2021 shares	Jun. 10, 2021 shares	Dec. 22, 2020 shares	Dec. 31, 2021 USD ($) Vote $ / shares shares	Dec. 31, 2020 USD ($) $ / shares shares	Jul. 20, 2021 USD ($)	Apr. 19, 2018 USD ($)	Feb. 05, 2014 USD ($)	Apr. 24, 2012 USD ($)
Class of Stock [Line Items]
Amount authorized under stock repurchase program | $						$ 40,000,000	$ 30,000,000	$ 20,000,000	$ 10,000,000
Sale of Shares Under Equity Incentive Plan | $				$ 315,000	$ 2,295,000
Class B unit exchange for Company Class A common stock
Class of Stock [Line Items]
Number of class B units exchanged for equivalent class A common shares (in shares)	30,414	760,000	494,316
Common Class A
Class of Stock [Line Items]
Economic interest held in company by class of stock (in hundredths)				23.50%	24.20%
Percentage of right to future income and distributions				21.60%	22.40%
Par value (in dollars per share) | $ / shares				$ 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)				865,556	1,211,573
Purchased under repurchase authorization at an average price per share (in dollars per share) | $ / shares				$ 9.99	$ 6.32
Common Class A | Common Stock
Class of Stock [Line Items]
Common stock purchased and retired (in shares)				865,556	(1,211,573)
Common Class B
Class of Stock [Line Items]
Percentage of right to future income and distributions				69.30%	70.10%
Par value (in dollars per share) | $ / shares				$ 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)				64,077	107,204
Purchased under repurchase authorization at an average price per share (in dollars per share) | $ / shares				$ 7.66	$ 5.97
Sale of Shares Under Equity Incentive Plan (in shares)				49,081	554,860
Common Class B | Common Stock
Class of Stock [Line Items]
Common stock purchased and retired (in shares)				64,077	(107,204)
Sale of Shares Under Equity Incentive Plan (in shares)				49,081	554,860
Class B-1 Unit
Class of Stock [Line Items]
Percentage of right to future income and distributions				9.10%	7.50%
Voting rights (in votes) | Vote				0
Number of shares issued				0
Pzena Investment Management, LLC | Common Class B
Class of Stock [Line Items]
Economic interest held in company by class of stock (in hundredths)				74.90%	75.80%
Pzena Investment Management, LLC | Class B-1 Unit
Class of Stock [Line Items]
Economic interest held in company by class of stock (in hundredths)				1.60%

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Shareholders' Equity - Incremental Assets and Liabilities Assumed in Exchanges (Details) - USD ($) $ in Thousands				12 Months Ended
	Dec. 22, 2021	Jun. 10, 2021	Dec. 22, 2020	Dec. 31, 2021	Dec. 31, 2020
Incremental assets and liabilities assumed [Abstract]
Pzena Investment Management, LLC Members' Capital	$ 372	$ 9,279	$ 6,694
Pzena Investment Management, LLC Accumulated Deficit	(324)	(8,210)	(6,072)
Realizable Deferred Tax Asset		2,493	506
Net Tax Receivable Liability to Converting Unitholders		(2,119)	(430)
Total	48	1,443	698
Unit Conversion				$ 321	$ 390	[1]
Total	48	1,443	698
Additional Paid-In Capital
Incremental assets and liabilities assumed [Abstract]
Unit Conversion	$ 48	1,435	693	1,430	1,007
Common Class A | Common Stock
Incremental assets and liabilities assumed [Abstract]
Unit Conversion		$ 8	$ 5	$ 8	$ 5

[1] Net consolidation (Deconsolidation) of Sponsored Investment Funds have been reclassified to conform to the current year presentation.

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Non-Controlling Interests (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Noncontrolling Interest [Line Items]
Non-Controlling Interests	$ 87,798	$ 42,664
Non-Controlling Interests of Pzena Investment Management, LLC
Noncontrolling Interest [Line Items]
Non-Controlling Interests	86,781	42,421
Non-Controlling Interests of Consolidated Subsidiaries
Noncontrolling Interest [Line Items]
Non-Controlling Interests	$ 1,017	$ 243

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Investments - Summary of Investments (Details) - USD ($) $ in Thousands		Dec. 31, 2021	Dec. 31, 2020
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total Equity Investments, at Fair Value		$ 90,219	$ 26,053
Investment in Equity Method Investees		5,287	8,051
Total	[1]	95,506	34,104
Equity Securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total Equity Investments, at Fair Value		82,900	18,739
Mutual Funds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total Equity Investments, at Fair Value		$ 7,319	$ 7,314

