Leases

12 Months Ended

Dec. 31, 2021

Leases [Abstract]

Leases

LeasesThe Company adopted ASU 2016-02 Leases (Topic 842) on January 1, 2019, and elected the modified retrospective method of implementation. The standard requires the recognition of ROU assets and lease liabilities for leases, which are defined as a contract, or part of a contract, that conveys the right to control the use of identified property, plant or equipment for a period of time in exchange for consideration. The Company has elected the practical expedient which allows for leases with an initial term of 12 months or less to be excluded from recognition on the Consolidated Statements of Financial Condition and for which lease expense is recognized on a straight-line basis over the lease term.

Topic 842 primarily affected the accounting treatment for operating lease agreements in which the Company is the lessee. These leases are primarily for corporate office space, datacenters, and technology equipment. The leases have remaining terms of 1 year to 11 years, some of which include options to extend the initial term at the Company's discretion. The lease terms used in calculating ROU assets and lease liabilities include the options to extend the initial term when the Company is reasonably certain of exercising the options. The Company's lease agreements do not contain any material residual value guarantees, restrictions or covenants. In addition to the base rental costs, the Company’s lease agreements for corporate office space generally provide for rent escalations resulting from increased assessments for operating expenses, real estate taxes and other charges. Payments for such reimbursable expenses are considered variable and are recognized as variable lease costs in the period in which the obligation for those payments was incurred.

The Company also subleases certain office space and facilities to third parties. The subleases have remaining terms of 1 to 11 years. The Company recognizes amounts received from subleases on a straight-line basis over the term of the sublease within Operations and administrative expense on the Consolidated Statements of Comprehensive Income.

As the implied discount rate for most of the Company's leases is not readily determinable, the Company uses its incremental borrowing rate on its secured borrowings in determining the present value of lease payments.

During the year ended December 31, 2021, the company ceased use of certain office lease premises as part of efforts to consolidate office space. For the year ended December 31, 2021, the Company recognized $28.1 million in Termination of office leases on the Consolidated Statement of Comprehensive Income, primarily related to the move of our global headquarters, comprising $9.6 million impairments of ROU assets, $17.6 million of write-off of leasehold improvements and fixed assets, and $1 million of dilapidation charges.

Lease assets and liabilities are summarized as follows:

(in thousands)	Financial Statement Location	December 31, 2021		December 31, 2020
Operating leases
Operating lease right-of-use assets	Operating lease right-of-use assets	$	225,328	$	268,864
Operating lease liabilities	Operating lease liabilities	278,745		315,340
Finance leases
Property and equipment, at cost	Property, equipment, and capitalized software, net	18,965		36,093
Accumulated depreciation	Property, equipment, and capitalized software, net	(12,465)		(24,585)
Finance lease liabilities	Accounts payable, accrued expenses, and other liabilities	6,612		11,687

Weighted average remaining lease term and discount rate are as follows:

	December 31, 2021		December 31, 2020
Weighted average remaining lease term
Operating leases	6.68 years		6.9 years
Finance leases	1.62 years		2.0 years
Weighted average discount rate
Operating leases	5.47	%	5.67	%
Finance leases	2.38	%	3.13	%

The components of lease expense are as follows:

	Years Ended December 31,
(in thousands)	2021		2020		2019
Operating lease cost:
Fixed	$	74,699	$	73,624	$	72,714
Variable	6,247		8,532		8,333
Impairment of ROU Asset	9,606		6,003		27,104
Total Operating lease cost	$	90,552	$	88,159	$	108,151
Sublease income	17,758		16,437		12,590
Finance lease cost:
Amortization of ROU Asset	$	6,587	$	11,536	$	12,565
Interest on lease liabilities	230		432		661
Total Finance lease cost	$	6,817	$	11,968	$	13,226

See Note 2 "Summary of Significant Accounting Policies" in Part II Item 8 “Financial Statements and Supplementary Data” of this Form 10-K for details on the classification of these expenses in the Consolidated Statements of Comprehensive Income.

