Form 4: Houlihan Lokey CFO Receives Significant Stock Grants Under Incentive Plan

Houlihan Lokey, Inc.'s Chief Financial Officer, J. Lindsey Alley, was granted 5,780 shares of Class B Common Stock, including performance-based awards, under the company's 2016 Incentive Award Plan.

Summary

• On May 22, 2025, J. Lindsey Alley, Chief Financial Officer of Houlihan Lokey, Inc. (HLI), received a grant of 2,962 shares of Class B Common Stock.
• These 2,962 shares will vest in four equal annual installments following the grant date.
• Additionally, on May 22, 2025, Mr. Alley was granted 2,818 performance shares of Class B Common Stock.
• These 2,818 performance shares will also vest in four equal annual installments following the grant date, contingent upon the achievement of specific revenue growth performance goals.
• If the performance criteria are not met on the vesting date, the annual installment of performance shares will be forfeited.
• All 5,780 newly granted shares of Class B Common Stock were deposited into the HL Voting Trust, with Mr. Alley retaining investment control and dispositive power.
• Class B Common Stock is convertible into Class A Common Stock on a one-for-one basis at the option of the holder or automatically upon the Final Conversion Date.
• Following these transactions, Mr. Alley beneficially owns 70,355 shares of Class B Common Stock indirectly through the HL Voting Trust.

Sentiment

Score: 7

Explanation: The sentiment is positive as it reflects standard executive compensation practices that align management's interests with long-term company performance and shareholder value, particularly with the inclusion of performance-based vesting.

Positives

• The stock grants align the Chief Financial Officer's interests directly with shareholder value creation.
• The inclusion of performance-based shares tied to revenue growth incentivizes management to achieve specific financial targets.
• Grants under an existing incentive plan demonstrate a structured approach to executive compensation and retention.

Risks

• The performance-based shares (2,818 shares) are subject to forfeiture if the specified revenue growth goals are not achieved, potentially impacting the executive's total compensation.
• Future stock price fluctuations could impact the value of the granted shares upon vesting.

Future Outlook

The granted shares will vest in four equal annual installments following the May 22, 2025 grant date. Vesting of performance shares is contingent on achieving specific revenue growth goals.

Industry Context

This Form 4 filing details routine executive compensation in the form of stock grants, a common practice in the financial services industry to align management incentives with company performance and shareholder interests. Such grants are a standard component of compensation packages for senior executives at publicly traded companies.

Comparison to Industry Standards

• The granting of restricted stock and performance shares to key executives is a standard compensation practice across the financial services industry, including investment banks and advisory firms.
• The four-year annual vesting schedule is a common structure designed to promote long-term retention and performance.
• Tying a portion of executive compensation to performance goals like revenue growth is a widely adopted governance practice to ensure pay-for-performance alignment, comparable to practices at firms like Lazard Ltd. (LAZ) or Evercore Inc. (EVR).

Stakeholder Impact

• Shareholders: The grants, particularly the performance-based ones, aim to align the CFO's incentives with shareholder value creation through revenue growth.
• Employees: While not directly impacting all employees, executive compensation practices can influence overall company culture and compensation philosophy.

Next Steps

• The granted shares will vest in four equal annual installments over the next four years.
• The company will need to assess and report on the achievement of revenue growth performance goals for the performance shares to vest.

Key Dates

Recommendation

Keywords

Houlihan Lokey, HLI, Form 4, Insider Transaction, Stock Grant, Executive Compensation, Class B Common Stock, Performance Shares, J. Lindsey Alley, CFO, Incentive Award Plan