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

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Investments - Investments, Fair Value (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Equity Investments, at Fair Value, Cost	$ 87,808	$ 23,814
Equity Investments, at Fair Value, Unrealized Gain/(Loss)	2,411	2,239
Equity Investments, at Fair Value	90,219	26,053
Securities Short Sold, Cost	259	620
Securities Short Sold, Unrealized (Gain)/Loss	(22)	94
Securities Short Sold, Fair Value	237	714
Equity Securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Equity Investments, at Fair Value, Cost	80,480	16,521
Equity Investments, at Fair Value, Unrealized Gain/(Loss)	2,420	2,218
Equity Investments, at Fair Value	82,900	18,739
Securities Short Sold, Cost	259	620
Securities Short Sold, Unrealized (Gain)/Loss	(22)	94
Securities Short Sold, Fair Value	237	714
Mutual Funds
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Equity Investments, at Fair Value, Cost	7,328	7,293
Equity Investments, at Fair Value, Unrealized Gain/(Loss)	(9)	21
Equity Investments, at Fair Value	$ 7,319	$ 7,314

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Investments - Narrative (Details) - USD ($) $ in Thousands	Dec. 31, 2021	Dec. 31, 2020
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments in equity method investees	$ 5,287	$ 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	8.00%

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Fair Value Measurements (Details) - USD ($) $ in Thousands	Dec. 31, 2021	Dec. 31, 2020
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Equity Investments, at Fair Value	$ 90,219	$ 26,053
Total Assets	90,227	26,061
Securities Sold Short, at Fair Value	237	714
Total Liabilities	237	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	82,900	18,739
Mutual Funds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Equity Investments, at Fair Value	7,319	7,314
Fair Value | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total Assets	89,490	25,328
Securities Sold Short, at Fair Value	237	714
Total Liabilities	237	714
Fair Value | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total Assets	737	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	82,163	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	737	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	$ 7,319	$ 7,314

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Fair Value Measurements - Additional Information (Details) - USD ($)	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value, assets, level 1 to level 2 transfers, amount	$ 0	$ 0
Fair value, assets, level 2 to level 1 transfers, amount	0	0
Fair value, liabilities, level 1 to level 2 transfers, amount	0	0
Fair value, liabilities, level 2 to level 1 transfers, amount	0	0
Fair value, measurement with unobservable inputs reconciliation, liability, transfers into level 3	0	0
Fair value, measurement with unobservable inputs reconciliation, liability, transfers out of level 3	0	0
Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities, fair value disclosure	$ 0	$ 0

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Property and Equipment (Details) - USD ($) $ in Thousands	Dec. 31, 2021	Dec. 31, 2020
Property Plant And Equipment [Line Items]
Property and equipment, gross	$ 10,773	$ 10,356
Accumulated Depreciation and Amortization	(7,086)	(5,980)
Total	3,687	4,376
Leasehold Improvements
Property Plant And Equipment [Line Items]
Property and equipment, gross	6,967	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	880	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
Capitalized Internal-Use Software Development Costs
Property Plant And Equipment [Line Items]
Property and equipment, gross	$ 245

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Property and Equipment - Additional Information (Details) - USD ($)	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Capitalized Internal-Use Software Development Costs
Property Plant And Equipment [Line Items]
Capitalized software development costs	$ 200,000	$ 0
Capitalized internal-use software costs	0
General and Administrative Expense
Property Plant And Equipment [Line Items]
Depreciation and amortization	$ 1,200,000	$ 1,200,000