Future minimum lease payments under operating and finance leases with non-cancelable lease terms, as of December 31, 2021, are as follows:

(in thousands)	Operating Leases		Finance Leases
2022	$	66,600	$	4,554
2023	67,539		1,928
2024	39,719		321
2025	32,844		—
2026	29,523		—
2027 and thereafter	98,428		—
Total lease payments	$	334,653	$	6,803
Less imputed interest	(55,908)		(191)
Total lease liability	$	278,745	$	6,612

Leases

LeasesThe Company adopted ASU 2016-02 Leases (Topic 842) on January 1, 2019, and elected the modified retrospective method of implementation. The standard requires the recognition of ROU assets and lease liabilities for leases, which are defined as a contract, or part of a contract, that conveys the right to control the use of identified property, plant or equipment for a period of time in exchange for consideration. The Company has elected the practical expedient which allows for leases with an initial term of 12 months or less to be excluded from recognition on the Consolidated Statements of Financial Condition and for which lease expense is recognized on a straight-line basis over the lease term.

Topic 842 primarily affected the accounting treatment for operating lease agreements in which the Company is the lessee. These leases are primarily for corporate office space, datacenters, and technology equipment. The leases have remaining terms of 1 year to 11 years, some of which include options to extend the initial term at the Company's discretion. The lease terms used in calculating ROU assets and lease liabilities include the options to extend the initial term when the Company is reasonably certain of exercising the options. The Company's lease agreements do not contain any material residual value guarantees, restrictions or covenants. In addition to the base rental costs, the Company’s lease agreements for corporate office space generally provide for rent escalations resulting from increased assessments for operating expenses, real estate taxes and other charges. Payments for such reimbursable expenses are considered variable and are recognized as variable lease costs in the period in which the obligation for those payments was incurred.

The Company also subleases certain office space and facilities to third parties. The subleases have remaining terms of 1 to 11 years. The Company recognizes amounts received from subleases on a straight-line basis over the term of the sublease within Operations and administrative expense on the Consolidated Statements of Comprehensive Income.

As the implied discount rate for most of the Company's leases is not readily determinable, the Company uses its incremental borrowing rate on its secured borrowings in determining the present value of lease payments.

During the year ended December 31, 2021, the company ceased use of certain office lease premises as part of efforts to consolidate office space. For the year ended December 31, 2021, the Company recognized $28.1 million in Termination of office leases on the Consolidated Statement of Comprehensive Income, primarily related to the move of our global headquarters, comprising $9.6 million impairments of ROU assets, $17.6 million of write-off of leasehold improvements and fixed assets, and $1 million of dilapidation charges.

Lease assets and liabilities are summarized as follows:

(in thousands)	Financial Statement Location	December 31, 2021		December 31, 2020
Operating leases
Operating lease right-of-use assets	Operating lease right-of-use assets	$	225,328	$	268,864
Operating lease liabilities	Operating lease liabilities	278,745		315,340
Finance leases
Property and equipment, at cost	Property, equipment, and capitalized software, net	18,965		36,093
Accumulated depreciation	Property, equipment, and capitalized software, net	(12,465)		(24,585)
Finance lease liabilities	Accounts payable, accrued expenses, and other liabilities	6,612		11,687

Weighted average remaining lease term and discount rate are as follows:

	December 31, 2021		December 31, 2020
Weighted average remaining lease term
Operating leases	6.68 years		6.9 years
Finance leases	1.62 years		2.0 years
Weighted average discount rate
Operating leases	5.47	%	5.67	%
Finance leases	2.38	%	3.13	%

The components of lease expense are as follows:

	Years Ended December 31,
(in thousands)	2021		2020		2019
Operating lease cost:
Fixed	$	74,699	$	73,624	$	72,714
Variable	6,247		8,532		8,333
Impairment of ROU Asset	9,606		6,003		27,104
Total Operating lease cost	$	90,552	$	88,159	$	108,151
Sublease income	17,758		16,437		12,590
Finance lease cost:
Amortization of ROU Asset	$	6,587	$	11,536	$	12,565
Interest on lease liabilities	230		432		661
Total Finance lease cost	$	6,817	$	11,968	$	13,226

See Note 2 "Summary of Significant Accounting Policies" in Part II Item 8 “Financial Statements and Supplementary Data” of this Form 10-K for details on the classification of these expenses in the Consolidated Statements of Comprehensive Income.

Future minimum lease payments under operating and finance leases with non-cancelable lease terms, as of December 31, 2021, are as follows:

(in thousands)	Operating Leases		Finance Leases
2022	$	66,600	$	4,554
2023	67,539		1,928
2024	39,719		321
2025	32,844		—
2026	29,523		—
2027 and thereafter	98,428		—
Total lease payments	$	334,653	$	6,803
Less imputed interest	(55,908)		(191)
Total lease liability	$	278,745	$	6,612