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Related Party Transactions (Details) - USD ($)		12 Months Ended
	Dec. 17, 2021	Dec. 31, 2021	Dec. 31, 2020
Related Party Transaction [Line Items]
Investment advisory fees		$ 199,334,000	$ 138,619,000
Loan write-off period		7 years
Cash savings generated by this election will be distributed to selling and converting shareholders upon realization (in hundredth)		85.00%
Tax receivable payments made		$ 2,476,000	2,881,000	[1]
Employees
Related Party Transaction [Line Items]
Loans to employees		3,600,000	2,600,000
Pzena Mutual Funds
Related Party Transaction [Line Items]
Investment advisory fees waived		1,300,000	1,300,000
Company's Executive Officers and Other Employees
Related Party Transaction [Line Items]
Investment advisory fees waived		1,200,000	800,000
Director
Related Party Transaction [Line Items]
Tax receivable payments made		400,000	500,000
Revolving Line of Credit Agreement
Related Party Transaction [Line Items]
Line of credit	$ 15,000,000
Line of credit facility, term	5 years
Line of credit facility maturity date	Dec. 17, 2026
Borrowings		9,990,000
Revolving Line of Credit Agreement | Secured Overnight Financing Rate
Related Party Transaction [Line Items]
Line of credit facility interest rate during period	1.10%
VIEs That are Not Consolidated
Related Party Transaction [Line Items]
Investment advisory fees		$ 1,200,000	$ 800,000

[1] Net consolidation (Deconsolidation) of Sponsored Investment Funds have been reclassified to conform to the current year presentation.

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Commitments and Contingencies - Additional Information (Details) - USD ($)	1 Months Ended		12 Months Ended
	Sep. 30, 2021	Jul. 31, 2021	Dec. 31, 2021	Dec. 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	$ 400,000
Lease expenses			2,503,000	2,282,000
Sublease income			300,000	400,000
Lease commencement date	Sep. 01, 2021	Nov. 01, 2021
Lease expiration date	Aug. 31, 2023	Oct. 31, 2023
General and Administrative Expense
Other Commitments [Line Items]
Lease expenses			$ 3,000,000.0	$ 2,900,000

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Commitments and Contingencies - Components of Operating Lease Expense and Supplemental Cash Flow Information (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Leases [Abstract]
Operating lease expense	$ 2,503	$ 2,282
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	2,521	$ 2,330
Right-of-use assets obtained in exchange for lease obligations	$ 939

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Commitments and Contingencies - Information Regarding Operating Leases (Details) - USD ($) $ in Thousands	Dec. 31, 2021	Dec. 31, 2020
Leases [Abstract]
Operating lease right-of-use assets	$ 10,014	$ 11,578
Operating lease liabilities	$ 10,323	$ 11,905
Weighted-average remaining lease term (in years)	3 years 9 months 18 days
Weighted-average discount rate	4.30%

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Commitments and Contingencies - Future Minimum Lease Payments (Details) - USD ($) $ in Thousands	Dec. 31, 2021	Dec. 31, 2020
Future minimum lease payments
2022	$ 3,026
2023	2,981
2024	2,607
2025	2,607
Total undiscounted lease payments	11,221
Less discount	(898)
Lease Liability	$ 10,323	$ 11,905

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Income Taxes - Components of Income Tax Expense (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Current Provision:
Unincorporated and Other Business Taxes	$ 1,710	$ 937
Local Corporate Tax	118
State Corporate Tax	123	15
Federal Corporate Tax	1,060	(103)
Total Current Provision	3,011	849
Deferred Provision:
Unincorporated and Other Business Taxes	(126)	(79)
Local Corporate Tax	447	304
State Corporate Tax	467	267
Federal Corporate Tax	3,999	2,946
Total Deferred Provision	4,787	3,438
Total Income Tax Expense	$ 7,798	$ 4,287

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Income Taxes - Components of Income Tax Expense (Parenthetical) (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Income Tax Disclosure [Abstract]
Tax benefit recognized	$ 2.5	$ 1.6

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Income Taxes - Provision for Income Taxes (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Amount
Federal Corporate Tax	$ 23,998	$ 11,723
State and Local Corporate Tax, net of Federal Benefit	1,155	586
Unincorporated and Other Business Tax	1,251	678
Non-Controlling Interests	(18,438)	(8,959)
Non-Deductible Share-Based Compensation	20	22
Other	(189)	237
Total Income Tax Expense	$ 7,798	$ 4,287
% of Pretax Income
Federal Corporate Tax	21.00%	21.00%
State and Local Corporate Tax, net of Federal Benefit	1.00%	1.00%
Unincorporated and Other Business Tax	1.10%	1.20%
Non-Controlling Interests	(16.10%)	(16.00%)
Non-Deductible Share-Based Compensation	0.00%	0.00%
Other	(0.20%)	0.40%
Income Tax Expense	6.80%	7.70%

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Income Taxes - Provision for Income Taxes (Parenthetical) (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Income Tax Disclosure [Abstract]
Tax benefit recognized	$ 2.5	$ 1.6

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Income Taxes - Reconciliation of Unrecognized Tax Benefits (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward]
Beginning Balance	$ 7,612	$ 7,193
Decreases Related to Prior Year Tax Positions	(1,870)	(1,210)
Increases Related to Current Year Tax Positions	2,593	1,629
Ending Balance	$ 8,335	$ 7,612

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Income Taxes - Additional Information (Details) - USD ($)				12 Months Ended
	Dec. 22, 2021	Jun. 10, 2021	Dec. 22, 2020	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Income Tax Disclosure [Line Items]
Unrecognized tax benefits				$ 8,335,000	$ 7,612,000	$ 7,193,000
Interest related to unrecognized tax benefits				1,200,000	1,200,000
Unrecognized tax benefits, increase				0
Unrecognized tax benefits, decrease				4,500,000
Operating loss carryforward				$ 0	800,000
Section 754 election tax deduction period (years)				15 years
Cash savings generated by this election will be distributed to selling and converting shareholders upon realization (in hundredth)				85.00%
Deferred tax assets related to Section 754				$ 22,296,000	24,255,000	27,953,000
Liability to selling and converting shareholders				(24,700,000)	(25,700,000)
Deferred tax assets				25,886,000	29,831,000	$ 32,683,000
Valuation allowance on deferred tax assets				$ 0	$ 0
Class B Unit Exchanged for Class A Common Stock
Income Tax Disclosure [Line Items]
Number of class B units exchanged for equivalent class A common shares (in shares)	30,414	760,000	494,316
Deferred tax assets related to Section 754		$ 2,400,000	$ 800,000
Liability to selling and converting shareholders		$ 2,100,000	$ 400,000

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Income Taxes - Deferred Tax Assets / Deferred Tax Liabilities (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Section 754 [Roll Forward]
Beginning Balance	$ 24,255	$ 27,953
Deferred Tax (Expense)	(4,452)	(4,204)
Unit Exchange	2,493	506
Ending Balance	22,296	24,255
Other [Roll Forward]
Beginning Balance	5,576	4,730
Deferred Tax (Expense)	(334)	771
Tax Impact of Transactions with Non-Controlling Shareholders	(1,599)	(239)
Unit Exchange	(53)	314
Ending Balance	3,590	5,576
Deferred Tax Assets [Roll Forward]
Beginning Balance	29,831	32,683
Deferred Tax (Expense)	(4,786)	(3,433)
Tax Impact of Transactions with Non-Controlling Shareholders	(1,599)	(239)
Unit Exchange	2,440	820
Ending Balance	25,886	29,831
Deferred tax liabilities roll forward [Abstract]
Beginning Balance	(1)	(2)
Deferred Tax (Expense)	(1)	1
Ending Balance	$ (2)	$ (1)

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Income Taxes - Change in Liability to Selling and Converting Shareholders (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Change in liability to selling and converting shareholders [Roll forward]
Beginning Balance	$ 25,701	$ 28,652
Unit Exchanges	2,119	430
Tax Receivable Agreement Payments	(2,486)	(2,881)
Change in Liability	(655)	(500)
Ending Balance	$ 24,679	$ 25,701

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Subsequent Events (Details) $ / shares in Units, $ in Thousands			1 Months Ended			12 Months Ended
	Feb. 01, 2022 $ / shares	Jan. 21, 2022 ft²	Jan. 31, 2022 USD ($) ft²	Sep. 30, 2021	Jul. 31, 2021	Dec. 31, 2021 USD ($) $ / shares	Dec. 31, 2020 USD ($) $ / shares
Subsequent Event [Line Items]
Cash dividends declared (in dollars per share) | $ / shares						$ 0.34	$ 0.55
Lease termination date				Aug. 31, 2023	Oct. 31, 2023
Additional lease payments | $						$ 2,521	$ 2,330
Subsequent Event
Subsequent Event [Line Items]
Area of space occupied under non-cancellable operating lease | ft²		45,050	74,000
Lease termination date		Dec. 31, 2025
Extended lease termination date			Oct. 31, 2036
Additional lease payments | $			$ 78,000
Common Class A | Subsequent Event
Subsequent Event [Line Items]
Cash dividends declared (in dollars per share) | $ / shares	$ 0.53
Dividend declared date	Feb. 01, 2022
Dividend payable date	Feb. 25, 2022
Dividend record date	Feb. 11, 2022